They’re everywhere – ads in the newspapers, on billboards, radio commercials – I’m talking about real estate investment opportunities. “Up to 18% interest!”, “12% annually!”, “RRSP eligible!”
Real estate investment companies may invite potential investors to a “seminar” which will include a motivational speaker, an investment expert, or a self-made millionaire who may give advice on investing and will explain how investors can get involved.
The real estate investment/trust fund might be promoting above average returns with little or no risk. Remember, no investment is risk free – and that is especially true with real estate. No one can forecast where prices will be in 1, 2, 5 years so how can they guarantee you an annual ROI? They can’t, which is why there are fine print lines such as: “actual results, performance or achievements could differ materially from those expressed by us.”
“That’s a red flag,” says Mark Dickey, senior communications adviser for the Alberta Securities Commission. “It’s easy for them to say, ‘It didn’t work out the way we thought.’ If that happens, you could lose your money.”
Another flag is claiming they have a “secret” or “exclusive technique” for investing in real estate. The salespeople at seminars can make misleading claims that entice you to sign up right away, and may involve a “limited time offer” or a “limited number of investors.”
Do Your Research!
Don’t let anyone pressure you into making any financial decisions without getting independent financial advice from a lawyer or registered financial adviser.
To begin with, you can check the websites below to see if any action has been taken against the companies or their promoters. Remember that even if ASC or RECA have not taken any action to date, this does not mean the opportunity is suitable for your risk level.
- Alberta Securities Commission(ASC) This is a great website with a LOT of information on how to protect yourself, file a complaint, sign up for investor fraud alerts and more! Here’s the link to show how you to do a background check on a company to get started.
- Real Estate Council of Alberta(RECA) The Real Estate Council of Alberta (RECA) is responsible for ensuring that consumers who use the services of industry members are adequately protected. Disciplinary decisions are posted on that website.
- Canadian Securities AdministratorsNational CTO Database