Real Estate Investing Trap 2 – Taking Advice Blindly

February 21, 2010 by srgproperty
Filed under: real estate

Today, we cover the second mistake often made in real estate investing: Taking Bad Advice.

Several financial advisors and educators do not act in their clients’ best interests because they need to worry about feeding their own families. On the other hand there are genuine educators and advisors who DO walk their talk, who do invest, and do exactly the sorts of things they advise you to do. So, it is vital that you don’t tar everyone with the same brush and give up on your dreams just because you have decided that the industry is full of crooks. As one guru suggests, that would be like deciding not to experience the wonders of swimming in the ocean simply because you are too scared to go in, on account of hazards such as rips and undercurrents. Instead, why not use that knowledge to take safety measures such as swimming on patrolled beaches and take pleasure in the experience to the full?

So, when it comes to advisers and educators we want to make sure that you differentiate between the following two groups:

1. Those who after you’ve learned how they will profit, you still wish to do business with.

2. Those who are set to gain an unreasonable amount or the nature of the gain reflects a conflict of interests and thereby is not in your best interests.

Note: the point here is not to sort them as con artists or honest professionals. The point is simply to have a process to establish “what’s in it for them” instead of acting on blind faith that they are providing advice that is good for you.

Here are a few questions to ask about your potential advisers before you hand over your hard-earned cash.

Q1. Will they get a kickback or commission from the investment Viagra Professional they are recommending?

You need to think about possible sources of big money for these so-called advisers. An obvious source is commissions on the sale of real estate. And the probability that the properties they have available are the best for you is unrealistic.

The first group of people I’d be very careful of is seminar presenters who make an effort to sell you real estate during or after their seminars. Not only is it the deal that you need to be wary of in this situation, but also the quality of the information. And several of them are very good at twisting facts and figures to make a very convincing sales pitch.

You should actually be wary of anyone who is advocating specific investments at all. A good educator will show you to find them yourself and this should totally avert a conflict of interests as well.

Q2. Do they practice what they preach?

This must be the most vital ‘tell’ of an adviser’s capacity to advise. Why would you take advice from anyone who proposes you do something that they aren’t doing themselves? Such hypocrisy should straight away raise a red flag and tip you off that there is something wrong. However, there is one disclaimer to this ‘rule of thumb’.

Is the advice suitable for their situation? It may be that they are now at a more advanced stage in their investing and the advice they offer to a beginner is no longer related for them. So, if they are further down the path they are suggesting you take, they may well have followed the advice they are offering but have now moved on to subsequent steps.

But that is getting rather focused on the details. Generally, if a seminar presenter or author is recommending you to invest in real estate using a particular strategy you would be wise to consider their advice ONLY if they are using that strategy themselves or have done so to get where they are.

Q3. How many years of experience do they have?

The general boom in real estate since the stock market crash has produced a lot of new wealth and success for people including many beginner investors. The problem is that the success could well be fleeting because they haven’t got any smarter; they just got lucky. And yet they now consider themselves experts and are out in the market offering seminars and charging excessive fees because they think they are so clever.

We saw the same phenomenon with the ‘dot com’ boom and then we also saw it was those very “experts” who were hit the hardest in the crash. And the world has seen it in many economic cycles before.

I think it is imperative that your advice is coming from someone who has experienced all phases of the market cycle and if they have just a few years of experience then they cannot have experienced all the phases.

Why is it that the most likely candidates for providing sound advice on real estate investing are the gurus and not licensed advisers? Well the vast majority of licensed advisers out there would very quickly get filtered out using the above process because there’s nothing in it for them to advice you to invest in real estate.

The way most financial advisers are set-up is to earn commissions on products they propose rather than charge an hourly fee. I guess they do this to reduce (or hide) their fees so that the common person is not scared off. If you want truly unbiased financial advice you may want to get an adviser that DOES charge an hourly fee rather than promote investment products that will earn them a commission.

However, in lieu of such an adviser we can turn to the industry of mass market educators that we have identified as gurus. But remember, they need to be working with what they preach and have more than a couple of years of experience. So long as we conduct that due diligence we will be left with the true gurus who have had success with the techniques they are teaching so we can be taught from that knowledge rather than make the same mistakes. We have brought together such educators, Click Here Now… to learn from their experiences.

Fetch realistic information about the topic of luxury vacation home – please study this web site. The time has come when concise info is really only one click away, use this opportunity.

Share and Enjoy: