Anytime you are approached about a real estate investment opportunity, it is important to look carefully at what exactly the opportunity is offering. Investing in an unsuitable investment can have a social and financial impact on you and your family.
What are real estate investment seminars?
- Real estate investment companies may invite potential investors to a “seminar” through an ad in a newspaper or magazine, a phone call, an email or post letter invitation, a booth, or word of mouth from family, friends or co-workers.
- The seminar may include a motivational speaker, an investment expert or even a self-made millionaire who may give advice on investing and will explain how investors can get involved.
- Some of these real estate investment opportunities make their money by charging seminar attendance fees, selling highly-priced reports or books and selling property and investments through high pressure sales tactics.
- Real estate investment companies holding the seminars may suggest following high-risk investment strategies, such as borrowing huge sums of money to buy into the investment or promoting investments that involve lending or borrowing money on unsuitable terms.
- The companies may offer to fly investors to the property location to view the real estate development. This could be a tactic to pressure commitment to a deal without time to obtain independent information or advice. Investors sometimes end up having to pay for their travel and accommodation if no investment is made.
Some investment “Red Flags” to watch for:
- Paid real estate advertisements that are designed to look like legitimate news articles.
- Talk of tax avoidance, moving money offshore or using RRSP eligibility as a hook.
- Above average returns with little or no risk. No investment is risk free.
- Offer of loans to cover both the investment and further investment seminars.
- Claims of a secret or exclusive technique for building wealth. The salespeople at seminars can make misleading claims that entice you to sign up right away.
- Limited time offer that discourages investors from getting independent advice.
- Promises to ‘be a millionaire in three years’ and ‘get-rich-quick’.
- Sales pitches of no cost involved or free attendance at seminars. The first session you are invited to attend may be free, but you may have to pay fees and commissions that the promoters did not tell you about beforehand.
Protect yourself by learning to ask the right questions. Do not let anyone pressure you into making decisions about money or investments without getting independent financial advice.
- Before attending an investment seminar, conduct your own research. If, after doing so, you believe the seminar might be worthwhile, seek independent professional investment advice before deciding to attend.
- Remember that family members and friends may try to involve you in an opportunity without understanding the level of investment risk. Again, you should seek independent advice (from a lawyer or registered financial adviser).
- Check with the Alberta Securities Commission (ASC) and Real Estate Council of Alberta (RECA) (www.reca.ca) to see any action has been taken against the promoters or their companies. 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.
- If you have questions about the tax implications of the investment, contact Canada Revenue Agency (www.cra-arc.gc.ca).
- Be cautious about committing to any investment at a seminar—the atmosphere at these events can be quite charged and exciting. You should only make investment decisions after you have taken some time to think about them, conducted your own independent research and most importantly, sought advice from an independent financial adviser.
What can I do if I think I have been scammed?
If you have been approached about a seminar or real estate investment which doesn’t seem right, or if you have invested money and now feel it is a scam, you can make a complaint on the ASC and RECA websites.
Speak out by talking about the investment with others. You may be able to help protect other family and friends who were thinking about getting involved.
Check out more tips on How do I check out a real estate investment opportunity and read an important investor alert.