The tragedy of 'get rich from property' seminars

These seminars promise to help you get rich through investing in property. But in reality, the only people making money are the speakers!

Have you ever received a series of ever more strident emails urging you to attend a "free seminar", of the “There's only a few free places left and they're going fast – don't miss this opportunity” variety?

I do – and I know a number of people who do too, perplexed that these missives somehow elude their spam detectors.

Film critics are paid to watch films. My less glamorous job is to sometimes turn up at “seminars”. So I decided to fetch up fifteen minutes early at the unattractive room in a budget hotel where this two-hour session was to take place.

I had this awful feeling of deja vu the moment I signed in. The staff were enthusiasts, the audience, drawn by the promise of escaping poverty to become “financially secure” (a phrase used by all too many get-rich-quick schemes), looking embarrassed and bewildered. And all too often, poor.

We've been here before

When the speaker stood up, I had another flashback. I had heard how the poor could become rich with very little effort and no capital nearly ten years ago when I went to an Inside Track “free seminar”. Inside Track and sister company Instant Access Properties went spectacularly bust in 2008, leaving those who trusted them out of pocket to the tune of many tens of thousands of pounds.

These companies claimed anyone could become a millionaire via buy-to-let investments. In a nutshell, you first bought a property with a 100% mortgage – not any old property, but one recommended by Inside Track.

Lenders didn't do 100% mortgages. Not to worry though - a barely legal device called a “gifted deposit” made banks think they were only giving 85%.

As any idiot knows, property prices can only go upwards. So after a few months, you “flip” the now pricier property, remortgaging it at its new higher value. You use the profit to buy more properties. Soon you'll have lots, all gaining in value and you haven't had to put down a penny, thanks to the “training” the firm gave.

Education, education, education

Throughout the Inside Track free seminar, and the more recent one, the pitch always emphasises expertise and training. 

The free seminar leads on – during the heavy sell of the final fifteen minutes – to a series of “educational workshops” which cost a packet. It comes at a price, though the good news is it is unchanged despite a decade of inflation.

You pay £2,495 for the weekend course, and you can bring your partner free of charge! And there are free extras such as DVDs worth £995 as well as “face to face” training - in reality, a hard property sell. The script never changes.

Inside Track, its directors told me (often via lawyers) could not go wrong – except it did.

Back to the present. My speaker claimed to be a property expert and millionaire thanks to the methods he would teach. He also said he took a holiday for six months of the year.

I doubted this. It sounded too easy. If he was really that rich, why was he working in a seedy room for hours each evening? I discovered later he had been part of Inside Track.

Buying property with credit cards

But he had moved on since Inside Track. Now he advocated getting a series of 0% credit cards. “Use this free money to buy at 'below market value'”, he told us. Below Market Value (usually shortened to BMV) is a weird concept for those who believe the market is the source of all prices. The market is always right so how can you buy cheaper?

Leaving that aside, credit cards only buy broom cupboards at best.  The trick, I was told with lots of Powerpoint slides, is use the plastic cash for a small down payment on a property still on the drawing board, known as off-plan.

Sadly, many stay like that – drawings in an architect's office rather than buildings with people paying rent.

It all sounds wonderful when you've been enthused by a professional speaker surrounded by an audience that wants to believe there is a magic route for them out of their financial misery and into the golden land of financial security.

But in the cold light of day? There is no cold light because the trick is to sign you up there and then. And the £2,495 is not the end of it. There are advanced courses costing £6,500 and £9,500 as well.

If you raise objections, you'll be decried as a negative loser. And who wants that? Ask what proportion of those who paid for a course have become millionaires and you'll be referred to a past student who will come up with some sort of individual story. Your question will never be answered honestly and you will be told: “People who ask that question are giving themselves permission to fail."

So you're a negative loser (again).

At the end of the meeting, around one in ten of the 120 or so present signs up for the £2,495 training course with their credit cards. That's nearly £30,000 less expenses, and speakers often repeat this stuff five or more times a week.

That means they can gross £125,000 or more a week – and that's more than most Premier League footballers or investment bankers get.