… Memphis properties, that is. ‘Distressed’ or ‘bargain’ properties. Cheap cheap cheap!!
A little while ago in ‘Safe investing means doing your homework‘ I mentioned that some members of the United Federation of Property Spruikers have moved onto shifting US properties to Kiwis and Australians. The exact commission structure (i.e. what’s in it for them) isn’t clear from the outside, but I assume they’re getting a clip of each ‘bargain’ sale that the lambs to the slaughter er, clients actually buy. If anyone reading this can clarify those arrangements, please drop me a line at the email address here.
I pointed to a recent promotional email doing the rounds in typical bullish tones, in this case inviting people who want to “retire through property in 2011 without hype, nonsense or unfounded promises” and “create cash flow safely, simply and fast!” to join a sales-pitch/educational tour taking in Phoenix and Memphis early next year — to look at the exceptional ‘opportunities’ the local spruikers will find for the strangers on their shores.
Well, out of nowhere (i.e. I didn’t sign up for the emails) I’ve now started receiving email promotions from a spruiker in Blackpool, England (!) offering me … guess what? … cheap properties in Memphis! Ha! Who woulda thunk it? See… this is today’s message:
Don’t you love the Christmas theme? Classy.
Now, call me skeptical (I’ve been called worse) but I just wonder how and why these ‘amazing’ these deals with their ‘amazing’ finance packages aren’t being snaffled up by the locals. Why is that, do you think, if they’re soooo amazing? Huh?
I pay attention on these matters and others to Australian author and whistle-blower Neil Jenman, scourge of the property spruikers, who says it loud and says it plain (written for Aussies, but tune in Kiwis):
AMERICAN WARNING
A deadly trap for Aussie investors.
by Neil Jenman
Here’s a confident prediction: Hundreds (probably thousands) of Australian investors are going to lose millions of dollars in the American property market.
Right now, it seems to be all the rage, the latest fad. Buy real estate in the United States. It’s easy. Prices for American homes are so low and our dollar is so high that an investment in ‘the home of the brave and the land of the free’ seems like a really good idea.
Unfortunately, it’s not a good idea. For the average mum-and-dad Australian investor, buying real estate in America is a very bad idea. Never mind what the Aussie spruikers tell you, never mind how good it sounds, it really is too good to be true.
These days, a number of Australian spruikers have set up companies and are selling real estate in America to Aussies. Some of the men ‘behind’ these companies are the same villains who were once ripping off investors with over-priced property deals in Australia. As any police officer will tell you, once a crook, always a crook.
Yes, I know it sounds wonderful. The numbers are enticing. You’ll be told that you can buy a house for as little as $50,000 and rent it out for about $200 a week. That’s a twenty per cent return. It seems like a no-brainer. In reality, it’s an investment for people who don’t have the brains to spot a scam. And while I don’t mean to be rude, I do mean to protect you from getting stung. … Read on at Jenman.com.au
Don’cha just love a straight-talker? I do.
Meanwhile, Dean Letfus, the NZ spruiker and (arguably) most high profile ‘educator’ (ahem) lining up the tour of Kiwi investors to Memphis said in a recent promotional blog post:
And more recently I have taken the time to really understand the international property market and found a “genuine” cash flow solution for many people in the USA. [Comment: oh boy! Now he ‘really understands’ the international property market too!] I am more excited about this than anything I have ever been involved in business wise because it is so straight forward and such an amazing product that I never knew about before. The numbers stand up to all scrutiny and there is nothing to “sell”. It is just a great way to solve the cash-flow problem.
Sigh.
Dear Reader, decide for yourself who you’re going to believe. Enough said.
The price seems right… But, I’ve been to Memphis, Tennessee
many times. I also know the American South very well. I can tell
you with great confidence, without visiting this house, and knowing
nothing of its true location, that it is a bad deal. This year
alone the US property market lost 1.7 Trillion dollars in value,
this, on top of the previous year’s 1 Trillion dollar loss. This
loss in value, by the way, is coming to NZ and Australia over the
next few years. Not the same numbers – but expect the same
percentage loss. Don’t get sucked in by what appears to be a good
deal. This property is most likely in a flood plain and in an
undesirable part of Memphis. The fundamentals of home buying don’t
change: location, location, location. My own experience has taught
me that to be successful at property management in the US you need
to be “hands on.” US cities and counties don’t play games with
stupid people. If this property has any outstanding tax liens –
then as a new owner, you will be expected to make the local
governing bodies whole. Any other outstanding lien will also be
levied against you as well. And this is just to start. The point
here is that you will need to pay for extensive legal services
before purchase – if you don’t — you will lose your shirt. Also,
if you do not understand the State, County and City laws you are
just asking for trouble. You should understand that properties in
this part of the US are subject to very cold and very hot weather
(-15c to 45c). These extremes cost money. It is essential that the
heating be kept on during winter otherwise the internal water pipes
will freeze and burst. If the air-conditioning is not running
during summer the house will become infested with bugs and moisture
build-up will damage the interior of the home. I say this just to
point out that if you think you can sit on it and not rent it out –
then you better think again. Termites, I put in a different
category. You will need to pay for an inspection. And if termites
are found you will need to pay to have them exterminated. Then
there is radon (look it up). Proper home inspection is imperative.
A home like this could cost you thousands before you even take
possession. Then there is the subject of insurance… need I
continue? Because I can… There is no free-ride in life. You cannot
hand over your hard earned cash to people who promise to make you
rich. You have to do it the hard way – which means you have to do
it yourself. To prove my point I am willing to offer up my time
(for an 8% fee). I will buy a house for you in the US that you can
rent-out – I will do all the work. I will find the house and do all
the legal homework: taxes on income, property tax: city, and
county; insurance etc. I will take care of the home inspection and
all the nitty-gritty details that go into purchase. I will then
take on the responsibility of advertising for tenants. I will
select the tenants. If the tenants don’t pay the rent or damage the
place I will take care of all legal wrangling that go into
eviction, repairs etc. I will manage the property honestly.
However, as I will never rent-out property that I myself would not
live in then…. if the house needs to be brought up to “code” you
will pay for this also. This could easily cost you 10,000USD extra.
So be warned – you will be dealing with and honest man. Before we
begin any transaction I will have an attorney draw-up the proper
legal papers (you will be paying for this also). But, you and your
money will have far more protection. Also, this protects us both
from liability. I would never enter into a contract from which I
could lose – you should be of the same mind-set. I won’t do
business with fools. This I can guarantee: 1.You will own a house
in the US. 2.You will probably not make money the first year –
because you will be responsible for all expenses plus my 8% fee.
3.You may make money in the second year (with emphasis on
may). Either way, your rate-of-return on outlay
will be low. If you are hell-bent on buying a property in the US
and playing US rental market then I’m your guy. I know far more
about how it works than any of the clownish property spruickers who
don’t live in the US. You must consider that the US is the most
litigious nation on the planet. If you don’t think a State, County,
City or tenant can reach you in NZ or Australia then you better
think again.
[snip]
Thanks for the very comprehensive rundown JT. (And the subtle trace of satire.) Yeah, there’s a lot to it, huh?
I guess there are property managers all over the world making money out of ‘absentee’ landlords and out of town/country owners, some of whom have been sold a lemon!
In some cases, I think some owners typify the old saying about owning a boat:
(But the commission salesmen don’t care.)
How the ‘opportunity’ is sold…
Begin forwarded message:
From: Dean Letfus
Date: 30 December 2010
To: xxxx
Subject: Tick tock tick tock
Reply-To: dean@ [snip]
Hi there,
If you have already advised you are not joining us on our USA research tour stop reading and hit delete NOW :-).
For the rest of you this is just a final courtesy email to say we lose our cheap flights and accommodation etc. on Friday night so if you think you are coming please get your form to me YESTERDAY!
We have over a dozen people on board the plane already and there has been a rush of foreclosures in Memphis so some of teh properties we will be looking at together are offering < <<<<<<<-------- UNBELIEVABLE discounts and yields -------->>>>>>>>
The US opportunity gets better and better, don’t miss out on the ultimate permanent cash flow solution! So email me any questions, get your form faxed to me urgently at 006495356296 OR scan and email to me. COPY OF FORM AT [snip]
More info about tour at [snip]
20% plus returns and freehold in under 5years with no banks, how could we not be doing this 🙂
See you at the airport ~ Dean .
———————————————————————————————
Ph: (09) 535 5296 | mob: 021 567 427 | fax: (09) 535 6296 | email:
dean@ [snip] The information presented in this email is for educational purposes only. Any information given by Dean Letfus and or any associated party or employee of Massive Action Ltd, is given purely as illustrations and should not under any circumstances be construed as specific investment, financial or legal advice. Whilst every care has been taken to ensure the accuracy of the material presented, Massive Action Limited and their representatives will not bear any responsibility or liability for action taken by any person on the basis of information presented from this email. The information presented is based on Massive Action Limited’s own views as Property investors and advisors and as such it is HIGHLY RECOMMENDED that no person make an investment decision until such time as their individual needs and desires have been assessed by qualified financial advisors and specialist professionals that are totally independent of Massive Action Ltd and Dean Letfus and any associated party.
Dean Letfus – Massive Action Limited
PO Box 51745 Pakuranga Auckland NZ
There’s no such thing as bad publicity, apparently.
Memphis property spruiker Dean Letfus has emailed his followers that he received a BOOKING for his ‘research tour’ as a result of my reproducing his marketing email (above) pretty much verbatim here on thePaepae.com
If I believe him (a stretch, yes, but who knows?) well, what a hoot!
It seems you can’t protect some people from themselves … nor me from the Law of Unintended Consequences in action.
I guess the Sydney Morning Herald‘s warning piece reproduced in the Dom Post (see comment below) must be great for business…
Any thoughts? – P
PS: Oh, and he also accused me of being a ‘competitor’ who ‘disperse[s] lies’ about him.
(Unspecified lies, as usual. Sigh.) It’s his own email!
One would think he’d write to me about these alleged lies I’ve been allegedly dispersing. A bit of detail would go a long way. But I guess it’s easier for him to issue a vague smear against the messenger. Too bad.
Update: I’ve snipped the links out of his spruiking/promotional email. I don’t want to promote this so-called ‘investment opportunity’ in any way. – P
I read this coverage from the Sydney Morning Herald reproduced in Wellington’s Dominion Post at the beach the other day …
http://www.smh.com.au/money/investing/australian-investors-could-lose-millions-on-us-rental-properties-20110103-19dde.html
Is anyone listening, I wonder?
[…] detail-free allegation (by broadcast email and on his blog) comes with bonus faulty logic and an extra smear topping: that […]
[…] internet-pushed ’gold rush’ continues. Remember the UK-based spruikers hawking Memphis distressed property? Look: Now they’re pitching ‘bargains’ in Buffalo, New York. That rings a bell […]
[…] my in-box today from the UK-based property spruiker hawking Memphis ‘bargains’ … a chance to buy mortgage bonds… at 40% discount! Oh boy! […]
[…] I’m with Neil Jenman on this as I said in It’s raining Memphis!. And Olly Newland: How To Go Broke by Buying in the USA. Judging by the operation and the […]