Investing in real estate is a popular way to diversify one’s investment portfolio, as property values often rise quickly. With the recent economic impact of the Covid-19 pandemic, property gurus view it as an opportunity to attract potential buyers to engage in loan compression and purchase multiple properties at once, claiming it is an ideal time for profits if they follow their guidance.
Sr Vicky How, founder and principal of Propedia Group has recently addressed “property guru scams” on her TikTok account where these gurus suggest potential homebuyers take on loan compression or multiple financing to make fast money.
@srvickyhowcn GURU 教学生投资在 TriumphFX 的故事。#propertyvaluer #拍卖投资 #propertyguru #lelongrumah #auctionpropertymalaysia #auctionproperty #propertyinvestment #propertyinvestment #askvickyhow #propertyinvesting #房地产知识分享 #房地产拍卖 #房地产投资 #triumphfx ♬ original sound – Sr Vicky How
These get-rich-quick schemes are not new and have been practised for ages. A few years ago, they caught the attention of several groups of property consultants due to a spike in casualties or bankruptcy cases.
“Multiple financing or loan compression involves an individual applying for several home loans from different banks simultaneously to buy multiple properties at once. This practice has been widely used by investors aiming to purchase multiple properties while still qualifying for a 90% loan margin. This has been ongoing for some time. But, recently, the loan application process has been tightened, with banks now refraining from granting loans if an individual has already taken up two maximum loans,” Vicky explained to WargaBiz.
Vicky mentioned that certain property gurus are actively teaching people how to exploit loan compression for quick profits. These individuals are lured with promises of substantial returns through the purchasing of multiple properties. Unfortunately, they are often unaware of the impending trap.
“In most cases, the victims of these scams do not have sufficient knowledge about the property investment, causing them to blindly follow all the advice given by these gurus. The gurus promote projects, stating that they are promising investments. They entice potential homebuyers by claiming the property’s price is below market value and even suggest that it will be easy to rent out the property. But, it’s all part of a scam.”
“They believe they’re making gains, yet they fail to realize that they might eventually find themselves burdened by an endless debt that surpasses their financial capacity, leading them into a trap of bankruptcy,” she explained.
Vicky mentioned that some individuals who fell into these traps have reached out to her. Many of them expressed difficulties in keeping up with the monthly instalments. Some victims shared that they initially managed to pay off the instalments with the help of cashback. However, their funds were slowly sinking. She also shared that one victim revealed that he had stopped making regular loan payments due to a lack of funds.
“The victims come from diverse backgrounds. They include retirees seeking investment options for their pensions, individuals in their 20s who fell for get-rich-quick schemes, and a significant number of working adults with an average monthly salary of RM5,000 who aim to generate passive income.”
She advised potential homebuyers to conduct thorough research on the property market and not blindly trust individuals who claim to possess solid knowledge of property investment.
“Their appearance may seem convincing, but don’t be swayed by claims that property investment guarantees easy money. Avoid falling into investment scams, as there are no such things as short-term returns. There is no easy way to become a property millionaire.”