THE FAKE CLUB SCAMS
Thousands of investors have purchased over-priced and poor-quality properties from spruiking outfits masquerading as "clubs".
These so-called clubs rake in huge commissions for themselves (usually around treble the amount charged by a normal real estate agent); this, of course, seriously inflates the price paid by the investors (who are conned into believing that, as "members" of a "club" they are getting a "free" service).
Most of these fake clubs make a number of fake claims, especially about the purported perennial increase in property prices. During a boom, the activities of these clubs remain hidden. The price of all properties rise and so, the investors believe they have done well. They don't realise, of course, that had they bought better quality properties at better prices they'd have made far better profits.
In a slump, these so called investment 'clubs' are especially dangerous for investors. This is when their entire 'model' collapses.
An example of the shaky foundations on which clubs are built occurred recently. In mid-2008 one of the high profile Australian clubs decided to "conquer England" (their words). The basic business model was the same - charge developers a huge commission which would then be shared (multi-level-marketing style) down through a chain of "support members".
According to the "Club" the English real estate market offered some of the best buying opportunities in years. Investors were told that they could retire as millionaires in six years. But, barely six months later, faced with a falling property market, the club shut up shop in England. A falling market soon exposes these investment clubs for what they really are - fakes.
FOOTNOTE: The boss of one of Australia's biggest so-called property clubs, a former bankrupt who changed his name, has become one of Jenman's fiercest critics. This spruiker has linked up with other notorious spruikers in a pseudo-partnership attempt to smear Jenman. This malicious mob includes former bankrupts, spruikers who have been banned from managing companies and one spruiker who has spent several years in prison for property fraud. A charming crew of critics.