All Topics / Help Needed! / HELP! Being lured toward “Real Estate Mastery – EmpowerNet”

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  • Profile photo of semerdasemerda
    Join Date: 2007
    Post Count: 2

    Hi guys, I’m new to these forums and thought I start off with a question which we are having a hard time to make a decision to.

    We went to a recent weekend seminar called “Real Estate Mastery” ran by EmpowerNet and afterwards had a one of one with their consultant.

    In a nutshell, for around $5K per year fee they are offering 3 opportunities to purchase land through them. They supposedly negotiate great deals through close relationships with developers so that they can pass the discounts to their members. They cover all legal and stamp duty costs – costs involved in the purchase of the property.

    The deals are all in Melbourne, City of Wyndham for the right to purchase off the plan land for around $100-$200 per lot.

    It works like this. I purchase the land off the plan using a bank guarantee with a minimum prior to settlement time being 18 months. Supposedly by the end of that time (the 18 months) when I settle the land has appreciated so I would pull out the equity and use that to repay future loan repayments (they call it “equity capitalisation”). So the land doesn’t cost me anything. In that time I would either sell the land or build a house on it for around $100-$150 and sell the house and land package for around $450K making the difference.

    However, after I did some digging around I found residential land in those areas on ranging from 75-130K.

    And house and land packages around $250-$400.

    What are your thoughts on this? Should we take the $5K plunge or is it a waste of time?


    Profile photo of Nigel KibelNigel Kibel
    Join Date: 2005
    Post Count: 1,425

    As the market booms so will all the new property investment companies. More and more crap

    Nigel Kibel | Property Know How
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    Profile photo of L.A AussieL.A Aussie
    Join Date: 2006
    Post Count: 1,488

    So let me get this right;

    you pay them $5K per year for them to find you deals through developers that they know? How generous of them. Why not approach the developers directly. The 'closed deal' line is BS.
    Then, you get the "right" to buy the blocks for $100 -$200 per lot after paying them $5K?? Again; how generous.
    Then, at settlement you hope the land has appreciated, so you then drawn down some equity to pay the future loan repayments, thus capitalising the interest on the loan so it costs you nothing to hold ithe land? But once you make a draw down on the equity, you then have to start paying interest on that draw down. Basically, you are not paying anything off the loan and the interest is simply tacked onto the loan and the loan increases. What if the land doesn't increase in value by settlement? What if they are charging you more for the block than it is really worth in the first place?

    This smells.

    You are being charged a lot of money to buy land that you can simply do yourself for free by going to the local real estate agents and asking what they have for sale and save the $5k. Every developer will also have their land lots advertised with all the local agents.

    You shouldn't be charged money for the 'right' to buy the land they find for you; especially after you cough up $5k.

    The legals and stamp duty amount to around 6% of the purchase price typically. Do you think they are going to give you this for free? No; it is built into the cost of the land.

    There are 2 things you need to do here;
    1. Run a mile.
    2. Run another mile.

    But seriously; look at what the average price of a block of land costs in that immediate area, and also look at what the cost of house and land packages are going for in the area right now. This is as easy as an hour on the phone talking to local agents, or spend a couple of afternoons driving around researching the values.

    Don't be betting on a cap gain in 18 months with their deals; this is gambling. You need to do a really in-depth due diligence to verify whether there is a likelihood of a good cap gain occuring in that area in that time frame. In most cases, these developer's deals are price loaded, so when settlement rolls around, your cap growth doesn't materialise as the price you paid for the land in the first place was too high. You may even find that the land is worth less than what you paid for it; especially if we get a few more interest rate rises over the next 12 months and everyone puts their cheque books away.

    These sorts of companies rely on people who can't be bothered to do the due diligence. Being lazy is expensive. If you want to be a successful investor, YOU need to do this work, take control of your future and make sure your investing is safe.

    One last thing; ask the 'consultant if you can provide your own valuation on the land , and your own legals before signing any contracts. Their response should be interesting.

    Profile photo of hschmidhschmid
    Join Date: 2007
    Post Count: 87

    a lot of these companies have a heavy mark up on real values.

    re .com is effective guide to real values.

    They are commanding a 50% premium… and charging u 5 k for the priveledge.

    Good if u can get away with it.

    I would stay far away.

    Profile photo of Zoe JonesZoe Jones
    Join Date: 2007
    Post Count: 47

    I would avoid this, do your own deals.

    Profile photo of amoramor
    Join Date: 2007
    Post Count: 2

    Hello! I atteded the 5 day event and left with the experience of being misled, dissatisfied, and ripped off!  The Properties they "offer" are way overpriced for places that are on the very edge of Melbourne, I could buy a property in the inner city for the same amount. Even though the info they give about property and Investing is informative and would be of benefit, the overall event was a shambles.I'm sure there are much better ways to access this information! I don't trust this company!

    Profile photo of propertypowerpropertypower
    Join Date: 2006
    Post Count: 312

    probably worth reporting to

    Profile photo of MasihMasih
    Join Date: 2007
    Post Count: 42

    I reckon Semerda and Jackie work for them. I've seen quite a few companies use this "what you guys think of this company or deal, etc" tactic to get you interested in their product. I'm not surprised they both have one post each.

    Profile photo of semerdasemerda
    Join Date: 2007
    Post Count: 2

    Thanks for the info guys. We didn’t end up going with them as both I and my wife had a bad feeling.
    I dont browse these forums as much as I should but for Masih I will make sure I do so that my post count goes up and he can be confident I don’t work for the mob I questioned above :)

    Profile photo of VPVP
    Join Date: 2008
    Post Count: 8

    I had similar experience with Central Equity who had an information session in Perth a few months ago, and they were trying to sell 22sqm units for 209K. I am not sure who invests in such deals.

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