Guarantee and Securities

“We guarantee you a 25% return”
“I guarantee you will make money”
“Our guarantee means you won’t lose any money!”

I am sure you have heard someone say this or seen it advertised on Facebook.

Did it get you interested?
Did you click on it and talk to someone, or did you pass on by thinking it was too good to be true?

Unfortunately, this type of ‘hype’ is spread around the property space especially via social media.

Also unfortunately, it is a load of horse poo.

There are no guarantees.

A guarantee is a super strong word used to invoke emotive feelings in you that align with it.
Low/no risk,
Throw caution to the wind.

All these things make you more complacent in your due diligence of the offer or deal.

When a guarantee is in place, you don’t need to worry any more, right?
Well, no..

You need to consider how this guarantee is made, what is used to back it and how to claim on it if you must.

If someone is guaranteeing a return, does that mean there is money set aside to pay for your return if needed?

Or what about guaranteeing against loss, where is that pool of cash with your name on it?

Nowhere, that’s where!

When you look into an offer, you will most likely find the guarantee is at best, nothing more than hot air and wishful thinking and at worst, purposely deceitful, maliciously chasing your hard-earned dollars.

Sorry, but that is the truth.

You cannot guarantee what you can’t control, unless you insure against it.
A financial guarantee must be backed financially, if not, it is worth $0.

What can you look for?

Security placement is something that is much more tangible than a guarantee.
It is something we use with our clients for their benefit, and it means they (or their entity) have a documented ‘position’ in the transaction they are involved in.

An example is a mortgage.

Opportunity 1 has advertising that says they are guaranteed investor capital to be returned plus make 45%.

Opportunity 2 has advised it anticipates a return of 25% and the funds are secured by way of mortgage against property.

Which one sounds better?
Which one is actually better?

Having funds registered by way of mortgage is much more ‘secure’ than any form of guarantee, because it is backed by actual real property.

(I use ‘secure’ lightly as ASIC does not like secure, free, guaranteed and a bunch of other words. And they are right, nothing is 100% guaranteed and secure does not mean a 100% return of funds.)

Would you like a hot air, wishful thinking guarantee?

Or perhaps a more grounded set of documents that attach your money to the transaction?

When you look for opportunities, make sure you are not blinded by BS and dig beyond the happy faces and nice cars on Facebook advertising.

Remember this:
There is a massive difference between guarantee and security.

Guarantee is attached to nothing
Security is attached to something

There is only one I look at using…

What will Australia’s headlines be, next month, next year?

If you want to secure your financial future using property, then contact us here  or call now on 1300 66 77 89.

Since 2004, Scotty North has been helping people buy the best properties for their needs at prices that simply speak for themselves.
Scotty has been instrumental in bridging the gap between financial planning and traditional real estate transactions through his property advice model.

Scotty North is a Qualified Property Investment Advisor (QPIA), with accreditation’s in financial planning, mortgage broking and real estate.

By carefully considering his clients’ goals and planning for market changes via demographics and trends, Scotty designs a future proof outcome not only specific to the client’s needs but dynamic in its execution with performance indicators and exit strategies built in.