OUR 14 YEARS IN ‘INVESTING PRISON’
by Ceridwen Dumergue
Article written and provided by Neil Jenman from Jenman.com.au . To see the original source of this article please click here. https://jenman.com.au/housewife-warns-families/. Neil Jenman is Australia’s trusted consumer crusader. He can support you, all the way, from choosing an agent who will get you the highest price guaranteed to when your removalist comes! You get an unprecedented level of total support. All for free. To find out more visit jenman.com.au
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Two factors inspire me to share our story. A recent article Neil Jenman published entitled ‘The Worst Type of Real Estate’ and a recent enquiry to Neil from a prospective investor who was confused about the best way to invest in real estate. This investor reminded me of me – 14 years ago. I now realise there are tens of thousands of confused investors – and many of them get badly hurt. Just like I did. And many much worse than me.
My husband and I made the mistake of buying the worst type of real estate, putting us into a financial prison cell. We now want to show other naïve investors how it can be easy to make terrible mistakes. The ‘it won’t happen to me’ or ‘surely this company is not like that’ attitude is so tempting. They seem genuine and nice. This is all part of their lure into their lair.
I am not a property expert. I am a wife and mum of two trying to make my way in the world like so many. We met Neil Jenman through using the Jenman Support service when selling two of our investment properties. If only we had met him 14 years ago.
That was when my husband and I started our journey into investing in property. We figured property would be a safe way to secure our future. In doing our research, we discovered many investing ‘experts’. They all claim to have schemes and strategies and sets of rules to follow to maximise your return. We got bogged down with all the details and statistics of the best type of investment and areas to buy etc. It was difficult to know what to read or whom to trust. Their ideas were inconsistent between the ‘experts’. We just wanted a checklist to help us do the right things. No-one could help unless we signed up to a course for a massive fee.
And then we came across what seemed a wonderful company who presented it all so well at a free seminar. They seemed trustworthy and even spoke of their contributions to charities.
They demonstrated the way to build your portfolio very quickly, by piggybacking off one property to buy another. The term ‘duplication’ springs to mind. They encourage negative gearing as a great tax incentive and to achieve two goals – tax deductions and accumulating properties quickly. Even as far as getting two loans for each property so you are not out of pocket while you build the house and land package.
It all seemed exciting and plausible.
What was even better, they did everything for us, and offered ongoing support and a safety net.
It all seemed so easy. And, with their help it was easy – to get in. Not to get out.
We agreed to buy properties using the strategy they presented to us. We ended up buying four of their properties in 8 years and maximised our debt in doing so. The idea was that a property would double in value in 10 years and when we sell one, it will pay off the debt of another.
This did not work. Not even close to what they promised.
The cost of holding these properties was reasonably easy at the start. But when children came along, our life changed. My income ceased when I chose to be a stay-at-home mum. When the children got older, the school fees put extra pressure on us. Sure, negative gearing may help you pay less tax, but you must spend money to qualify for this. It’s like trying to make the most of a bargain by buying in bulk. You still must have the money, to save the money. It all got too much. We were sinking. We were going backwards, not forwards.
I was constantly saying to the children “I’m sorry darling we can’t afford to go to the movies / swimming pool / cafe” etc. I found myself getting on to my computer daily to check bank balances, updating spreadsheets to keep track of things, making sure the savings plans were working, shuffling the money at the end of the month for loan repayments before the rent came in, then paying back our savings on pay day. Making sure I didn’t forget anything and accidentally default on a loan repayment, there were eight loans! If my husband didn’t receive a bonus from work at times, we could not have stayed afloat.
We could not buy clothes from our favourite stores (opting for $10 bargains), we were grateful for the hand-me-downs from cousins. We could not even justify buying a cup of coffee. On the rare occasion we went to a restaurant, my heart would sink at the prices on the menu. I would think how this one meal could buy three days of groceries. Our lifestyle was robbed from us.
And then came the stresses from dodgy property managers and the tenants these properties attract that don’t look after the place. I lost count of the number of insurance claims we made. I wanted to be a happy mum raising happy children. Managing our ‘wealth creation’ was a disheartening occupation with no rewards. Snapping at the kids after financial blows. We had far too much debt – something had to change and fast.
So, we looked at selling and got a horrible shock. Ten years in and the properties in the area were selling for less than what we owed the banks. We had to hold until they improved in value, otherwise we would lose everything.
You see, these property experts don’t tell you that the houses they sell you are at hugely-inflated prices. I suppose that’s how they make their huge profits – out of naïve people like us. You don’t find out their true value until years later when you try to sell.
By then it is far too late. It was like we were in a financial prison.
The ‘experts’ told us to call the bank and get lower interest rates. Refinance. They said the market is going to boom. Well, we did manage to get the bank to lower our interest rates and refinance from principal and interest for one property (which was so stressful). This helped us survive another four years.
But enough was enough.
Now, we can’t even refinance as the rules have changed and we don’t meet serviceability criteria. Property prices improved a little, it was time to sell – but we must get the best price.
We found Jenman Support and, thanks to them finding the best agents, we have now sold two of our properties with reasonable results. Better than we hoped. All thanks to Neil Jenman not the ‘experts’ who locked us into this financial prison.
But get this: Because one of our properties was secured against our own home, our LVR increased. To keep it under 80%, we had to inject an extra $35,000 into our home loan. Just to sell a property. If not, the bank was going to restructure our loans. We knew we wouldn’t get across that line and what then? I shudder to think.
Luckily, I had purchased some shares three years earlier which were doing well. So, we sold them. Yet again, a narrow escape.
A similar circumstance occurred selling the next property. We had to get valuations done on the other properties and if they came back low, we had to find money to inject into loans. It was hair-raising, we had no shares to fall back on. We were lucky, the valuations were okay.
Also, we managed to secure a much higher price than expected thanks to Neil Jenman’s tenacity and supreme negotiation skills, advising our agent what to do. We were able to pay off a lot of debt and kept some aside.
We are now breathing a lot easier in life. It is not perfect, but we have visited a café again, and although that thrifty mentality was still present through habit, I shook it off and enjoyed the experience. It brought back memories of when my husband and I first got together.
But it seems we are the lucky ones.
Neil Jenman told us about people much worse than us. Some lose their family home. This could easily have been us.
I now realise just how foolish we were. There is a lot of mis-information in the real estate world, packaged up as sensible and sound. Self-titled experts make investing sound complicated and confusing. This appeals to inexperienced investors who think investing must be complicated. They don’t trust what they should trust – simplicity
You must know this: these experts make investing confusing. They want you to give up in exasperation and trust them to use their services. Then, when they lure you in and you buy property through them, they make a packet of money. But you lose ten or more years of your life waiting for properties to increase in value to justify selling them to reduce debt. The properties these experts sell or recommend are usually the worst properties to buy. Neil describes the type we purchased as “cookie-cutter properties”. You do not want one of these. They never improve much in value. I could feel the anguish in Neil’s voice when breaking the news to us about one of our properties and how it had “no redeeming features”. It was as about as bad as it gets.
We plan to sell the other two properties and start our investment journey from scratch, the right way. We will never do anything in real estate again without checking first with Jenman Support. If that’s the only rule we follow, my husband and I know we will be safe. When it comes to Neil Jenman, my husband has said many times, “I love that man.”
It is hard to believe we have experienced both ends of the real estate world – the experts who nearly wiped us out and then the people who literally saved us – Neil Jenman and his son, Alec.
Our decision to trust ‘experts’ has cost us 14 years of prime wealth building years. It put us in financial prison. We nearly went bankrupt. Something I do not wish to happen to anyone.
We now realise the best properties are sold through real estate agents – average houses in established suburbs, not house-and-land packages built for the ‘sucker-market’. Something you could live in yourself that presents well. Possibly even local so you can check it easily and keep an eye on the property managers and the local market.
It does not have to be complicated. Remember, ‘experts’ deliberately make it complicated to pull you in. They just want your money. They call themselves “wealth builders”. But they are the main ones building wealth – by making people like us poorer. It makes me shake with anger at how slick they were and how we were enticed by their offer of wanting to “help us” just like they boasted of helping charities.
How gullible we were back then. But not now, never again.
My husband and I, our relatives, and friends, none of us will make a move in real estate in future without contacting the only people we have found who genuinely do care about us – Neil Jenman and his son Alec Jenman and their team of supporters. Contact Jenman Support before you buy, and they will give you their honest opinion of the property. And make sure you get their support when you sell. Their skill at finding and supporting the right agents has been the only good news in this sorry saga. And they never charged us a cent. It seems so obvious looking back, but if people genuinely want to help you, they do not charge you.
All is 20/20 in hindsight and 2020 was an awakening year for us. We have learnt a lot throughout this process.
I hope our story will prevent other trusting people from making the same mistakes we did.
Thank you, Neil and Alec Jenman, for helping us and genuinely caring for our wellbeing, as you so clearly do for every person like us. Your skills at helping us sell a not-so-impressive property in a hot spot of Melbourne in the middle of a lock down for $28,000 more than local agents estimated, impressed us so much.
Your huge effort on our behalf and your incredible kindness means you have our loyalty for life.
Thank you for showing us the way. I only wish I had contacted you years ago. As all consumers should do.