Broke women are promised financial freedom through buying houses on their credit cards, Maria Evrenos investigates.
“I know what it’s like to work hard, and never get anywhere”, Annie Sweet, 64, says gravely. It's followed by an unanimous sigh from the fifty or so women who have turned up to this free event called “Women in Wealth”. They have gathered in the red-carpeted suite under a glittering chandelier at the Guoman Hotel, London, looking for their golden opportunity.
The workshop is promoted as "a dedicated one-stop-training-programme for the discerning lady seeking to improve and protect her financial status”. It is hosted by Tigrent Learning, which charges for courses in wealth accumulation. But the options are few. The answer for fed-up working chicks is mortar and bricks.
“Who would like to have £20 000 on their account by the end of the year?” All hands shot towards the sky as if just maybe the money was going to be released from the ceiling.
‘Financial Freedom’ from property investment
Mrs Sweet with her blow-dried hair, heels and pearls, is offering a way out of “the rat race”. She turned her financial life around after starting with property investment. From barely breaking even on her previous salaries, she is now demonstrating her new lifestyle by flickering her power point slides from one holiday picture to the next.
Mrs Sweet says: “If you don’t already have money, property is the way to go. It doesn’t matter if you have half a brain, dyscalculia, aren’t a U.K. citizen, have a terrible credit rating and no money”.
This is not what the average mortgage adviser will tell you. Even with government schemes such as help-to-buy, or the more lenient of private mortgage agreements, you are expected to have at least a 5% deposit of the property’s value. And to be granted a loan for the rest you need a fairly large income and good credit history.
As the independent mortgage adviser Adam Parker at Felicity J. Lord Estate Agents tells me: “If you don’t have that, why would anyone trust you to lend you all that money?”
What the Estate Agencies say
We’re sitting in his office on Upper Street in Islington - a street where almost one in three shops is an estate agency. It doesn’t get much more conventional than this; well-groomed men in shirts and ties, answering telephones in an open plan office.
“To actually, in a legitimate way, become a property investor, you have to be a homeowner first, and then for the second property you have to put down a 25 per cent deposit”, Mr Parker clarifies.
Buying properties without any money
But Tigrent Learning is far from the only company offering paid short courses in the real estate business for people without any assets, following on from free introductory evenings.
Fielding Financial Family has four ‘Free Property-Investing Seminars’ coming up this week. You might have seen the full-page ad in the Evening standard. “Maria Davies and her mastermind group of professional property investors will show you the exact money strategies they used to become financially free…”
When I email them, they reassure me. “There are ways that you can buy property without using your own money.”
Borrow money to make money
One way that Tigrent Learning teaches people how to do this is by using Bridging Loans. They tell you that you can find a property that is being sold “below market value” according to your own research, but which needs some decorating and a few renovations. You get a bridging loan to cover for both the purchase and the renovations. And then when you sell the property, you pay back the loans and the fees, and should still be able to make a hefty profit.
But mortgage adviser Mr Parker says that it’s not as easy as that. “There isn’t really anything like “under market value”. Not in London. Maybe in Wigan, or Manchester, but not here.”
And even though property most often rises in value, there is also a risk of the reversed happening. “What if the bubble bursts? You've taken out very high interest loans and you have to pay them back, quickly.”
Credit is cheap
But it’s not too surprising that we hear of this. After a few frugal years following the last world economic crash, it looks like credit is cheap again. And as Tigrent Learning’s DVD says: “Credit cards are essentially unsecured loans, and if you have one in your wallet, you have access to almost instant cash up to your credit limit. If you can get unsecured money from one source, why shouldn’t you be able to get it from another?”
“These are amazing”, says Emma, 35, a Tigrent Learning alumni, waving two handfuls of credit cards in front of the class. “I now call them investment cards. I used to buy shoes with them. Now I use them to buy of refurbish properties. And best thing, they’re available to everyone.”
Work- a bad deal for women
In the midst of all this optimism that property investment can make you rich, regardless of your skills or assets, behind it all are some very gloomy truths presented about the current working climate in the U.K. And as they point out - women are getting the worst deal out of traditional salary work.
They earn on average about 10 per cent less than men and generally end up with a pension as much as £6,500 a year less than men, according to research by Prudential in 2013.
Real wages have been falling consistently since 2010, according to recent reports from the office for national statistics. But earning a passive income such as collecting rent from a property in this heated housing market makes up for the downfall.
David Cameron’s rental income
Ironically, David Cameron could be seen as the perfect example. When he came to office in 2010 he tried to convince the country that “we are all in this together” and announced a pay cut of five per cent and a pay freeze for the next five years.
But when he moved to Downing Street, he started to rent out his home in Notting Hill, earning up to £6,000 a month, according to an article in The Daily Mail. That makes up for the loss of salary.
But whether the property market is open or not to those with very little means, remains an argument between the conventional estate agents and banks, and the workshops offered by private companies.
See you in the Bahamas
Vivian, 32, was one of the women who signed up to Tigrent Learning’s property investment course. She is fed up with the long hours at her job as an accountant, seeing very little profits on her account at the end of each month.
She says that she signed up to give herself a better chance. “I wanted a challenge. Something for me.” And she wants the luxurious lifestyle; those tropical holiday photos.
I tell her that I might see her on the course. She walks off to go catch the tube, but before she turns round and laughs, “I'll see you in the Bahamas!”