The Dirty Truth About Guarantees (and What It Means for Financing Investment Property)

Guarantees sound reassuring until you realise you’re the one paying for them. Flashy promises are often nothing more than marketing smoke and mirrors. For anyone financing an investment property, what you’re really buying matters far more than a shiny sales pitch. Here’s why so-called ‘guarantees’ could be costing you more than you think.

The Dirty Little Secret of Real Estate Guarantees

Most investors don’t realise that many ‘guaranteed return’ offers are baked into the purchase price. As Goro explains, agents or developers often charge more or split fees to fund these guarantees. The investor walks away thinking they’ve secured a sure thing, when in reality, they’ve likely bought an overvalued property.

This has real consequences. Overpaying upfront can impact your loan-to-value ratio, limit your borrowing power, and make it harder to refinance later. In short, you’re not just paying for a property, you’re funding a marketing ploy disguised as a safety net.

Why ‘Guaranteed Returns’ Don’t Help You Get Ahead

Here’s the brutal truth: if a property performs poorly, no guarantee will save your cash flow. Banks don’t care about marketing claims; they care about numbers. When rental income doesn’t stack up, it directly affects your ability to repay your loan and build equity.

Many investors find themselves locked into deals where the rent is artificially inflated, only to face shortfalls once the ‘guarantee”

‘ period ends. Meanwhile, capital growth stalls because the purchase price was higher than the property’s true market value. This is a risky position for anyone using finance to grow their portfolio.

The Real Guarantee: Long-Term Sustainability

At Ethical Property Investments, we focus on long-term results, not gimmicks. The real guarantee is a sustainable investment backed by strong fundamentals, solid rental demand, infrastructure growth, and realistic pricing.

If you’re borrowing to invest, your repayments must be underpinned by reliable income, not short-term fluff. That means doing the homework: understanding the local market, assessing tenant demand, and checking that your numbers work with or without incentives.

Financing Investment Property the Smart Way

Smart investors know that how you structure your finances is just as important as what you buy. That means understanding your loan options, whether it’s interest-only, offset accounts, or avoiding risky cross-collateralisation setups.

More importantly, structure your deals for sustainability. Ask: What happens when interest rates rise? Can I refinance down the track? Will the rent hold up without a guarantee?

Savvy investors ignore the sales hype and dig deeper. They want properties that hold their own without needing a marketing prop to stand up.

The Guarantee That Matters

Financing investment property requires more than optimism; it requires clarity. Don’t get caught paying extra for someone else’s marketing strategy. Instead, invest in real assets backed by data, demand, and long-term growth potential.

The best ‘guarantee’ is a property that performs on its own merit. When you strip away the fluff, what you want is something that makes financial sense today, tomorrow, and ten years from now.