- One in four TikTok real-estate investing videos were “misleading,” Online Mortgage Advisor said.
- Influencers pushed back, saying they are bringing critical knowledge to the masses.
- One financial advisor said the videos are best viewed as “entertainment.”
Pete Mugleston, a managing director at Online Mortgage Advisor, said he has started to see clients with starry-eyed notions of what they could afford and how rich they’d become by investing in real estate.
They were “unrealistic inquiries,” he told Insider.
The company, which matches prospective homebuyers with mortgage brokers and claims to have helped over 120,000 customers, wondered if TikTok might be the culprit, where hashtags such as #property and #realestateinvesting rack up over 1 billion views from users all over the world.
So Mugleston and others reviewed popular advice available to the average TikTok user, looking at 25 creators with the biggest followings under the #realestateinvesting tag, and viewing their 25 most recent videos.
In results released earlier this month, the company — which has a 4.5 out of 5-star rating on the consumer-review site TrustPilot — found that 25% of the over 600 videos advisors reviewed were “misleading.”
Errors of omission were common. The videos had no disclaimers about the riskier sides of real estate or cautionary tales of investors suffering losses, according to the study. Price growth is not guaranteed, houses can require expensive repairs, and interest rates can change on a dime. Reducing an investment decision to guaranteed riches is irresponsible, argued Mugleston.
What’s more, Online Mortgage Advisor said that creators should acknowledge the limitations of their expertise and hedge their advice. Unsurprisingly, Mugleston also suggested talking to a traditional mortgage broker.
Insider approached three of the creators that Online Mortgage Advisor called out. They pushed back against the firm’s characterization, saying they are making the real-estate industry more accessible and are helping people on the path to financial freedom.
One video in the study, posted by Austin Rutherford (@austinrutherfordo), lays out a plan on how to “live for free” while renting out bedrooms in a $300,000 property while living there, a practice known as house hacking.
Online Mortgage Advisor flagged Rutherford’s post for its lack of disclaimers and oversimplification of the process. Similar videos on TikTok could give casual viewers the wrong impression, said Mugleston.
“The bite-sized nature of this content struggles to convey complex details about the housing market,” he said.
Rutherford was surprised his content was the subject of criticism.
“You only have so much time” on a TikTok video, he said, and even the casual viewer can grasp that he’s talking in broad strokes. “It’s not a statement of, ‘Do this,’ it’s, ‘Hey, this is an option,'” he added.
Online Mortgage Advisor also found that nearly 65% of the creators it analyzed in the study weren’t “transparent” about their qualifications for doling out advice. Spelling out credentials is important because influencer opinions can be “easily misinterpreted by younger, financially inexperienced audiences,” said Mugleston.
Creators believe they are helping others
Hayato Hori (@hayantoo), another influencer Online Mortgage Advisor studied, wasn’t shocked by the results but still believes in the value of his content.
Hori, a 35-year-old investor based in California, owns five properties across the country and runs RocketOffr, a company that finds off-market listings for investors. It all began when he bought his first property, a $70,000 home in Memphis, sight unseen, in 2019. He wants to help others take that bold first step.
“I’m just a normal kid who was able to buy real estate and found out that it’s a really good path. I just wanted to share that with everyone,” he told Insider.
Hori acknowledges that on TikTok “anyone can say anything,” and he’s seen plenty of videos that he’d consider suspect in their intent. Because of that, he said Online Mortgage Advisor is warranted in saying that some content could lead viewers astray.
“I get where their concerns are,” he told Insider.
But creator Antonio Cuccinello (@investarters) says the disclaimers and risk analysis demanded by Online Mortgage Advisor aren’t practical for every video, or even some books. Videos seem to only perform well if they’re “under a minute,” said Cuccinello, who — like Rutherford — argued it’d be impossible to pack everything you need to know into one sound bite.
Instead, he sees his content as a stepping stone for the casual viewer.
“The dream gets them in,” he said. “Then they’ll start to get the full picture.”
A caricature of the industry
Eben Burr, a financial planner at the Toews Corporation, said TikTok real-estate-investing videos are best viewed as “entertainment.” Viewers should see influencers as selling their brands, not acting as personal advisors, he said.
“Speaking in such generalities, it’s almost like a caricature of what that industry is,” he told Insider.
Burr noted that many of these creators most likely started investing during the past 10 years when rising prices floated all boats. He worries that “people out there looking for a dream” might be too late, and that those people might be the least able to sustain a financial hit on damaged properties or properties that they’re not able to fix. Worse, an overly risky investment could lead to bankruptcy, he said.
Looking at the bigger picture, Burr noted that people whipped into a state of excitement through social media are more likely to jump into a real-estate venture without understanding the full breadth of responsibilities.
“Nobody mentions time on here, they only mention dollars,” he said of TikTok. “And that to me is the biggest thing you’re going to spend.”