Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • pika_doh9
    • By pika_doh9 7th Dec 17, 4:10 AM
    • 8Posts
    • 3Thanks
    pika_doh9
    Car Park Investment - Is it a Scam?
    • #1
    • 7th Dec 17, 4:10 AM
    Car Park Investment - Is it a Scam? 7th Dec 17 at 4:10 AM
    I bought a car park space at Gatwick airport in March 2016 for £25,000 with a company called Park first. They promised a guaranteed 8% rental return for 2 years.

    I just got the paperwork with details about their buy-back scheme.

    Turns out after 2 years they offer to buy the parking space back from you for £21,840. They deduct the £4000 (8% of £25,000 over 2 years) and give you £840 interest (2% of £21,000 over 2 years). This means I did not make a rental income, they have simply given me back my own money and the 2% interest isn’t even on the original investment.

    I then have to pay solicitor fees which, if more than £840, means I lose money from the investment! Especially with tax on the ‘rental return.’

    I was so outraged from the false advertising of 8% rental return! How can they justify giving me back my own money.

    They then tried to convince me to sign up to a lifetime lease where after the initial 2 year period has finished, I have to wait another 3 years to sell it back to them or I have the option to sell it to the open market at any time. I was informed that they may or may not buy it back after 5 years, and if they do, then it may or may not be at the original value of £25,000 - but on the plus side I get to keep all the rental return (so the £4000 + whatever % interest I get over the additional 3 years - assuming someone actually parks in the space).

    If I sell it back on the open market then they take 5% fee and I pay solicitor fees. So assuming they can only sell it back for £25,000 - they get £1250 and I may only get an additional £1000 in the end after all the fees - so no 8% rental yield.

    I also have to mention that if I choose to sell it back, it is a 12 month process and I get no payments or interest in that time.

    So in summary I lose money if I sell it back to them after 2 years. I potentially lose money if I sell it back to them after 5 years (because they might again offer to buy it back and deduct what they have paid so far) and I lose money if they sell it back to the open market (assuming I cannot get it sold for £25,000 minimum).

    I hope I have explained it well - have I been a fool to invest in a parking space? It looks to me like it does not offer any return.
Page 1
    • veryintrigued
    • By veryintrigued 7th Dec 17, 4:32 AM
    • 2,117 Posts
    • 1,398 Thanks
    veryintrigued
    • #2
    • 7th Dec 17, 4:32 AM
    • #2
    • 7th Dec 17, 4:32 AM
    Am afraid it not good news:

    http://forums.moneysavingexpert.com/showthread.php?t=5391864

    http://forums.moneysavingexpert.com/showthread.php?t=5035815
    • greendoor665
    • By greendoor665 7th Dec 17, 6:03 AM
    • 44 Posts
    • 91 Thanks
    greendoor665
    • #3
    • 7th Dec 17, 6:03 AM
    • #3
    • 7th Dec 17, 6:03 AM
    Unfortunately you've been had. These guaranteed return and guaranteed buyback schemes all come with a list of caveats and are basically a scam. It's easy to offer a guaranteed return if you are only paying back someone's capital and you can get out of paying back the full original investment.

    If you can get out with nearly all your money back consider that a good result! Don't continue to throw good money after bad by going for the lifetime lease option. In future consider more conventional investments such as funds.
    • bowlhead99
    • By bowlhead99 7th Dec 17, 7:25 AM
    • 6,987 Posts
    • 12,583 Thanks
    bowlhead99
    • #4
    • 7th Dec 17, 7:25 AM
    • #4
    • 7th Dec 17, 7:25 AM
    I was so outraged from the false advertising of 8% rental return! How can they justify giving me back my own money.
    Originally posted by pika_doh9
    It's not a regulated investment but a private deal between you and them. The terms are poor. Unfortunately you didn't get it crystal clear in writing on how much they would buy it back for. And even if you had, they might not have bought it back because the entity that promised to buy it back might have closed down or gone bust in the two years anyway and not been able to.

    If I sell it back on the open market then they take 5% fee and I pay solicitor fees. So assuming they can only sell it back for £25,000 - they get £1250 and I may only get an additional £1000 in the end after all the fees - so no 8% rental yield.
    Don't assume it can be sold on the 'open market' for as much as £25,000.

    For example, *you* were only willing to pay as much as £25,000 because they offered you a guaranteed 8% (rather than the lower amount that is actually collected from customers) and because they said they'd guarantee to buy it back.

    Now when you sell it on to me, you are presumably not going to guarantee my rent income for a few years, nor guarantee that you'll buy it back if I don't want it after a couple of years. You are not going to offer that as part of the package to me, because it would cost you money and risk to provide that guarantee. So why would I pay you £25,000 for it? I could buy a new one off one of these dodgy companies I find online, with 'guarantees' instead?

    If I am a mug, I'll buy a new one with the 'guarantees' for £25k. If I am not a mug I won't be in the market to buy individual parking spots controlled by someone else at all. Nobody is going to buy your second-hand space for a full £25,000 when you're not giving them a guarantee. If you want the parking proprietor to help you out by giving guarantees to your buyer (so that the buyer will be willing to pay £25,000) then you are not going to net £25k for yourself.

    So basically, don't go dreaming you could sell it on the open market for £25k. You could be waiting a very long time indeed with your money tied up in this asset.

    Also, for example lets say there is pika_doh9 and pika_doh10 and they both have these parking spaces. Pika_doh9 sells his back to the proprietor for £21840. Pika_doh10 decides to try to get his sold on the open market for £25,000. Then a punter comes along looking to invest. Which space does the proprietor sell them?

    The space that Pika_doh9 just sold them for £21840... which would get the proprietor over £3k profit for themselves if sold for £25k?
    Or the space that Pika_doh10 wants to sell for £25k where Pika_doh10 would want all the £25k and the proprietor gets no profit and is left with stock of one parking space of their own. Clearly the proprietor has not motivation to put effort into selling Pika_doh10's space 'on the market' while he still has any unsold spaces of his own which he would also like to sell 'on the market'.

    Also, bear in mind that the proprietor could offer that ex-pika_doh9 space (just repurchased from pika_doh9 for £21840) for £22.5k and make a small quick profit after legal costs. If a company is willing to sell spaces for £22.5k... and you would assume there would be a lot of those spaces being made available, because there will be a lot of people selling back to the company after two years to get the hell out of this deal ASAP... , then pika_doh10 is not going to be able to get his sold at £25k because that's not the going rate in the market. The company can set the going rate at whatever price it takes to get things sold.

    I also have to mention that if I choose to sell it back, it is a 12 month process and I get no payments or interest in that time.
    Yes, it could take 12 months or it could take longer and if you are exiting the arrangement they have no motivation to get people to park on your spot, they would rather have people park on other spots which generate income for them to help support their 'guaranteed rental income' for others.

    So in summary I lose money if I sell it back to them after 2 years.
    Yes but you are losing a set amount of money and you get to get out of it with some money and are no longer at risk of being stuck in this bad investment for years to come. That is the very best thing you can do.

    I potentially lose money if I sell it back to them after 5 years (because they might again offer to buy it back and deduct what they have paid so far)
    You have identified it was a bad deal to have bought this thing and the company have been less than transparent with you so far - it would be ludicrous to think that you should keep it for another 3 years and hope the terms are better. Remember they will have had a lot of people scrambling for the exits having realised that they bought into a terrible deal. So don't assume the company will still be around in three more years or that the going rate will be north of £20k. So, don't hang around. Get out now.
    and I lose money if they sell it back to the open market (assuming I cannot get it sold for £25,000 minimum).
    There is no way you can get it sold for £25,000 minimum when you are not providing a guaranteed income to whomever buys it off you, and the company has no motivation to prioritise your sale over the sale of its own stock, and the market is flooded with all the spaces from all the people getting out after their own 2-year-minimums which they are giving to the company for £21840.

    On the 'market' there will be loads of spaces available at £22k (or at £25k which give the company a nice profit) so there is no way the company will choose to sell yours for £25k for zero profit for themselves.

    I hope I have explained it well - have I been a fool to invest in a parking space?
    Correct
    It looks to me like it does not offer any return.
    It 'offers' a return but doesn't deliver.

    That's why much of the discussion on this website is about investing in genuine regulated investment funds or through regulated independent investment advisers, and the only discussion threads about unregulated investments are packed with people saying Avoid Avoid unless you have millions of pounds to invest and want to take a complete punt with a small proportion of your wealth just for fun.

    Your very best option, if the company is willing to buy it off you now for a fixed price, is to take that fixed price and get out now. They will try to offer you something tempting to stay in the deal for longer so they can make more money off your money. Do not be tempted, because staying in this unregulated private investment could easily cost you £20k more loss when the company collapses and nobody wants to pay more than a few pounds per square foot for your land and it costs you lots of legal fees to assert your rights over the property.

    If you decide to give it 3 more years rather than taking the money and running now, you are taking more of that risk of losing all your money. Likewise if you try to wait a year or more to sell it on the 'open market', not that an open market really exists because it is a niche product controlled by the company who sold you the space and is dominant in the market.

    Remember if you hold on for longer and lose money you are not just losing the money you lost, but the money you could have made by putting the £20k into a bank deposit account or S&S ISA or pension - the 'opportunity cost' as well as the actual loss of your capital on the parking scam investment.

    So, having realised your mistake, get out of it now ASAP.
    • BananaRepublic
    • By BananaRepublic 7th Dec 17, 7:41 AM
    • 924 Posts
    • 665 Thanks
    BananaRepublic
    • #5
    • 7th Dec 17, 7:41 AM
    • #5
    • 7th Dec 17, 7:41 AM
    Unfortunately the investment world is full of scam artists. And some well known banks have been involved in some pretty nasty schemes such as Libor fixing, and deliberately sending companies bust.
    • AnotherJoe
    • By AnotherJoe 7th Dec 17, 8:02 AM
    • 7,671 Posts
    • 8,286 Thanks
    AnotherJoe
    • #6
    • 7th Dec 17, 8:02 AM
    • #6
    • 7th Dec 17, 8:02 AM
    If you can get out with nearly all your money back consider that a good result! Don't continue to throw good money after bad by going for the lifetime lease option. In future consider more conventional investments such as funds.
    Originally posted by greendoor665
    This ^^^^^^^^^^^

    Take the money and consider yourself lucky.
    • cloud_dog
    • By cloud_dog 7th Dec 17, 9:28 AM
    • 3,304 Posts
    • 1,864 Thanks
    cloud_dog
    • #7
    • 7th Dec 17, 9:28 AM
    • #7
    • 7th Dec 17, 9:28 AM
    Agree. If you can get out of this with most of your money then take it. Learn from it.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Aretnap
    • By Aretnap 7th Dec 17, 10:03 AM
    • 2,842 Posts
    • 2,338 Thanks
    Aretnap
    • #8
    • 7th Dec 17, 10:03 AM
    • #8
    • 7th Dec 17, 10:03 AM
    Bowlhead has said most of the things I'd say, only better than I'd have said them, but I'll just reinforce the views of the others. By "investing" in this scheme you have fallen into a giant heffalump trap. You're not the first and you won't be the last, but the harsh truth is that most people who invest in schemes like this lose the vast majority of their money. If you have a way of getting out only having lost a little bit of your money, you should grab it with both hands and count yourself as one of the lucky ones.

    Do not throw good money after bad, do not sign an extended lease, do not hold on in the hope that things will improve - take whatever you can get and walk away before the whole thing falls apart, as is already happenening with the sister company StoreFirst (which sold storage pods rather than parking spaces under much the same terms).
    • Glen Clark
    • By Glen Clark 7th Dec 17, 10:34 AM
    • 3,906 Posts
    • 2,910 Thanks
    Glen Clark
    • #9
    • 7th Dec 17, 10:34 AM
    • #9
    • 7th Dec 17, 10:34 AM
    It really isn't practical to own one space in a car park, or one storage pod in a warehouse, when someone else owns the entry and exit roads, and you depend on them to tell you how many people used it and collect your money.
    Its just a trick to make you feel you are owning a real asset instead of a piece of paper share in the company. But the piece of paper share in the company is actually a lot safer and more practical.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • Malthusian
    • By Malthusian 7th Dec 17, 10:38 AM
    • 3,435 Posts
    • 5,271 Thanks
    Malthusian
    Just in case it wasn't clear, OP, if you can get the rest of your initial stake back (minus the 8% of your own money they already returned to you), minus a few quid in solicitor's fees, you should bite their arm off.

    Most people who invest in schemes promising "guaranteed returns" of 8% per annum are not that lucky.
    • veryintrigued
    • By veryintrigued 7th Dec 17, 11:23 AM
    • 2,117 Posts
    • 1,398 Thanks
    veryintrigued
    Dare i say multi storys of these car parks?

    Genuinely good luck to the OP.
    • jimjames
    • By jimjames 7th Dec 17, 1:15 PM
    • 12,236 Posts
    • 10,771 Thanks
    jimjames
    I hope I have explained it well - have I been a fool to invest in a parking space? It looks to me like it does not offer any return.
    Originally posted by pika_doh9
    If they're offering most of your money back now then grab it as fast as you can. If you search up Store First which was another of their investments then many people have now got worthless assets that they can't sell and some have put their entire pension pots into them.

    This isn't a regulated investment and you are probably lucky that they're still in the sales part of the cycle so won't want any negative publicity about not getting your money back.

    http://damn-lies-and-statistics.blogspot.com/2015/11/store-first-storage-pods-scam-complaints.html
    http://damn-lies-and-statistics.blogspot.co.uk/2015/11/airport-parking-pension-investment-scam.html
    Remember the saying: if it looks too good to be true it almost certainly is.
    • BananaRepublic
    • By BananaRepublic 7th Dec 17, 1:31 PM
    • 924 Posts
    • 665 Thanks
    BananaRepublic
    Am I alone in finding it shocking that someone would set up such a scheme?
    • cloud_dog
    • By cloud_dog 7th Dec 17, 2:35 PM
    • 3,304 Posts
    • 1,864 Thanks
    cloud_dog
    Am I alone in finding it shocking that someone would set up such a scheme?
    Originally posted by BananaRepublic
    I'm not sure there is anything wrong in setting up the scheme, it is just that without a market you have few/zero options when you want to liquidate.

    The only reason stocks/shares work is because they are liquid and there are market makers who 'make' the market.

    (I know you know this stuff but...)

    A colleague of mine was always being called by a organisation and he wanted to invest in carbon credits. The offer / return potential sounded fine but I asked him...who makes the market, on what markets could he sell his investment and of course it was via the company selling him the carbon credit options. A bit off topic but if you have a property and it was valued at £500k but there was only one interested party offering £100k, then guess what...it is only worth £100k.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • Thrugelmir
    • By Thrugelmir 7th Dec 17, 2:42 PM
    • 56,196 Posts
    • 49,572 Thanks
    Thrugelmir
    Am I alone in finding it shocking that someone would set up such a scheme?
    Originally posted by BananaRepublic
    The world has never been any different. Open a pot of jam and people fall over themselves in their haste to invest. That's human nature. Greed overcomes common sense.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • OldMusicGuy
    • By OldMusicGuy 7th Dec 17, 3:50 PM
    • 197 Posts
    • 360 Thanks
    OldMusicGuy
    Am I alone in finding it shocking that someone would set up such a scheme?
    Originally posted by BananaRepublic
    Probably. Have you never heard of Charles Ponzi or Bernie Madoff? At least this one is legal!

    I haven't been on MSE long, but the number of threads on unregulated investment schemes astounds me. Just reading a few of those should open anyone's eyes to what they are letting themselves in for.
    • pika_doh9
    • By pika_doh9 7th Dec 17, 7:08 PM
    • 8 Posts
    • 3 Thanks
    pika_doh9
    Thanks
    Hey guys - thanks so much for all the responses and the advice. I called them today to initiate the buy back - lesson learnt.
    • OldMusicGuy
    • By OldMusicGuy 7th Dec 17, 7:25 PM
    • 197 Posts
    • 360 Thanks
    OldMusicGuy
    Hey guys - thanks so much for all the responses and the advice. I called them today to initiate the buy back - lesson learnt.
    Originally posted by pika_doh9
    Well done, wise move
    • le loup
    • By le loup 7th Dec 17, 9:48 PM
    • 3,656 Posts
    • 3,586 Thanks
    le loup
    Hey guys - thanks so much for all the responses and the advice. I called them today to initiate the buy back - lesson learnt.
    Originally posted by pika_doh9
    I hope for your sake they honour their offer.



    She offered her honour, he honoured her offer and all through the night he was honour and offer. (You have to hay it out loud.)
    • tempus_fugit
    • By tempus_fugit 7th Dec 17, 10:43 PM
    • 327 Posts
    • 310 Thanks
    tempus_fugit
    She offered her honour, he honoured her offer and all through the night he was honour and offer. (You have to hay it out loud.)
    Originally posted by le loup
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

264Posts Today

1,696Users online

Martin's Twitter