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  • FIRST POST
    • pika_doh9
    • By pika_doh9 7th Dec 17, 4:10 AM
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    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 2
    • BananaRepublic
    • By BananaRepublic 7th Dec 17, 11:39 PM
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    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.
    Originally posted by Thrugelmir
    You've completely missed the point. I was referring to the scheme creators not the investors. Sadly the world is full of people who set out to enrich themselves at the expense of others.
    • luckysh0t
    • By luckysh0t 7th Dec 17, 11:53 PM
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    luckysh0t
    I bought one in glasgow just over 2 years ago. Thing is, I asked for the deeds and they never sent them out. Only after I picked up on it this year did they respond saying "they're at the solicitors" and needed some documentation missing. Documentation provided a month ago, no deeds. Now after this announcement obviously I'm after my cash.

    My question is since the deal never actually completed I'm not sure how they can legally hold my money that was for a property they never finished selling me for a further 12 months. What are my options legally here?
    • bowlhead99
    • By bowlhead99 7th Dec 17, 11:57 PM
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    bowlhead99
    You've completely missed the point. I was referring to the scheme creators not the investors.
    Originally posted by BananaRepublic
    Maybe *you* miss his point. With what Thrugelmir has explained to you about human nature and that people are gullible fools who'll invest in anything because their greed overcomes common sense -and that it had always been so - how could you be surprised that such a scheme exists?!

    If it was known that large swathes of the population are gullible fools - which it is - how could you possibly find it shocking that someone would set up such a scheme? Surely if people are generally gullible folks who will invest in anything if the return from it promises that it could be double digits, it would be perfect common sense to establish and advertise such a scheme to collect in the free money from those gullible mug punters.

    Nobody here is genuinely shocked that a scheme has been created that purports to offer riches by actually offers high risk. Such schemes have been running since thousands of years ago, and finessed over centuries.
    • darkidoe
    • By darkidoe 8th Dec 17, 12:20 AM
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    darkidoe
    If you think logically about it, how could a parking space be an investment of any sort? Where's the value in a parking space? The only value is only if there are cars wanting to park in it if not it is just empty space. Any why would anyone want to just own space? It is just not a productive investment imo.

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    • Fatbritabroad
    • By Fatbritabroad 8th Dec 17, 6:47 AM
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    Fatbritabroad
    Maybe *you* miss his point. With what Thrugelmir has explained to you about human nature and that people are gullible fools who'll invest in anything because their greed overcomes common sense -and that it had always been so - how could you be surprised that such a scheme exists?!

    If it was known that large swathes of the population are gullible fools - which it is - how could you possibly find it shocking that someone would set up such a scheme? Surely if people are generally gullible folks who will invest in anything if the return from it promises that it could be double digits, it would be perfect common sense to establish and advertise such a scheme to collect in the free money from those gullible mug punters.

    Nobody here is genuinely shocked that a scheme has been created that purports to offer riches by actually offers high risk. Such schemes have been running since thousands of years ago, and finessed over centuries.
    Originally posted by bowlhead99
    Plus could have got nearly double this return in various p2p websites which ARE regulated
    • bowlhead99
    • By bowlhead99 8th Dec 17, 7:08 AM
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    bowlhead99
    If you think logically about it, how could a parking space be an investment of any sort?
    Originally posted by darkidoe
    Land is finite; it is expensive to create more land, or more space within buildings.

    Land available for use near places where people live, or near travel hubs, is desirable because people want to go to those places and then need to put their car somewhere if they have travelled there by car and do not have a self-driving car that can take itself elsewhere, parkup and refuel, and come back to meet them later at zero cost. It is not much of a stretch of the imagination to suggest that people would be willing to pay money to park in a convenient parking space.

    With most land and buildings being in use for other purposes (residential and commercial) rather than parking, space that can be used for parking is scarce. To make a car-sized space available for parking there is an opportunity cost (of not being able to enjoy any other of the thousand possible uses for the land or building space).

    That opportunity cost ensures that space given over to parking rather than alternative uses will remain scarce, and though there is plenty of 'spare' space on or off the planet in general, if you need to get to Gatwick for a 7am business trip you would not pay very much for a parking spot in the Mojave Desert or on the edge of the Sea of Tranquility ; you would pay more for use of a parking space near Gatwick.

    Where's the value in a parking space?
    The present value of all future net cashflows that people would be willing to pay, to use it for parking ; or for any other purpose years into the future (e.g. to buy the parking space from you outright together with the other surrounding spaces and put up a hotel on the former car park so that they can take all the future cashflows from that venture).

    The only value is only if there are cars wanting to park in it if not it is just empty space.
    If it is empty space marked out on a piece of land and is not being used for its intended monetisable purpose (parking) it is 'just empty space' with some maintenance and marketing costs to try to get customers to park on it for a few hours or days or weeks or months. But it is also empty space that is stopping someone from building a hotel or another runway or piece of infrastructure or some other sort of commerical or residential building within that space. So it has value of what someone would pay to acquire it and convert it over to one of those uses

    Any why would anyone want to just own space? It is just not a productive investment imo.
    Why would anyone want to just own a house. It is just a space that you can eat, sleep, entertain in while keeping warm and dry. Who wants to pay for something like that. I guess buying a house is silly because it is after all just space...

    Some people will not want to pay money for a house because they don't have enough money or don't like the location of the house. But they still need somewhere to live, so they pay money to temporarily occupy the 'space' owned by someone else, perhaps for a long term (tenancy on an apartment) or short term (hotel). What's that - someone would pay money on a short term basis to occupy 'space' for their preferred purpose ? Interesting... By jove! That could be the basis of a business model!

    It seems like 'why would anyone pay to buy space' is an question asked by someone who hasn't considered the economics of supply and demand - the fact that someone may be willing to pay money to temporarily use it, or to permanently acquire it for their own use (as a parking spot or something else).

    Of course, space on some land is worth more or less than others and if demand for parking in a particular location is not very high you may not get a high occupancy rate and if other land exists nearby which is available for parking or could be made available for parking you may see a race to the bottom in terms of the low amount you would be willing to charge per hour to encourage someone to use it. Without doing your own prohibitively expensive research and due diligence into the local market to work out what could be made from a car park in general or from one specific space, you don't really know how much the ownership of a parking space is worth as a fair value.

    I know I would be willing to buy a second designated parking space at my apartment block (less than I would pay for a first one, but certainly a non-zero amount of money for a hundred-year lease) and I could make some guesses at what other people might pay and hopefully make a sensible bid if one became available. For a space on a bit of land 'near Gatwick' that's part of a bigger development with a lot of spaces and only a guesstimated level of traffic... not a clue. I could spend £25k on research and still have conflicting ideas. Which is why the companies marketing them, like OP found, offer things like 'guaranteed' rent for the first x years to try to convince people to sign up for their investment scheme.

    If you are still thinking "why would anyone see 'space' as an investment, if you think about it, it has no value" you are just being deliberately naive. Of course a space has value, it's basic economics. That's not to say the value is anything like "£25k" which the OP decided to pay.

    Here is some text from this week's Deloitte's weekly economics briefing - at this time of year they do a Christmas Quiz:
    7. A parking space in the UK sold for £40,000 this year. Where was it?

    Mayfair – London
    Chelsea – London
    Sandbanks – Poole
    St Ives – Cornwall

    Answer: St Ives. The parking space is within easy walking distance of the beach, harbour and town centre. Parking is at a premium in St Ives, which is a popular location for second homes, and car parks are often full kin summer. There are 970 of the 999 years left on the lease for the parking place.

    £40,000 may sound excessive for a parking space. However, it costs £1/ hour to park a car in St Ives. If you assume that the spot is occupied for 12 hours a day for four months of the year (peak season), this saves £1,440, or an implied annual yield of 3.6% on a £40,000 investment. This doesn’t seem bad in a world of low returns.
    • BananaRepublic
    • By BananaRepublic 8th Dec 17, 7:41 AM
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    • 676 Thanks
    BananaRepublic
    Maybe *you* miss his point. With what Thrugelmir has explained to you about human nature and that people are gullible fools who'll invest in anything because their greed overcomes common sense -and that it had always been so - how could you be surprised that such a scheme exists?!
    Originally posted by bowlhead99
    No he commented on my post, which was about the people who create these schemes. Obviously the world is full of naive people who are easily exploited. I find it hard to understand the mentality of these charlatans.

    If it was known that large swathes of the population are gullible fools - which it is - how could you possibly find it shocking that someone would set up such a scheme? Surely if people are generally gullible folks who will invest in anything if the return from it promises that it could be double digits, it would be perfect common sense to establish and advertise such a scheme to collect in the free money from those gullible mug punters.

    Nobody here is genuinely shocked that a scheme has been created that purports to offer riches by actually offers high risk. Such schemes have been running since thousands of years ago, and finessed over centuries.
    Originally posted by bowlhead99
    Well yes a statement of the bleedin' obvious which you excel at.

    What I find shocking is that such schemes require a group of people with some financial and technical knowledge to actively create a scheme which is in effect fraudulent albeit legal.
    • bowlhead99
    • By bowlhead99 8th Dec 17, 7:56 AM
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    bowlhead99

    Well yes a statement of the bleedin' obvious which you excel at.

    What I find shocking is that such schemes require a group of people with some financial and technical knowledge to actively create a scheme which is in effect fraudulent albeit legal.
    Originally posted by BananaRepublic
    If it's bleedin' obvious that there is a great deal of money out there for the taking, it's bleedin' obvious that some people will be highly motivated to acquire the necessary financial and technical knowledge to get some of it. You can't find that shocking or in any way surprising -it's capitalism.

    You might find it repulsive, abhorrent, disquieting, disgusting, whatever, but Thrug says it has never been any different so nobody should be shocked or taken aback by what they see today. Ponzi's scheme was 98 years ago so by now you should be somewhat desensitised to the idea that someone will be greedy and acquire technical knowledge to harvest the spoils of other greedy people who don't know how to ask the right questions or are taken in by bold advertising claims.
    • Malthusian
    • By Malthusian 8th Dec 17, 9:18 AM
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    Malthusian
    My question is since the deal never actually completed I'm not sure how they can legally hold my money that was for a property they never finished selling me for a further 12 months. What are my options legally here?
    Originally posted by luckysh0t
    1) If you took advice from an FCA-regulated adviser, complain. Assuming you didn't:

    2) Sue

    3) Write it off.

    Bear in mind that suing is expensive and even if you win in court, you won't get any damages if the money is no longer there.
    • jimjames
    • By jimjames 8th Dec 17, 12:09 PM
    • 12,239 Posts
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    jimjames
    Am I alone in finding it shocking that someone would set up such a scheme?
    Originally posted by BananaRepublic
    But potentially the scheme is entirely legal, it's really down to the investor to look at all the loopholes and problems that could arise.

    If I buy a car park and sell off all the spaces individually then I could make a lot of money while passing all the risk to the buyers. There is far more value in those spaces sold individually than as a whole so why wouldn't someone do that if they could.

    I think the ones who market, package and sell them on as pension investments etc are the real fraudsters
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Reaper
    • By Reaper 8th Dec 17, 3:04 PM
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    Reaper
    Before this it was land. They would buy an agricultural field next to a town then tell people it would soon have planning permission for housing. Next they would split it into bits and sell each one off to private investors.

    Planning permission was highly unlikely in the first place and even if granted in the distant future what developer would want to negotiate with hundreds of individual landowners before they could build on it?

    As soon as the sector gets a bad name (anybody remember ostrich farms?) the "in thing" changes but the results are much the same. Only the scheme owner walks away with a profit.

    Think twice before investing in unconventional and unregulated investments.
    • badger09
    • By badger09 8th Dec 17, 3:36 PM
    • 5,587 Posts
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    badger09
    Before this it was land. They would buy an agricultural field next to a town then tell people it would soon have planning permission for housing. Next they would split it into bits and sell each one off to private investors.

    Planning permission was highly unlikely in the first place and even if granted in the distant future what developer would want to negotiate with hundreds of individual landowners before they could build on it?

    As soon as the sector gets a bad name (anybody remember ostrich farms?) the "in thing" changes but the results are much the same. Only the scheme owner walks away with a profit.

    Think twice before investing in unconventional and unregulated investments.
    Originally posted by Reaper
    Then walk away
    I'm a supporter of dunstonh
    • eddddy
    • By eddddy 8th Dec 17, 4:11 PM
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    eddddy
    Just to add a few points to those already made.

    A few years back I scanned through the 105 page legal document pack for an investment like this - mainly for amusement. (Lease agreement, leaseback agreement, maintenance fee agreement etc.)

    It was a shocking set of documents.

    Terms included...
    • A confidentiality clause - you must not disclose the existence of the contract to anybody, or it's contents.
    I assume that's to stop you publicising it when it turns out to be a rip-off, or perhaps even to stop you taking professional advice.
    • You commit to pay maintenance fees of £1000 per year for the next 150 years, with no guarantee of any income, and an unsalable 'investment'
    • Multiple companies are involved - e.g. You pay maintenance to one company, and receive income from another.
    My guess is that is to allow the company that pays you to fold, but your liability to pay maintenance to another company continues.
    • The "Guaranteed Buy Back" only applied if the company had sufficient funds. It was for the company to decide if they had sufficient funds - and they would not disclose how much funds they had, or enter into any discussion on the topic with the investor.
    • mrwowfactor
    • By mrwowfactor 8th Dec 17, 8:39 PM
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    • 2 Thanks
    mrwowfactor
    guarantees are few and far between in investment but if you are called out of the blue about a scheme you are 100% guaranteed to loose cash.
    • darkidoe
    • By darkidoe 11th Dec 17, 12:15 PM
    • 896 Posts
    • 1,022 Thanks
    darkidoe
    Just to add a few points to those already made.

    A few years back I scanned through the 105 page legal document pack for an investment like this - mainly for amusement. (Lease agreement, leaseback agreement, maintenance fee agreement etc.)

    It was a shocking set of documents.

    Terms included...
    • A confidentiality clause - you must not disclose the existence of the contract to anybody, or it's contents.
    I assume that's to stop you publicising it when it turns out to be a rip-off, or perhaps even to stop you taking professional advice.
    • You commit to pay maintenance fees of £1000 per year for the next 150 years, with no guarantee of any income, and an unsalable 'investment'
    • Multiple companies are involved - e.g. You pay maintenance to one company, and receive income from another.
    My guess is that is to allow the company that pays you to fold, but your liability to pay maintenance to another company continues.
    • The "Guaranteed Buy Back" only applied if the company had sufficient funds. It was for the company to decide if they had sufficient funds - and they would not disclose how much funds they had, or enter into any discussion on the topic with the investor.
    Originally posted by eddddy
    This makes me quite angry just reading about this!!!

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