Business proposal to help first time buyer - thoughts?

sonastin

OK, so the deposit is from "personal savings" - that in itself is fraud.

Secondly, how are you planning to protect the investors interests? Yes I know you said a contract but how exactly is that going to guarantee the investor gets his money back? The only asset you appear to have is the property so if you break your contract he is going to have to sue you and the only thing you can pay up with is the equity in the property that he put in. And he can't have a second charge against the property because the mortgage lender would need to know about that and that would tip them off to the earlier fraud.

Say you find an [STRIKE]idiot[/STRIKE] investor to go along with this scheme. Your lender/employer finds out and a) repossesses the property and b) sacks you. What clauses are you planning to put in the contract to protect the investment in those circumstances?!

DVardysShadow

sonastin wrote: »

... Say you find an [STRIKE]idiot[/STRIKE] investor to go along with this scheme. Your lender/employer finds out and a) repossesses the property and b) sacks you. What clauses are you planning to put in the contract to protect the investment in those circumstances?!

I don't think it will be one of those contracts. It'll be a contract with an Investor who likes contracts without clauses. And deals which people don't refuse.

ammago07

Isn't this idea similar to that of the shared equity scheme run by the government? I don't know the ins and outs of that scheme but it sounds similar and does not require anyone to commit fraud.

BitterAndTwisted

I suspect this young person hasn't been working for the lender for very long and that they are not directly involved in the actual mortgage-lending part of the business or they wouldn't be asking this particular daft/risky/fraudulent question.. I also suspect that this scam/plan is motivated by the extremely attractive in-house rates such employees can enjoy.

JQ.

I've got to say it's rather scary that someone who purports to work for a lender would propose such an illegal scheme.

OP - in answer to your question you will not get an investor, full stop, no ifs, no buts, no maybe's. Your proposed scheme is in no way attractive to potential investors. As someone else said, the only person who would invest on this basis is a parent.

ps. I work in Property Investment

Yorkie1

burnsy89 wrote: »

Based on the prices of the houses I've been looking at, a £10k investment would get the investor a 15% share in the property so if 4 years down the line I have £20k equity on the property, the investor will get their capital back and a profit of about £3k.

It's been a while since I did my maths exams but I think if £10K is 15% of the property, you're looking at a purchase price of £65K.

To expect it to appreciate by £20K, i.e. over 30%, in 4 years in a stagnant market, is truly detached from any sense of reality.