Where's the catch? Hawthorn Care Village...

92 Posts

An ad in the Sunday papers caught my eye. It says 12% a year for 10 years...
Investment of £75,000 gives a rental income of £9,000 a year. Take the first 2 years rental as a discount, so initial investment reduces to £57,000. You receive £9,000 a year from years 3 to 10 and can then sell the suite back to the developer for 125% of initial investment, which is £93,750.
They say they are helping to address the dire shortage of dementia care beds, and have formed a joint venture with Lancashire local authority to build Hawthorne Care Village in Burnley to build a dementia care unit, with the council having a Sole User agreement to ensure all suites are fully occupied by local authority funded patients. This joint venture gives private investors the chance to own a suite within the village on a 125 year lease with full legal title, lease it to the care home management company and receive 12% rental income for 10 years, then sell it back to the developer for 125% of initial investment.
The ad says "12% a year for 10 years? Surely that's too good to be true?" It does sound a bit far fetched so I thought I'd ask you. Here's a link:
http://www.eliteinvestorclub.com/portfolio/hawthorn-care-village/
What do you all think?
Investment of £75,000 gives a rental income of £9,000 a year. Take the first 2 years rental as a discount, so initial investment reduces to £57,000. You receive £9,000 a year from years 3 to 10 and can then sell the suite back to the developer for 125% of initial investment, which is £93,750.
They say they are helping to address the dire shortage of dementia care beds, and have formed a joint venture with Lancashire local authority to build Hawthorne Care Village in Burnley to build a dementia care unit, with the council having a Sole User agreement to ensure all suites are fully occupied by local authority funded patients. This joint venture gives private investors the chance to own a suite within the village on a 125 year lease with full legal title, lease it to the care home management company and receive 12% rental income for 10 years, then sell it back to the developer for 125% of initial investment.
The ad says "12% a year for 10 years? Surely that's too good to be true?" It does sound a bit far fetched so I thought I'd ask you. Here's a link:
http://www.eliteinvestorclub.com/portfolio/hawthorn-care-village/
What do you all think?
As a fan of THE NUMBER THREAD, our NUMBER IS £22,000 a year = FREEDOM
Amended 2019 - new NUMBER is approx £27k pa nett (touch wood)
Amended 2021 - new NUMBER is approx £29k pa nett - heading that way...fingers crossed!
Amended 2019 - new NUMBER is approx £27k pa nett (touch wood)
Amended 2021 - new NUMBER is approx £29k pa nett - heading that way...fingers crossed!
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I then thought to get some legal advice on this investment proposition.
Shall watch this forum for comments though. With just being caught up in the credit union going under (EBCU) I look at everything a little more cautiously now.
Rebecca
1 - The 12% rental return is not guaranteed. Do not mistake commercial guarantees for financial services guarantees. The latter is guaranteed. The former is subject to developer still being in business and able to meet its obligations.
2 - Guaranteed sell back to developer for 125% of your initial investment after 10 years - again not guaranteed. It is subject to developer being there.
3 - No mention of charges. (How much do you need to pay the "letting agent", ground rents etc)?
4 - Dont forget refurb costs and maintenance
5 - Yields reflect the risk. Why cant this business raise finance from the banks for less than 12% when the base rate is 0.5%.
- The investments that we show are unregulated and therefore not covered by the Financial Services Compensation Scheme (that covers up to £85,000 in a High Street bank).
- Unregulated investments are not covered by the Financial Ombudsman scheme so you will not have redress there if anything goes wrong
- Because we are not licensed, we are not able to obtain professional indemnity insurance cover so there is no policy you can claim against
Rather you than meAmended 2019 - new NUMBER is approx £27k pa nett (touch wood)
Amended 2021 - new NUMBER is approx £29k pa nett - heading that way...fingers crossed!
Whether it's carbon credits, airport parking, storage units or ones like this you need to be aware that there are no guarantees and there is a high likelihood of losing money with unregulated investments.
If the company decide to disappear after 9 years and 11 months then there is no one to pay your money back and nothing you can do.
Sadly with the new pension freedoms I can see more and more people being scammed by this type of unregulated investment.
None of this necessarily means that it is not genuine, just that a good deal more due diligence is required before considering proceeding, like at least verifying facts with the local authority.
If you're a journalist Melanie, then you need permission to be requesting details such as this this.
See: http://www.moneysavingexpert.com/site/forum-faqs for further information.