Property Investment Schemes please help

Blockz99

Hi
I need some advice . Someone close to me is thinking about investing in a Property Investment Scheme. He's very intelligent but I worry about this. He hasn't been cold called but I am concerned . He likes the fact that they promise to pay 8-10% return . I don't understand how they can offer this when average private returns on Buy to Let are 5/6/7% - surely they have costs which would negate the extra percentages ? If the company or scheme fails will He (and other investors ) be at the back of the creditors queue ? Whose name are on the deeds of the properties ? If the scheme is legit but goes bust will he lose any title deeds ? If it goes bust who ends up with the properties ?
I am sure there are schemes that are water tight but would appreciate any advice from someone who has invested in these schemes .
Thanks

G_M

Is it governed by the FSCS?

Does she realise investments go down as well as up?

Has she ever heard the expression 'too good to be true'?

There are many perfectly legitimate property investments via the stock market and unit trusts etc. They have risks attached, as do all investments, but are 'mainstream'.

There are also very dubious schemes, unregulated, with no protection, that at best lock you money away, at worst do a Paul Daniels on it: "puff & it's gone"!

Name the scheme and I'm sure people will take a look.

eddddy

Blockz99 wrote: »

She's likes the fact that they promise to pay 8-10% return . I don't understand how they can offer this when average private returns on Buy to let are 5/6/7% - surely they have costs ?

I'll describe some schemes I've seen.

I've seen schemes that offer a guaranteed 10% return for 3 years. In simple terms, they work like this:

- An investment is 'worth', say, £25k.

- The investment company sell it to you for, say, £50k - with a guaranteed 10% return for 3 years i.e. £5k per year for 3 years.

- So after the guaranteed return, you have paid £35k for a £25k investment.

Blockz99 wrote: »

Whose name are on the deeds of the properties ?

I'm tempted to say, if your relative doesn't know the answer to this question, look them in the eye and say very loudly "What the !!!! do you think you're doing?"

However, it's often "a lease and rent back" arrangement...

- The investment co owns the freehold of the property
- Your relative buys a 150 year lease on something (a student pod, a hotel room, a parking space etc)
- Your relative rents it back to the investment co for a monthly rent

Blockz99 wrote: »

If the company or scheme fails will she (and other investors ) be at the back of the creditors queue ?

Your relative is not lending money, so they will not be creditors. They will just own a lease, which could be a worthless piece of paper (whether the company goes bust or not).

In fact, it can be even worse than that...

- You've paid £35k net for the investment
- You end up with a pod, room, space that is unrentable
- So after the guarantee period ends you have zero rent and a property with zero value
- So the investment is also unsaleable
- Your lease says you have to pay £2k per year n service charges for the next 150 years.

.... so your total loss over the period of the lease is £335k

Blockz99 wrote: »

I am sure there are schemes that are water tight...

The ones I've seen are watertight for the investment co, but a massive pile of !!!! for the investor.

kinger101

It has all the hallmarks of the student property scams.

http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/10852153/Student-digs-offer-a-harsh-lesson-for-investors.html

There's usually a reason these schemes are marketed to people who know little about investments.

AnotherJoe

Anything that promises an 8-10% return is a scam for certain because if it was a sure thing why on earth wouldn't the originators take that return themselves?
If your friend can't see this she is shortly going to learn a very harsh lesson.

theGrinch

cold call? Oh snough said!!

googler

Blockz99 wrote: »

Hi
I need some advice . Someone close to me is thinking about investing in a Property Investment Scheme.

Tell them to research what happened to the creditors of

Inside Track
Instant Access Properties

amongst others. Oh, what the heck...

http://www.thisismoney.co.uk/money/mortgageshome/article-1630818/Advice-for-Inside-Track-victims.html

http://www.pad4u.com/blog/beware-inside-track-resurrected/

http://www.iap-instant-access-properties.co.uk/

http://www.thisismoney.co.uk/money/mortgageshome/article-2008281/Buy-let-victims-Inside-Tracks-plan-joint-legal-challenge-mis-sold-homes.html

Google the name of the scheme or company and let us all know what results...

Blockz99

Thank you for your links . They make interesting if somewhat worrying reading.

agrinnall

theGrinch wrote: »

cold call? Oh snough said!!

Read again...

Blockz99 wrote: »

Hi
He hasn't been cold called but I am concerned .