Syndicated investment with high yields: too good to be true?

jake_jones99

Hello all,

I just saw today an advert allowing me to buy a share of the freehold in this social housing establishment. The issue is what the agent told me feels too good to be true. Basically, the rent is guaranteed for 5 years without a gap, worth around 7% yearly of the investment value. There is no stamp duty. The property is let on a full repairing and insuring (FRI) lease, meaning I wouldn't need to pay for anything. And even more, the agent said it is covered under a "guaranteed buyback law" where in 3 years I am guaranteed 32% return (including rent) if I want to sell. I know 10% per year is not a huge profit. but given all safety promised by the agent if feels too good to be true. Where is the catch, and how can I find it?
Also, the investment boutique is called poseidon capital management. Have you heard of any scams strange situations with them?

k6chris

My guess is that the "guaranteed 32% return " does not include capital.  If you give me £100 I am happy to guarantee a 32% return.... Also "guaranteed buyback law" sounds iffy.

Not my cup of tea.

masonic

Yes, capital is at risk, doubt the 32% is guaranteed either if things go wrong. No individual or company can be compelled to buy your investment back if they are bankrupt/in administration by then. If it ends up being sold at auction in a hurry, it could fetch a lot less than you are paying. This is all assuming the property actually exists and there are no other misrepresentations.

Have you explored what liability you will have to the renters? Presumably they will have rights under the rental agreement.

HappyHarry

Hmm.

A little digging shows that Poseidon Capital Management was formed 18  months ago, and has not yet filed any accounts at companies house.  It is owned by one director, Hassan Saeed, who has appears to have no previous experience of running a business. Hassan is also the owner of HQH Group, created at a similar time, and similarly has no accounts yet filed with companies house. HQH Group faced being struck off a couple of months ago, presumably due to lack of communication with companies house.

PCM's website states "The investments marketed and managed by Poseidon Capital Management Limited (“PCM”) are not suitable for all investors and are intended for certain categories of investors only which are exclusively classified as Self-Certified Sophisticated Investors and High Net Worth Individuals. Investments in property are not readily accessible and are therefore illiquid. PCM does not provide advice or make personal recommendations. If you are unsure of any investment decision you should seek advice from a professional financial adviser. Please consider all risks, fees and taxation factors before investing. "

By self-certifying as an appropriate investor, you will be giving up certain protections afforded by the FCA.

The returns  you have quoted are unrealistic. It would be interesting to see who is guaranteeing the returns. If it is PCM or HQH then as they appear to have no assets, their guarantee would be worthless.

The guaranteed buyback is only of use if those giving the guarantee are still in business and able to honour the guarantee. I cannot see any information suggesting this would be the case.

In a nutshell, without heavy evidence to prove otherwise, the guarantees are worthless and you will have no protection if it all goes wrong.

Whether this is a highly risky speculative investment or a scam is anyone's guess.

msallen

Do you want to borrow a bargepole?

bostonerimus

I have a bridge I'd like to sell you. This is obviously skinks like the "you-know-what" it is. Why can't people smell this stuff a mile off.

NedS

bostonerimus said:

I have a bridge I'd like to sell you. This is obviously skinks like the "you-know-what" it is. Why can't people smell this stuff a mile off.

My elderly father keeps telling me about these 'bonds' he's going to buy that he's seen advertised on the Internet offering 7-8% yields. He has a small amount of capital and can remember a time when he did earn 5% plus interest and doesn't understand why that is totally unrealistic today. He is exactly the type of person they are targeting and exactly the type of person that would jump in both feet first. For the people running these scams schemes, there is little to no risk for them, only profits, as their 'investors' are taking all the risk. As long as real interest rates remain low and people are willing to 'invest' desperate for better rates of return, such schemes will continue to operate.

jake_jones99

This seemed strange to me too. The agent I talked to was pretty dodgy and said "before you speak to Poseidon let us talk to them to tell them which quotes we gave you". She was speaking fast and throwing in large sums how the company has millions etc.

If I didn't think this was dodgy I wouldn't post this here. I am quite curious about scams and how they actually earn profit. This is only to help to stay away from them in the future - "know your enemy".