I love property, but sadly the property investment industry is rife with sharks and peddlers, out to separate you from your hard-earned funds.
Most people active in property know of many other property people across the country – and now that social media is a key part of business, it’s very easy to see what other people in the industry are doing – and how they are behaving…
Here are a couple of examples of investment horror stories. Obviously it wouldn’t be fair to name them, but I suspect other property people will know of them.
# A development guru who promised big things with investors’ funds; took lots of finance from people for large projects, and then disappeared into oblivion – absconded from the UK, now suspected to be in south east Asia.
# A property training provider who delighted in showing off an expensive car, all the while having not paid back hundreds of thousands of pounds to investors they owed money to.
# A charismatic and seemingly successful developer – having made a series of choices and mistakes leading to debt and disaster and personal crises, which ultimately led to their downfall and incarceration. (Although I will add that it is good to see them claim they do intend to repay all debts as a moral obligation to their conscience)
So with all these sharks infesting the waters with their seeming greed and lack of morals and ethics, the key question here is, before you invest your money with them: what do you really know about them, and their knowledge, experience and credibility?
And most importantly: their integrity as a person?
Here’s a couple of ways in which you can check out the credibility of someone you’re considering investing with:
- Watch them. And not just for a short while; for months and months, or longer if necessary. As long as it takes for you to feel comfortable that they are who they say they are. Meet them in person if possible, several times.
- Stalk them from afar. I fully expect that anyone considering me will have checked me out in the ways I’m about to suggest. I encourage it. And that’s absolutely fine, because if you’ve nothing to hide, you’ve nothing to worry about.
- Does what they say and do seem real? Can they prove it? It’s all very well them saying they’ve done this, that and the other, but where’s their evidence? They should be able to show you case studies, legal documents, Land Registry certificates and so on. I am happy to showcase any of my projects, and always ask if anyone wants to visit – obviously that’s easier to do during the refurbishment stage when there’s no tenants living there to pester!
- Companies House should show you a few things about them – but remember it doesn’t show you everything, and it’s not always fully up to date. For instance, it shows you the properties I have within my limited company, but it doesn’t show the ones in my personal name. If in doubt, or if something doesn’t tally up with what they’re saying – just ask them!
- Their credit file score and credit report – are they willing to show you it? Be aware of missed payments, unserviced debts built up, county court judgments and so on. It is best when they have lots of ticks every single month, and a nice high score. And if there is some minor blip, can they explain it? For instance, credit card balances might be down to buying a new boiler, not just simply a bad spending habit on shoes and handbags!
- The deal they are offering: does it actually stack up? Can you see exactly how and when your money will be returned? Is it realistic? Openness and honesty is key here. Last year I had to tell an investor that the deal simply couldn’t afford to give them the interest rate that they were looking for – there wouldn’t be enough in it to make it viable. What’s the point in making fake promises you can’t deliver on? No point – so make sure you ask lots of questions, even the awkward ones.
- Recommendations, referrals and testimonials. Now in the work I do, it’s easy to get feedback about my property and tenancy work – but not so easy to get angel investor testimonials. Why? Well put quite simply, it’s not really fair to ask someone who has invested with you to publicly admit to the world that they’ve lent you money – even though you did a good job and returned it in full and on time with the agreed rate!
- We’re still a little shy in the UK about talking about our money, and I fully respect that my investors probably won’t want other people harassing them to lend them funds.
- However… do they have people willing to tell you about their personality and character? The length of time they’ve known that person, and in what capacity? The work they’ve seen from them? Dig dig dig for that information, especially if you’ve not known them very long!
I hope all this helps you, no matter who you choose to make an investment with.
If you don’t know, like and trust someone, you definitely shouldn’t be working with them.
It’s vitally important that you protect your assets at all costs, and you’ve every right to be suspicious and cautious – in fact I strongly encourage you to be!
Because it’s very likely that you’ve worked hard for your funds – so don’t let some wretch disappear with them.
Thanks for reading, hope you found these top tips helpful!