Is this a good investment?

Question

I have been offered an opportunity and I'm interested in your thoughts.

I invest £75,000, For this the company sources 4 buy to let properties, they carry our any refurbishment work, they install a tenant and they collect the rent.They also manage all the maintenance and liaise with the service providers to change the accounts. All I have to do is buy each of the 4 properties using a mortgage and the difference between what I can borrow on mortgage and what the property values for is deducted from the £75k investment. They arrange the mortgage broker, the insurance agent and the solicitors if i want them to. They guarantee the rent to be at least the mortgage payments and insurance costs.

When my property has increased in value they help me refinance to release the equity or sell if i want to take out my profit.

I know the price of property is low and could still go down but over the next 5 years it will rise significantly again.

What do you think?

Answer 1

good!

Answer 2

I think you have a habit of walking too near the cliff edge in very thick fog on a very dark night.  Whoops. There goes another.

Answer 3

OK, how do they make their profit and what percentage is it?

Why don't you just get a mortgage on a property or two, employ a letting agent, as someone elese said, cutting out a lot of the middleman and thereby saving on the cost. These people seem to be in a win/win situation using your money/credit. If they can't make money on the actual deal they will stuff you somewhere else (like maintenance or service\charge) Don't do it unless you thoroughly understand the risk/reward.

Answer 4

Its ok but you can do this by your self with proper timing and preperation especially if you have cash assets. Find two houses buy them with credit (under valued homes ) like they all are now and 75K cash at hand you could pay the mortgage your self for a year and already make profits, You may want a realator who will work for a couple of lunches  and commissions. lol really. Use you credit.

Answer 5

Why does this company need you??

If this is such a great idea then why cant they borrow the money somewhere else and keep all the profit.

Guess no-one else will give them the credit.

I WONDER WHY.

Answer 6

I would be cautious, you should be able to do this without working with this type of firm. They have to be making decent margins themselves

Answer 7

It sounds like a total scam to me mate.  Be very very careful.  A lot of risk for not too much reward.

Edit:  I've just reread all your postings and I'm fairly sure you own or run the company that's trying to sell this to some poor sap - you haven't been offered the opportunity - you're trying get someone else to part with their hard earned cash.

Let me know if Donald Trump, Ronald McDonald and Mr Cadbury want to invest. If so I might just be tempted.

Answer 8

It sounds ok.  It doesn't sound wonderfully profitable at this moment and it may well become so.  The only advice is don't use the middle man.  You can do this yourself.  It would take so much time and effort but I suggest more profitable.

Answer 9

This might sound like a good idea, but keep in mind that with all the issues that have come up in real estate, scammers are coming out of the wood work.

So let me get this straight.

You are putting up your credit rating, and an initial investment.  For a company to follow through with the build out, rent collection and everything else.

If anything goes wrong on the build out, you are listed on the note and title for each property.  So if the build out doesn't goto plan, and there are issues with permits and violations, you are RESPONSIBLE.

There is no risk assumed by the said company that is going to be handling everyting else.

Not only that, but they would receive compensation from the mortgage broker, insurance agent and other companies involved.  In addition, there are no guarantees for the rent.  If you don't get it rented out, your dead in the water.  Also, if the construction falls behind, you again are dead in the water.

In addition, there are no guarantees that the property will appreciate.  Look at all the other markets.  Especially California here in the United States.  People owe mortgages of $500,000 for properties that are now only worth $250,000.

Sounds like you have no leverage, which means that they hold all the cards.

My brother in law entered into the same type of investment opportunity about 6 years ago.  Long story short.  The companies owner is in prison now, and my brother in law can't even finance a piece of bubble gum.

Rule of thumb, be greedy when others are being fearful, and be fearful when others are being greedy.  It sounds like this company is being greedy, so in turn what should you do?

I wouldn't do it even if I had a million in the bank.