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Cautionary Tales: Overseas Property Investments

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  1. #11

    Join Date
    Nov 2005
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    I remembered in 2007.. we had an European banker coming to Singapore to pitch a private equity project..
    'the eyes/wheels/whatever you call ferry wheels'... then, all these wheels were sold on the business case of the london eye, which broke even after 1 or 2 years.. and everything was so rosy..

    So the guys were like guaranteeing 5% p.a. for the next 10years, and company to redeem the investment at the end of 7 years or bump up the interests.. got one of my banking colleague very excited.. saw it as a '7y principal guaranteed investment product with 5% p.a. return'...

    What is the problem ? well, obviously as a banker my colleague failed to recognize the most basic issue that the entity that were giving these guarantees are themselves not credit worthy.. so whatever guarantee they give is only good until they go bankrupt.
    Same in these cases.. for someone to give a 10y 10% p.a. guarantee when the pound rates are like 1%.. makes naive buyers think its free money but obviously doesn't match the in versus the outs..

    but well, the world need stupid money for the smarter ones to profit.. we just have to live with it


  2. #12

    Join Date
    Mar 2009
    Location
    Hong Kong
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    Scams appeal to the greed in human nature. To make the most money with the least amount of effort.

    Always be sceptical of "guaranteed" income and returns that are too good to be true. Theres a reason the investments with the highest returns are also the riskiest (look for the small print that warns you may lose everything).


  3. #13

    Join Date
    Nov 2016
    Posts
    310

    I have to agree. Always, always dig deeper when you want to buy something overseas. Out of your country where you reside. They will say anything in those initial ads about their properties for sale! To get you to buy! It’s part of that game. Their jobs. To SELL. It’s also better to only buy once that building in that certain country is actually being built. Or even completed already. So you can SEE something. Not just read about it. Also try and get a good lawyer (good luck!) from that certain country so they can tell you about the certain laws they have in that country when it comes to foreigners buying properties there. There might be certain laws they only have. Ask. Investigate first. Also investigate the company building the building. Who are they? What’s their track record? Any legal issues before? If you can find this out. Worth it. Try to cover your bases as much as possible before you give anyone a cent! Do your homework. Then buy or not. How I know all of this is because I have once bought an overseas property. In Asia. So I had to do all of this. Prior. Not after. But before. Then I felt it was ok to buy.

    TaD_LaLa likes this.

  4. #14
    Quote Originally Posted by shri:
    Yes, it is easy to find information IF you've got the preconception that it is a scam.

    Many people tend to think that these advisors / sales people are "professionals" and get rich after they made their investors even richer. Because.. thats the old fashioned way business is supposed to be run.
    I tend to search for the investment, the promotor and the individual and "scam" or "losses" – not very sophisticated but it's surprising (or not) how many hits these searches get.

    Other things to search for are the generic investment and "selling" – getting out is usually a lot harder than getting in.

  5. #15

    Join Date
    Nov 2019
    Posts
    2,161

    Student property plan taught us a £100,000 lesson... on RIP-OFFS: Why you should steer clear of unregulated investment schemes.

    The UK Financial Conduct Authority warns against them saying they are 'not recommended for most people as unregulated collective investment schemes by their nature are risky products'.

    https://www.thisismoney.co.uk/money/...-RIP-OFFS.html


  6. #16

    Join Date
    Oct 2007
    Posts
    1,896
    Quote Originally Posted by shri:
    and being slightly 'leet,
    Please tell your teenage son not to teach you new slang anymore...
    shri, ArrynField and TaD_LaLa like this.

  7. #17

    Join Date
    Nov 2019
    Posts
    2,161

    Although this article is a few years old, the points raised are worth noting in relation to investments in Student Accommodation

    https://www.thisismoney.co.uk/money/...-investor.html

    For Corporates, Pension Funds, BTR entities, Student Accommodation is big business, but for your average investor.....Walk Away or better RUN


    If an agent in Hong Kong tries to sell you Student Accommodation which is a Collective Investment Scheme (CIS), report them to the SFC

    https://www.sfc.hk/web/files/PCIP/FA...e_20160617.pdf


  8. #18

    Join Date
    Oct 2018
    Posts
    487

    I almost signed up to one of the "10% guaranteed for 10 years" student accommodations. I had a long email conversation with one of these agents, trying to figure out how they can make it work. I did the math, looking at the incomes they obtain by renting the rooms, and the costs of staff. It was quite impossible for them to honour the 10% rental yield. One thing I remember is that I counted three cleaning women working full time to clean the building. And he said: "you don't need three women, one woman part-time is enough, and then students are hired to clean it for very little money". Uh? Anyway, 10% for 10 years is like if they give me the building for free, which would indeed be very nice of them. I remember I asked people on this forum, and some good soul said "now banks throw money at you for 1%, why would they pay you 10%? Run away from it". So I did. Which was probably a good idea.

    I also almost signed up for a retirement home investment that also promised a similar return. I actually paid the down payment to reserve a unit, and then I read an article about the company that stated that of the two bosses, one had been in prison for fraud, and the other was a lawyer who had been struck off. Luckily I got the deposit back and only lost bank charges. For that too I also asked for comments here, and someone wrote "if they had such an amazing business plan, why wouldn't banks line up to lend them money?".

    Moral of the story: for all financial transactions check first with geoexpat!


  9. #19

    Join Date
    Feb 2019
    Posts
    3,240

    Commercial REITs are struggling, but with all this build-to-let activity I guess it can't be long until it's possible to properly securitise being a BTL landlord?

    Much less hassle, lower all-in fees, and no chance of a £100k bill for cladding refurbishment!

    (Only question then, will a bank let me take a 75% mortgage out on a £500k REIT portfolio?!)

    ArrynField likes this.