Bankrupt wealth creation experts - should the property community care?

[Vanessa Warwick]

Phil,

I've heard on a number of occasions how newbies are driven around the guru's "patch", had all their properties and developments pointed out, and then taking the unsuspecting newbie home to meet their family.

People should be aware of this "emotional" marketing involving family members in business activities and promotion.

If a business transaction is professional, I don't believe you should ever need involve your family or use them to manipulate a situation. Not to mention it could put your family at risk if/when things turn sour.

I personally find these signs very worrying but it would appear that it is often viewed as charming and likeable and it makes them "trust" these people even more. It is a false trust and should be regarded as a good reason to "make your excuses and leave" imho.

[MARY LATHAM]

I can remember sitting watching a TV programme with another well worn landlord in the early days of buy to let lending. At the end of the programme he turned and said "It will all end in tears, they make it sound like you buy a property, throw in a few sticks of furniture and sit back and count your rent" Not only did "guru" oversell being a landlord but the main stream media did too. Arguably it was the media that set people up and planted the seeds that the "guru" harvested. I can't tell you the number of times I have screwed up a Sunday Financial Suppliment having read how easy it is to make money/build a pension fund from residential property investment.

I have been a landlord for 40 years and I have never regretted my decision but I have seen many, many people loose lots of money and a few make losts of money. The difference? The hare and the tortoise.

People who treat residential property like shares need to get in and out at the right time - its a good trick and if anyone knows how please post because I would be happy to learn.

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[Paul Ainsworth Lord]

I agree Phil...
And in the example you refer to... He parked is Aston Martin as close to the door as possible and told everyone about it. This was the car he claimed was worth 50k and 'given' to him by an investor he sourced a portfolio for. Only later did it transpire that he only took over the payments on the car. No mention of this before it all came out in the wash.

I have strong views on these guru types and am always advised to keep quiet. They get my goat!

Paul

(07-08-2012 04:56 PM)phil_stewardson Wrote:  Adam,
I think the main point is that these people were persuaded there was no risk at all. They attended meets like BPM where these chumps parked as close to the front door as they could feasibly get their Aston/Lambo/Ferrari or whatever supercar they could get a deal on from the leasing company, they were endorsed as being superstars and conned people out of tens of thousands......Many people have posted on here about genuine losses they have incurred, thats not heresay.

I have made friends with a PT newbie member in Kent who spent £10k being mentored by a pair of 'guru's' from Kent who were absolutely incompetent and clueless and I hear endless stories about them and others offering 'investment' opportunities and promising inflated returns of 15-20%.

I dont think the debt dies with their defunked co's, these people still owe this money because It was a con all along, but instead they hide for 12mths, then pop back up thinking they have been forgotton, usually with a story about why the failure wasnt their fault.

Phil Stewardson.
Stewardson Developments Ltd.
http://www.stewardson.co.uk
@philstewardson

[Phil Stewardson]

Adam,
Sorry for delayed response. My posy yesterday was rushed as i was on a train but i totally agree with your points and people should do more due diligence but a lot of the time its quite difficult, the flash car and endorsements by prominent property meets answer a lot of these peoples concerns, many of these guru's frighten off unhappy investors with litigation so its often quite difficult to find out what has really gone on. Coupled with that, these people are quite often out of their comfort zone, trying to learn something completely alien so being help by a supposed expert is the answer to their dreams, so they get sucked in.

There was a thread on PT that i will always remember about a mentor who took thousands of a new investor and then even involved his family, getting a relative in at a cost of course to 'geomance' the property and rid it of bad vibes, Sadly I cant find it....dont suppose you can V or N can you??

On the point you made about debts dying with a co bankrupcy, that obviously right in law. I was talking from a personal point, we have lost money with tenants in the past that have bankputed Co's owing us money, I still regard those individual concerned owe us money and in a couple of instances have ben paid. Too many people abuse Ltd Co status.

Phil Stewardson.
Stewardson Developments Ltd.
http://www.stewardson.co.uk
@philstewardson

[manc]

(07-08-2012 12:37 PM)Adam Hosker Wrote:  @John Corey - You are making me blush.

@vanessa you say "grating on his creditors" - technically speaking if his companies are bankrupt/dissolved. Their no longer creditors, he owes no one money. They put a bet on Red, but Black came in.

@Daniel Be weary Challenging him, it may result in counter legal claim, if false allegations are made.

@paul Yes, He can be banned as a Director from Companies House and Trading Standards can step in. If they have not done already then he is Free to conduct business.

@Lynne I agree, knowledge is key.

It should be said, I have no idea who you guys are talking about - so perhaps playing devils advocate.

Their is discussion about warning noobies. I propose this is the job for their legal representatives, perhaps not a Vigilante.

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Related: EU proposes 'right to be forgotten' A new law promising internet users the "right to be forgotten" will be proposed by the European Commission on Wednesday.

Adam
I know a number of people who he looked upon as friends. He asked his friends to ‘help him out’ and by lending him money. One couple lent him up to £90k. He gave personal Guarantees by handing out CH1 forms, which could be secured against his residential home. We have since learnt he handed the CH1 forms out like confetti above and beyond the value of his home.

The days before he want bankrupt his former PA was phoning round asking people for the full debt he owed them and for their full name and address where he could send the full payment to. We have since learnt he needed this information to compile his full debts to be added to his bankruptcy.

@ Adam - Should these former friends right off these debts now he has been released out of bankruptcy?

As stated previously he has recently sent an email to the people he took money off from his facebook account. On his facebook account he states he is ‘enjoying the journey’. His Journey is ‘spending the money he took off his friends’.

Some of his former friends have to sell their homes whilst some mysterious benefactor is paying his children’s private school fees! The question I would ask is; where did this mysterious benefactor get the funds to pay for an other man children
private education? I understand the fees are £15,000 per child per year.

He will be back in some form on a forum somewhere and he will strike again. The best the community can do is monitor his activity. If he is found to be asking people for money to invest or for a loan they should be given the facts of his past. At this point they can decide if they want to throw money away.

[Vanessa Warwick]

@Paul A.L.

Out of curiosity, who advises you to keep quiet and why?

@Phil

You are referring to the Mentoring from Hell - a true & disturbing story thread.

It is a true and disturbing story that the same company alluded to in this thread is now seeking loans from newbies offering them a return of 15%. Only yesterday, I received email correspondence from someone who was on the verge of lending them £100K!

If this thread even stops one newbie from handing over huge amounts of unsecured cash, then it has got to be a positive thing.

[Richard Bowser]

Have only recently been made aware of this thread - so where do I start? This thread and two others are also linked and referred to on this forum; both are currently active and all have a common theme of warning about investors being exposed to the risks of self styled property experts/gurus and mentors.

As some of you will know - but many reading this post may not - as the editor of the magazine 'Property Investor News', I have regularly been speaking out both in print, online and at various events for over ten years now about some of the shadier practices in property investment. It is of course an entrepreneurial industry and largely unregulated, so the scope for shady dealing and rip off merchants is substantial.

Answering the title of this thread firstly: Yes this community and the wider property 'industry' should most certainly care and those who have taken the time to respond here, whatever their reasoning, are at least standing up to be counted.

There will also be some people who have read and will read this thread and the others on this topic but who will choose not to respond for their own reasons. Quite a few people are also very aware of at least one property mentor who is currently engaged in misappropriation of monies given by investors for property portfolio acquisitions on which the contracts have not been delivered!

So should someone who declares bankruptcy be allowed a second chance? In my opinion yes, as it may not all have been their fault. Circumstances outside their control could have conspired against them, perhaps compounded by over-trading etc and/or poor business acumen.

Attempting to make a comeback in the same business sector that they had previously caused serious misery and losses to their many creditors? That would seem illogical to most people if widespread publicity of the bankrupt’s failure had been widely publicized, however an oversized ego combined with being completely ‘in denial’ may result in a new path being taken which could cause further losses to investors if the individual concerned has not learned or grasped his or her lessons as to why their business failed.

I am aware of two previously bankrupt individuals whose actions are being closely scrutinized by various authorities, as well as by company creditors who are understandably very angry as to how someone has been able to continue to enjoy a lifestyle that many people would envy while some creditors lost their life savings.

[John Corey]

Richard and I are on the same page when it comes to the general subject.

That said, the following is a slight spin on the idea that a bankrupt in a sector would have a hard time restarting the same sector.

At some level the following is an American viewpoint. Or it is just a logical viewpoint if you are willing to do serious due diligence.

A business owner who restarts in the same sector has the benefit of hindsight. They made a mistake and they may have learned from it. While we could say that a bankruptcy might happen for reasons outside of your control, it could be said the business was just not stress tested enough. While no one expects that there will never be a business failure, many times a great business is the one that can weather storms. They plan for problems and they react quickly enough to stop the damage when something happens.

In Silicon Valley there is the idea that when you have been through a failure you will be hardened and otherwise more seasoned. You will react quicker when stuff happens in the next venture. You will pul the plug and scale back quicker. You will cut your losses rather than continue to hope that things will get better.

So, it might be a good sign if someone has failed in a sector and they stage a come back in the same sector. Did they learn from the mistakes and therefore are a better risk? Or are they still drinking the Kool Aid and prone to repeating the same failure?

[Vanessa Warwick]

Richard,

I know how busy you are so thank you very much for coming here and sharing your thoughts.

Are you willing to speak to people off the record if they want to run a mentoring programme or portfolio building programme past you?

John,

Thanks for your view.

I think we have to consider "intent" behind bankruptcy as well. Was it used to ditch a load of debt, squirrel away a load of cash, and then re-start one year later with a fresh start? I think that is what happened with the particular person we are referring to at the beginning of this thread. He knew he was going down and was taking money off people hours before he made the announcement. Unfortunately, his many creditors do not have the luxury of fresh starts, going on forums and advising people how to create wealth, and talking about how he is succeeding in creating his dreams and the wonderful lifstyle he's been able to provide for his family. That just seems so wrong to me and I will not sit by and not draw attention to it.

[MARY LATHAM]

There is an excellent example of the media "selling the dream" in the Sunday Times Money this week. The headline

POCKET A 9% RETURN FROM STUDENT LETS.

There is no mention in this article of the 10% reduction in applications from British youngsters this year and the fact that it is overseas students who are taking up the slack. Many overseas students will live in univeristy or purpose bullt student accommodation throughout their time at university and there has been a lot of investment in purpose built blocks around most of the popular universities, which means that the PRS may be struggling to let our properties in future. The Times also fail to mention the number of local authorities who are restricting the increase in student accommodation from the PRS with the use of Article 4 Directions and Selective licensing to control the "studentification" of popular areas. Even where local authorties grant a licence a landlord can pay as much as £2K for that licence and this reduces the return before the landlord begins to meet the requirements of the licence which can run into many thousands of pounds.

Landlords are reporting an increase in rent arrears from students this year and this too will have an impact on the return.

Student lets have been a good investment up to now but I think that we will see a big change in the next few years and I dread to think what will happen to those who have bought properties, at a premium if they are in the right area, and spent a lot of money on them only to find they cannot let them. If students don't rent properties in student areas there are very few other people who want to live there and even less who will pay the rents that students pay.


With or without Guru no one should invest in a market before doing the homework.

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