(22-08-2012 04:31 AM)Jonathan Clarke Wrote:  The presenter in the video worries me. To market yourself as ` Mastermind University` then give a stuttering presentation stating openly that the structure you are promoting may not be legal defies belief. He gives me absolutely no confidence . Surely surely you would check this out first before you made a video. In a way though you have to have a grudging admiration for him for being so honest about the potential illegality of his structure. Perhaps its a double bluff and a cute marketing ploy

It is - he's going to go on and tell us about the LEGAL forms of NMD that he and his mates are using. I assume he's referring to strategies like rent-to-rent, lease options and exchange with delayed completion. And of course it will attract interest in his courses/mentoring services. (I actually met Hanif a couple of days ago. He's a business partner of Shimon Rudich and his office is just round the corner from me.)

As for legality, I've heard other investors describe this approach as something they're doing (or at least have been taught on their mastermind programme) but it sounded dodgy to me. If you disclosed to the lender that the vendor was paying you £20K, would the lender be happy to lend on a £100K purchase price?

I can categorically say that no (buy to let) lender would agree to this strategy. It is without doubt non disclosure and the person wholly responsible is the applicant.

I know people are doing it as I get calls regularly asking me if its fraud or not; despite my answers people still carry on. Amazes me people either don't care or are willing to spend the next 25 years wondering if that letter will arrive!

Madness!

Lisa

Thanks for clarifying that Lisa.

If this is just a marketing strategy to collect data, then it is a hugely irresponsible one imho ... on several levels.

Vanessa,

Irresponsible? I am not sure that is accurate.

1. He says he thinks it might be illegal. He suggested people consult with their own advisors before taking action.
2. He explains (poorly with arrows set up wrong) how it works. That way people know what is being discussed. Many newer investors will want to know the mechanics so they can spot the situation if it is presented to them.
3. He suggests that he has alternatives that he (mildly) feels are better.

I would not call the video polished. I suspect the headline will grab attention. It triggered a discussion here. Traffic and people asking for more information would be the measure of success. It is likely a successful marketing campaign.

For someone to be irresponsible I would expect them to have crossed a line in terms of their responsibilities. As an educational video it did get people talking and debating the merits and there are warnings that the situation being discussed is likely illegal.

BTW - There is actually nothing illegal about the set up if the lender is not concerned about the cash back. At one time lenders did not care about such things. The only thing that could be illegal is to misrepresented the facts for financial gain. In other words, there is no crime unless the lender asks the right questions and the applicant intentionally takes steps to deceive the lender. The structure is not illegal, just the loan application process and related disclosure if it is intentionally falsified.


I am not advocating and I am not against the alternatives. I am splitting hairs here. Real investors need to know where the lines are. Too many got into trouble in the past because they did not care about details and they used a broad brush when they looked at deals or people. Best to be really good with the detail if you want to truly understand the risks.