X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Entrepreneurs

    How to use Companies House for due diligence

    Yes - i have the same issue. I think DueDil changed something last year and now they are much less useful unless you pay.

    0
    0

    Peter,


    Go to Companies House website & choose the Beta search. There you can download all the Statutory Documents free.

    1
    0

    JP - I think that the Abbreviated Accounts give as much as you need. Yesterday I looked at 3 Gurus & it was a common tale - lots of dissolved companies, very little income. The P&L will be an entry on the Balance Sheet which is all you get with the abbreviated accounts, but that may be enough.

    In one case an early (now dissolved) company had been registered at the home address, which turned out to have been sold last year for £240,000. It was a very nice cottage indeed, in a nice if poor part of the country (a little isolated for some, and more in keeping as a holiday home). It wasn't in keeping with the £3m pa income though, and explained why the Ferrari was photographed outside some offices (or maybe a dealership?) with no driver. The cottage didn't have a garage so he obviously keeps the car at the dealership for safety. I digress.

    The point about DD is that you know what a successful individual looks like, the company will have lots of money flowing through it, and that money won't be coming from loans. There won't be many dissolved Co., and income will be higher than costs.

    Also look at who the person associates with, who else is at the front of the room with them, who they JV with, who they train with. Be aware that the network that you want to avoid recommend each other, and pay commissions to each other, so do DD on recommendations as well.

    1
    0

     No, P and L is not part of the balance sheet ( it's part of the income statement).

    Winding up a company is also a tax efficient way to extract money from a company that you used for example to do a development. That in itself is not a sign of "something dodgy".

    0
    0

    Good additions Nick, thank you.

    A massive red flag for me is, if you do DD on someone and all is not as they claim, and you ask legitimate questions for clarification, and they turn hostile ..... Any ethical person would not have a problem offering an explanation as to why the DD does not back up their own claims.

    Every time, without fail, where I have challenged claims made by a Facebook guru, and asked them for clarification, they have turned hostile, arrogant, indignant, and even outraged and 9 times out of 10 they attempt to discredit me or imply that I have some other agenda.

    A person's response to DD questions is actually a vital and valuable part of the DD picture imho.

    Not to mention that if you did transact with them, and it went pear-shaped, what would they be like to deal with?  The DD writing is always on the wall, but a lot of people don't heed it.

    1
    0

    Keep up the good work Vanessa!   All decent investors, landlords, tenants will be behind you.

    1
    0

    This was an excellent post and great example of things to look out for.

    If I may add and share another free resource which I use for digging up dirt and finding out credit worthiness of individuals and potential investments.

    Especially when you have name only and looking for linked companies. The way the information is presented and encourage others to give it try. I hope it always remains free in most way

    https://www.endole.co.uk 


    If I may give a recent example of due diligence.

    Looking at freehold mixed commercial unit for sale at cheap price.  Failed to sell @ auction. Thought is was rather odd given fantastic potential income.

    Had potential rental of total gross 11k per annum  ( flat above lock up shop ). On 60k price.

     google Street view showed different signage change to a limited company.

    The limited company is set up only 6 months ago and created a lease for short timeframe of 3 years full repair and insurance.

    However research indicates originally bought for 40k, and new tenant for shop is actually the person selling the place. Alarm bells are ringing in my head. BS detector.


     Mutton dressed as lamb is my conclusion. It may still be investable but one to avoid.

    No one pulls the wool over my eyes from now on.

    The director has had other liquidated business.

    Another tip is looking for spouse/family members linked companies.

    Due diligence is so important!! 


    2
    0

    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 

    I just wanted to up-date this thread to note that Companies House is not infallible in tracking Directorships.

    I have recently discovered that, if the person uses a different name format , such as John Smith and John Edward Smith, CH will treat that as two different people and create separate listings.

    Likewise, if the same name format is used, but a different address given, CH will create a separate entry.

    Using a different date of birth will also create a separate entry.

    1
    0

    Great post.

    If I may add this little warning to those incorporating due to section 24 to be vigilant about own details. I have been victim of identity fraud before and it's not a nice experience. I took steps to avert any damage.

    https://www.accountingweb.co.uk/business/...-directors

    1
    0

    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 


    Very interesting article here and a very useful website in general.

    Excerpt of article about due diligence:

    The problem is that “due diligence” is a much abused concept. Time and again you see people losing money because they think they were doing due diligence when they weren’t.

    What they were actually doing is pseudo-diligence, i.e. something that <i>felt like</i> due diligence but <i>in reality</i> wasn’t.

    Due diligence mostly involves independently verifying that the information given by the borrower is actually true.

    Pseudo-diligence mostly involves letting the borrower ladle on more information without verifying that any of it is actually true.

    Pseudo-diligence is a classic example of the Dunning-Kruger effect, which can be simplified as “thinking you are cleverer than you are”.

    Full/source article

    Bond Review also has some articles warning of scams, and some are from the property sector, so be sure to bookmark it!

    0
    0