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  • Entrepreneurs

    Zeegar Properties - help with due diligence

    Hi All, I'm looking at signing a contract with a company named ZEEGAR.  So far, from my DD, they seem reputable.

    We're looking at conducting a flip with them in Liverpool, where they will do all the works required, we fund the entire deal, and then we split the profits on selling 50:50.

    As part of our DD, we looked them up on Companies House, but I'm trying to decipher the listings. Can anyone highlight anything that they see as suspicious or questionable in their registration under Companies House?  (I'm apparently not allowed to include the link while I'm under 'probation'.)

    Thanks, Sonia.

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    No information on them really. They formed 2015 but the filing date for their first accounts is not till Sep this year so you can't tell how they are doing. It seems to be set up by 3 people, 2 of which live in USA, 1 an american in Liverpool. All own equal shareholding.

    Personally I would always be concerned at such an arrangement. If they can do all the hard work, what do they need you for? Well the money, well why have they not made any money, or considering 3 shareholders why have they not invested. They have no track record. Whats to stop them upping the works or costs to improve their side of the deal. If they have not invested anything, they have nothing to lose. The fact that they are American and residence there would further worry me

    Of course many developers need to joint venture but it is a different kettle of fish having someone with a history of previous developments and investing his own capital, needing silent partners to fund a development. However ZEEGAR do not fit into this category.

    I am interested in your DD. There is very little independent information on them. Lack of complaint does not mean a company is ok

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    Hi.  My DD so far was based on their deal only, which I think stacks up in regard to sale price, demographics of area, area stats, etc..  Total costs £60K with an estimated min £75K sell, of which we split 50:50.  A small deal, but a nice, safe start - I'm hoping. They claim to supply all the necessary certificates (gas, electrics, etc.).  They invest the work in the project to renovate it.

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    Hi Sonia,

    Could you itemise exactly what they are bringing to the JV?

    Have you considered why it is necessary for them to JV with you and share the profit?

    Have you asked to speak to previous satisfied JV partners and visit previous completed projects to check the standard of workmanship etc?

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    [Image: 4995468760_6be86655d4_t.jpg]
    general operations director (aka Colonel Nicaffi) - propertytribes.com

    Hi Nick. From what I understand, they are basically driving business towards their refurb service.  We pay all expenses (PP, refurb, legals, etc.) and the 50:50 cut covers their labor works.  That's how I understand this business model.

    Their approx £15K profit should cover an upgrade of the central heating, conversion from a 2 bed to a 3 bed, full re-wire, new kitchen, new bathroom, damp course, plastering throughout, renew all wood work, and decorate the house (with their own furniture) to sell.  Sounds like a stretch for £15K to cover plus leave room for profit. (??)

    Haven't spoken to previous customers yet.

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    Wait, that should be covered by their cut of £7.5K.

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    That business model does not compute to me.  They have no skin in the game.

    So, if the project goes pear-shaped and there is no profit, what incentive is there for them to continue with the refurb?. They can just walk away and leave you in a mess.

    See - Joint Ventures - structures & pitfalls 

    I am really struggling to see the benefit to you. Why risk getting involved with strangers?  Why not just do the deal on your own, employ your own builders, and take 100% of the profit?

    Sorry if I have misunderstood something ...

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    We were looking for a deal on our own, having already met a project manager who has a build team in the Liverpool area.  Then we came across this opportunity.  We're not UK based, so we're considering all possibilities. Their £7.5K cut is supposed to cover their labor for 8-12 weeks, since we pay for all materials.

    I'm trying to sign into DueDil.com at the moment.

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    Nothing to see on DueDil.



    For what it is worth, I regard it as exceedingly high risk, especially if you are not even in the UK to see what they are doing.

    The margins seem very tight, and the better standard they create the property, the more their profit diminishes. They are not incentivised to do a good job with such weak margins imho.

    The structure makes no sense to me whatsoever, so on that basis "I'm out"!

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    Does anyone know the American equivalent to Companies House?

    Thanks.

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