publication date: Sep 11, 2009
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
Well they are at it again! Back in mid 2000 there were lots of property sourcing companies offering what appeared to be, and what turned out to be, unbelievable deals on property for investment purposes. And, as the market starts to show signs of picking up (which it isn’t really, supply has reduced to match low demand), then out come the property locaters and their ‘magic deals’!
Before you EVER consider property deals offered by a company:-
1. Work out what the company you are considering working with earns from the deal.
2. Does the company earn their money even if you lose money?
3. Only work with companies that allow you to use your own mortgage broker and legal company.
4. ALWAYs visit the property and area that they are offering to sell you.
5. Secure your own independent valuation and survey from a local surveying firm.
6. Check rental income forecast claims can be achieved via three local lettings only companies.
7. Ask an independent property advisor about any property growth forecasts.
However ‘clever’ property investment companies so called ‘strategies’ appear to be, remember that buying a property with ‘no money down’ is either highly risky or likely to be illegal!
As well as the above tactics that rogue property investment companies use, here are five key reasons why you should avoid so called ‘no money down deals’:-
1. It’s impossible to buy a property in your sole name LEGALLY without putting some money into the purchase.
2. If you buy a property using other people’s money to fund a purchase it’s ILLEGAL.
3. If you don’t fully disclose to a lender where the purchase funds are coming from, you are committing MORTGAGE FRAUD.
4. If you don’t advise the lender the ACTUAL price that you are paying for the property, you are liable for MORTGAGE FRAUD.
5. Most ‘no money down deals’ require you to use the investment company’s own legal and finance companies and don’t allow you to check the deal with independent advisors.
Finally, most so called ‘no money down deal’ providers do actually require money from you, even if it’s only a few thousand pounds AND most of them charge excessive costs for purchasing a property such as legal or financial services.
For more information and help assessing deals from property investment companies, call us on 0845 838 1763 or contact us via email.