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Keep Your Enemies Close?

Veteran international investor John Corey comments

On a regular basis we hear about dodgy deals, failed structures and individuals who break the law in the property sector. It seems that every few months we are told of another alleged rogue person or deal which has gone sour. Many of these situations can look obvious with hindsight. Even if we take away the actual criminals, there are often some really dumb transactions out there. The cash investors get caught holding the bag. Others wonder how people can fall for the offer in the first place. A fool and their money are soon parted comes to mind. Do you really want to be the fool?

Fraud vs. Incompetence vs. Bad Luck?
Two key questions need to be asked. How did things go off the rails? The build-up to the crash. Second, how do I avoid being the fool?
The residential property sector in the UK has its list of people who the regulators have shut down. There are a few, well known, names who are presently serving time at one of the Queen’s specialist HMO’s or who were forced out of business without a custodial sentence. There are even a few folks who are regular attendees at various property shows or at some property networking events who have created a series of failures and bankrupt companies.

In my not-so-humble opinion, it rarely starts with a desire to break the law. Investors come to the BTL sector and related property business to become wealthy. They want to invest their time into something that will produce riches which are greater than they have been able to achieve in their career to date.

Some investors have had a series of missteps in the corporate world. They just do not fit in. Or, they do not want to continue in what has become a rat race for them. Some started as an accidental land-lord. Others read the book, Rich Dad, Poor Dad. In any event, they found the sector and they got started. No problem so far.

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