Investment Property Highlights - 2008

As the year draws to a close we have taken a step back from an incredibly busy couple of weeks to look at the past few months.

We started this blog in August this year for a couple of reasons. Having been involved in various sales businesses as well as the property industry we have seen no end of scams, schemes and dodgy business practices go on. We have also seen a large number of opportunities go unnoticed, as well as a large number of investors being hauled into things they really don't understand.

The whole point of this blog has been to enlighten the public as to what is going on in the world of investment property, good and bad. Sadly during 2008, most of our time has been occupied covering the doom and gloom and the shadier side of the business.

In August we covered Panama and the "Sheep Factor". Rumour has it now that some developments may not be finished now due to lack of financing. We also covered what the collapse of Fadesa meant to purchasers buying outside Spain. Possibly the first of many developers to go by the wayside.

September bought us the collapse of another developer, Colonial, followed rapidly by the Viva Estates and Ocean Estates, not forgetting the infamous Inside Track/Instant Access saga. Vivas' Expo centre has now completely closed and been stripped of furniture, Instant Access is still trying to squeeze more money out of clients and fend off the heat by simply changing directors.

October saw the exposure and gall of Red Hot Homes resurfacing, rearing its ugly head again. To this day, the site has been modified slightly (mainly to remove the mention of Channel 4) We also saw Dubai developers claiming there would be no knock on effect for them from the recession.

November was a quiet month, the main focus being on Dubai, the rumour and the confirmation of massive job cuts by DAMAC, we did state here that there would be a substantial drop in prices in the region, only to see 50% off sales a couple of weeks later.

December has been an insane month. We started with another company called inside track that had mysteriously disappeared with everybodies cash, followed by coverage on fractional ownership. This article did generate a response from the company, inviting us to attend their seminar free of charge, as well as admit their website needed updating Needless to say we declined on the account of the need for anonymity required for this type of reporting. Their website (at time of writing) has still not been updated.

To date, the biggest post of the year. (UPDATED 08/01/09) Has had to be removed due to unfounded legal threats against innocent parties.

The final article of the year though is one we are surprised no-one had picked up on. Fortuna Land and Oanna Group has been running for some time and received huge press coverage in the UK and abroad. All the "authorities" in the industry were happy to republish the badly translated articles by El Pais, yet no-one did any research into the background of it all and actually inform people how it all came to be. Granted, it took us a while, but fantastic reading if a little astonishing.

What can we expect from 2009?

Well doubtlessly many more companies are still to fold or go into difficulties, we'll report as we hear about them. No doubt there will be more scams and cons to cover too.

On the positive side?

Brazil. A slow burner admittedly, but it has the economic infrastructure to become a major player in the world in general, saving any natural disasters or political uproar, the safest bet for the mid term.

The US Dollar. With Barack Obama about to take the hotseat, we will without doubt be seeing some "feel good" economy factor. The Dollar is highly likely to rise during the first quarter of 2009, so if you are sat on Sterling at the moment going down in value, a bit of currency trading might be an idea. When you sell your Dollars though, go into Euro until the Pound sorts itself out.

A happy new year to you all, the comments we have had so far have been positive, both from the public and the industry. It is a great shame we have to remain anonymous, but having seen some of the lawsuits that have been flung about in the past, we'll stay the way we are for now.

If you would like our reports as we publish them, (and like us, haven't got this "RSS" thing figured out yet,) click on our home page here, Investment Property Rumours On the right hand side you will find a box that says "enter your email address" from FeedBurner. Enter your email, confirm the subscription, and every time we publish you'll be sent it in your email!

Fortuna Land and Oanna Group – How It All Started

As most of you will have seen in the press by now, Fortuna Estates in it's various guises has been widely reported on by the press in most of Europe, with several bloggers and apparent authorities simply copying and badly translating the El Pais article, each adding some interpretation or another as they go.

Now some of that has died down, The Investment Property Rumour Mill brings you the actual story, with many tantalizing connections to the boiler room industry, A world famous arms dealer, One of the largest banking cons in living memory, a car rental company, one of the largest telephone company scams of all time, all stretching from sunny Spain as far as the Philippines, Sri Lanka, Monaco the USA and beyond!

For those of you that don't know, Fortuna Land and it's many alternate guises was for all intents and purposes, a landbanking company. Basically offering investment opportunities into land that was "assured" to get planning. Not the first time we have heard of this, several have made the British press of late, UK Land Investment (UKLI) and Hambrook and Greenstock to name a couple ordered to cease trading or be conveniently liquidated.

Fortuna was just that little bit different though. With figures that have substantial connections in some unusual areas, the history behind the formation of Fortuna, how some of the funding was doubtlessly raised in the first place to get the operation off the ground to finance it's high profile
advertising and marketing campaigns reads like a fantastic tale of fiction suitable for a Hollywood movie.

The plot starts in several places (as far as we can trace, although there could well be more history to this!) to a boiler room (a fake stock promoting company selling worthless or non existent stocks and shares) called Goodman Hart. Goodman Hart were selling shares in a company which many would have heard of, Spantel. Spantel does still exist to this day offering telecoms services. The stock itself however, (SPAL listed on the over the counter board in the USA) is worthless after being artificially manipulated and sold to investors.

Goodman Hart is believed to have run under various names, and offered several other investments to unsuspecting punters in a bid to "switch" them out of the failed investment at a price, EDHC (European Diversified Holdings) and Adrentacar.

The main people behind the scenes at the time, were Jerome Andre, Frank Palumbo, and in the distance, and old friend who technically controlled Spantel, a Mr. Mohamed A Khashoggi. Son of arms dealer, Adnan Khashoggi. (Adnan is very well known for the manipulation of BCCI Bank of Credit and Commerce International years ago, as well as the Iran contra scandal)

Frank Palumbo was a barred securities dealer, banned by the NASD for fraud (National Association of Securities Dealers) in 1992 for artificially controlling stock in three companies. (Now believed to be in Monaco)

Jerome Andre (Currently believed to be in hiding in Sri Lanka) was a relative nobody prior to Goodman Hart, the history on him is a little vague. Once he started making money though, was well known in the bars of Marbella and Puerto Banus, the casinos and brothels. Remembered by many salesmen apparently for saying whilst drunk in morning sales meetings "you need an addiction to succeed in this business, if you don't have one, don't come back until you get one!"

As time went by the heat increased, clients were sick of hearing why their stocks weren't making any money so new salesmen were bought in on a constant basis. One such fraudster who had previously run his own deals, and recently arrested in Spain on another charge is Mark Stephen Dalton. Dalton was previously arrested running an investment scam, Rutherford Limited with another convicted fraudster, Radin Akhbar, as exposed by Tony Hetherington of the Sunday Mail. Another heavy salesman was an old chum of Palumbos days at Gant, Ron Jones. Ron is now believed to be in the Philippines pushing yet more failing stock after a half hearted attempt to set up a franchise in the Marbell Center in Marbella, allegedly with Hooters involved. Ron Jones is also reportedly at least partly responsible for bringing another company to the table, Adrentacar, again a company that never listed and was nothing more than a couple of hire cars at Malaga airport.

Eventually, the clients got too weary and the sales pitches weren't working anymore. Time for a new ruse. Fortuna was born.

A myriad of companies was set up in Spain, Cyprus, and even an old company of Jerome’s, Dancing Brave SL was wheeled out of the cupboard to launder and clean the money.

Frank and Mohamed appear to have left the picture at this point, Jerome had been extradited to face charges in a couple of European countries, and returned to run the show, or at least what was left of it.

It would seem that Jerome needed some other names to use as "fall guys" for the project, as well as other front men for the selling itself. This is where DANIELE EMBOULAS, ATUL SHARMA, ABDULRAHMAN AL ANSARI and T. JAMES. A. SATHASIVAM all come into play. Each playing their part to either go on the books or add credibility to the companies, a list of some of which are as links at the bottom of the page.

What is the state of play now?

Well, the forums and chat rooms around the world are at the point of melt down with all of this, none however have tracked back as to how it all started or was funded. Most of the time the answers are found in the trail preceding the fraud. All of the companies were registered within the requirements of the law at the time. If you wish to see them there is a few links at the bottom.

What if I'm a victim?

There are a few options it would seem.

Join the (rather confusing at times) forums and boards, see if you can team up with strangers and string a case together.

Hire your own lawyer

Take up with a mediation/law firm.

The chat rooms are all over the place, the largest we found being fool.co.uk, (so much so they have had to move part of it to prevent the crashing of their site.) The dangers there though is no-one posting, or what they are posting can be easily verified. It could be you end up in another scam. One would suggest erring on the side of caution as you would know these people no better than Fortuna!

Hiring your own lawyer is likely to be costly to say the least, and unless you are able to consolidate and confirm a lot of information yourself, you are likely to just end up even further out of pocket.

Mediation companies? We will admit whilst we are not the biggest fans of such companies (ambulance chasers as well call them) there is something to be said for them if you follow a few simple rules.

Mediation companies that work on no-win, no-fee are always more expensive in the long run, and will not take cases they are not already working on or have had some success with.

Companies that charge an upfront fee? Check them first! Some are cons from the start. Whist there isn't a great deal of multi country legal paperwork covering this area, a good place to start is checking if they are registered or regulated.

How can I avoid being taken by future scams like this?

The method of pressure selling on the telephone has been around for many years, but perfected by timeshare and even more so by the boiler room industry, finely tuning very specific scripts which salesmen read, time after time to unsuspecting victims. There are several things to consider when it comes to avoiding these scams. If you have been scammed once, you will be on a list that will do the rounds with other companies, so every phone call or e-mail you receive should be treated with caution.

If it sounds to good to be true, without doubt, it is.

In the real world as far as stockbrokers are concerned, they are not permitted by law to "cold call" you to offer investments.

The property industry has a long way to go before it has any kind of universal regulation to protect investors, until then, ask for all the documents, go see the property if you can, get a local lawyer that speaks the language of the country you are doing business in. An English lawyer in England trying to assess an investment in Spain has no chance at all of ensuring everything is correct. The laws are too different.

We are approached regularly by law firms and mediation companies offering their services, as well as the press looking to sensationalize some of the stories we publish. We have refrained form accepting offers to ensure that we only offer clean sound fact as far as possible, and state when rumours are rumours.

The same thought should be applied to recovering money from investments as it does to making them in the first place. Research. If you don’t know or understand, don't do it!

Some useful links.

Company Registration for Dancing Brave SL

Company Registration for Fortuna Est 2002 SL

Company Registration for Fortuna Properties SL

Company Registration for Fortunaland Investment SL

Company Registration for Oanna Spain SL

See some picture of the fraudsters

We would have supplied a link to the original Oanna website, but it has been suspended by the hosts.

There are other company names that have been used by Fortuna and Oanna, most of which to purchase land or launder money, many with similar names, some in Cyprus, others in Spain and doubtlessly more will appear. We will be returning to this as more information is uncovered, and apart from anything else, this is turning into an epic in its own right!

Fractional Ownership - Pros or Cons?

The inevitable is knocking at the door folks! With the downturn of late in the overseas property market resulting in companies going bust, disappearing, downsizing and generally crying in their empty offices it had to turn up in Europe sooner or later.

Fractional Ownership.

What is it?

In a nutshell, you take a resale property, or indeed a new property, and sell sections of it. The idea being that you can own 1/4 of a 1 million Euro property for just 250k. Sounds like a fairly good idea, understandable given the lack of money around at the moment.

Where did the idea come from?

Originally the idea came about from the aircraft industry. Owning your own private jet is not cheap at any level, but if you use it as a work horse, part ownership is a good idea, mainly because even the busiest professional is not going to spend their entire life in an aircraft, and it is an excellent offset for tax purposes, as well as reducing long term costs.

So what is different here?

Well, at the very start, not a lot, the principles of buying the asset in the first place if you are a cash buyer are much the same for property, aircraft or yachts. The difference starts soon after, or even at the dotted line if you are looking for finance. Raising a mortgage on a split asset is not an easy thing to do at the best of times, let alone in today's lending environment. If you are cash buyer, there are other things to take into account, the primary one being the differences between a property as opposed to a boat or a plane.

Boats and planes have definable lifespans, scrap values, and calculable costs. Planes and boats can also have business loans raised on them in most cases, whereas your luxury villa on the Algarve cannot. Houses and property in general are supposed to rise in value on the whole, giving the owner equity.

Surely this is a good thing?

At first glance, one would think so and in some areas it is true. If you are a lifestyle buyer, wanting a holiday retreat for your own use, then yes, the whole thing makes a modicum of sense. The fractional concept appears to work very well in Canada and the USA, and there is legislation in place to govern it, South Africa in the most part seems to be getting there with its laws too.

Ok, so where is the catch?

Over the past few weeks we have seen a substantial increase in "Fractional Investment" ideas. A few of the old obvious scams like banana plantations in Panama, ethanol plantations in Brazil, "Make nine times your money in 5 minutes" "Be a millionaire with 10k in 6 years" etc etc.

What is alarming is the new "Investment" angle being used to lure struggling agents or brokers into promoting something that has little or no legislation behind it. On top of that, the promotion to prospective agents is through an "Inside Track" style of seminars at £95, offering insight to how "intelligent products" can bring "swift revenues" in a difficult market if packaged and sold correctly.

The mailshot we received here really does go for it, saying the "Fractional Awareness Days" will tell you how to sell a SIPPable fractional, and even how to deal with the "t-word" (Basically explain away how it's not like timeshare)

Now don't get us wrong here at the Investment Property Rumour Mill, We do know people that own fractional property, granted they are Canadians, funnily enough in Canada where there is legislation and finance tools in place. Also substantial legislation for agents too, far more than there is in the UK and certainly more than Spain where many agents are still based.

Fractional ownership can work for some, in just the same way that timeshare can work for a few.

So what is there to worry about?

Well, the company bringing the mailshot to the table is none other than Richmond Green Marketing, the ones we reported on before in connection with OPP (The self proclaimed aficionados of the overseas property industry). RGM are not the main players behind this though, and appear to have a page just for the promotion in the back of their site that isn't linked in from anywhere else. Best Group Limited appear to be the suppliers of this "tool" with there address at Salisbury House in London, but a postal address in Chester, and a domain registration in South Africa.

The site itself does seem to be specifically vague, talking about PenTICs and how they believe they are unique, stating that ski lodges have great track records, (so that must mean everything is like a ski lodge?)

The next question answered on the site is how easy is it to sell a PenTIC? Apparently they'll handle it for you if you wish. Now isn't that nice of them? No info on any other way of selling it, nor quite how they go about it or what they charge (Remember the calculable costs for fractional aircraft?)

Then we go on to have our minds put to rest about "management fees spiralling out of control" The response to that? "in some locations they fix them for a number of years" (Ok) but in others "We might link them to inflation" Might? sounds to me that someone hasn't quite thought this one out have they?

Of the products they have, there is waterfront South Africa, Caribbean, New Zealand and Panama. Having had a quick google, there seems to be a distinct lack of ski lodges in these locations, maybe our geography is a bit out? (Or global warming)

Best do have some fine testimonials on their site, even one about All Blacks player Zinzan Brooke, but if we look back a few years at Viva Estates with Ian Botham, and more recently Red Hot Homes with Kirstie Allsopp, and the general media hype that went into Inside Track in the early days, where are these companies now? Either sat on your cash in Panama, hiding under a rock selling leads from a bedsit in England, or inventing ever more devious ways to extract hard earned cash from the public, or getting agents to work for them and not pay them!

With this particular post, we will be surprised if we don't get some posts from Best or RGM and so on, and as usual, The Rumour Mill is not responsible for their opinions, but then we have sailed very close to the wind with a number of high profile companies, and we haven't had to remove any posts yet.

The public are likely to be badgered to death with this by agents far and wide promising riches and lifestyle beyond your wildest dreams for a fraction of what it could be.

As always, buyer beware. Whether it's a whole house, 10/52 of a house, or a spaceship with a side car and a walrus detector, if you don't understand it, don't invest in it!

Another Mysterious Inside Track

Well well, it never rains, it pours!

This week we see a story about another Inside Track. This time in the Middle East. Developers Al Barakah responsible for the "tallest tower in Ajman" Police are looking for the CEO Imran Khan after allegedly defaulting on $3.8 million USD worth of cheques.

The story goes according to the Dubai 7 Stars blog and The National Newspaper that the company was offering 50% profits in 6 months. Nothing illegal about that of course, the likelihood of it however takes a bit of believing to say the least!

Buyers however still bought in their droves, some buying entire floors of buildings in the traditional greedy sheep mentality that gripped the Dubai market place.

Now buyers with their bouncing cheques are flocking to the police after not being able to find Kahn. Strangely his house is empty! To rub salt, or maybe sand into the wounds, Al Barakah is registered in Ras al Khaimah (RAK) a tax free offshore zone, as an offshore company, the marketing company, aptly named "Inside Track Real Estate Brokers LLC" is a limited liability company in Dubai, quite likely as an offshore company too.

Perhaps Mr Kahn has an offshore company in Panama too like our other inside track chums?

Apparently staff at the sales agency has received death threats and not been paid, no projects are registered at the Ajman land department and no-one has anywhere too turn. The official real estate body in the region RERA is reported to be coming up with some cunning plan or another to deal with all of this, but considering it has only thought of 12 laws and decrees since 1997 on its website, it could be a little while.

As they say in Arabia, Enchala! (God Willing)

DAMAC Downsizes - Rumour Confirmed

You heard it here first folks, confirmation in from Arabian Business News that DAMAC Properties CEO Peter Riddoch has stated that "right sizing" is going on.

To see the article in full, go to At least 100 jobs go at property giant Damac.

We will be bringing more news about DAMAC and other "Investment Property" Developers around the world as we have it, and wherever possible we'll have it here before anyone else!

To see our prediction of this event last week, go to our post "Brazil Boom and an end to the Emirates" To give you an idea of things to come from the region, the laughable interview with Falcon City Of Wonders CEO Saleem Almoosa, take a look at "Blind to Recession - Or Just Sand in the Eyes?" Almoosa clearly highlighting that there is a severe lack of understanding of what is actually happening in the real world!

Brazil Boom and an End to the Emirates?

A very quick post here tonight folks! It would appear some of our suspicions here at the Investment Property Rumour Mill are starting to gain some momentum after a conversation last night with some good friends in the industry, and also a few phone calls that has bought a couple of things to light.

We received a call earlier from someone working at one of the largest developers in the Emirate state (and beyond) claiming mass lay offs of staff were underway! We won't name the company specifically at this point, but it really is rocket science to figure out who. (The developer in question is known for its culinary expertise amongst other things, we have written about them in previous posts)

Infamous for starting, cancelling, restarting, doing the hokey-cokey and no end of other things besides, the rumours from within from 3 separate sources so far would suggest that mass downsizing is going on, culling of staff is at rate of knots only seen at old peoples homes when the reaper is in town. Rest assured, the moment we have independent confirmation of this from somewhere, we will post it for all to see.

The conversation with old friends last night threw up a couple of points which make a great deal of sense, as well as confirm what could be the end of a very short era for the Emirates as a whole.
A bit dis-jointed as it's going to look here, we will try to convey the point as best we can.
The discussion itself was about Dubai and the Emirates in general, my friends had been in conversation with some very prominent banker types in the middle east recently. The bankers when asked where the future of property was and was not for the foreseeable future.

On the positive side, Brazil came up. Now we know that a lot of peoples eyes are going to roll at that one, and cries of "that old chestnut" can already be heard. However, consider this.
Brazil is somewhat larger than just Natal and Fortaleza. (The only places that most of the west has heard of.)

Brazil has long been a producer and user of Ethanol, importing little oil of any kind. In the past 18 months it has discovered one of the largest oil fields and one of the largest gas fields ever recorded. This puts them in a position to export heavily and given the price of oil and the lack of it, the last man with a pot of oil will be a wealthy one!

Brazil has an enormous populous, infrastructure although crude in places, is nevertheless in place and scalable.

Brazil has now made 100% mortgages available to nationals. Granted they are not for high amounts, but the increase in commerce internally, and rapid expansion needed soon internationally for export and tourism, the country finds itself with a very large and expanding middle class with money.

On the negative side of where the future of investment property lay, Dubai and the Emirates was the response.

Why? Several reasons.

Infrastructure. Understand that the Middle East is still classed for the most part as a desert. Sand gets everywhere, nothing lives there primarily because it can't survive. Putting a bunch of shiny revolving buildings on it doesn't make it a great place to live, nor does it ensure the future of entire country.

We could put the office cat in a spacesuit. It does not however mean that the cat can firstly fly a rocket, nor does it mean that he can survive in space. Regardless of how much money we throw at him.

With all of the engineering skills and advancement in the world, subsidence happens. You build on sand, you will get some sinkage. Fact.

Attitude and/or ignorance. You only need to read the statements made to the press that we reported on from one developer saying there was no recession and prices would never fall.

Like it or not, and the Rumour Mill will go on record here, Property prices in the Emirates are going to drop. Hard and fast.

We believe by as much as 60% in the next 12 months or less. Sound like a wild prediction? maybe, but remember, we don't publish anything we haven't researched well, cannot prove, haven't heard on good authority or don't actually know.

If you have invested in the Emirates, stay for the long haul, it should recover. If you are in for the get rich quick, you've done your money. Expect to here the phrase "Enchala" (Arabic for "God Willing") when it comes to expected completion times, rental projections being met, and re-sale opportunities.

COMING SOON!

Shiny pictures of yet another Costa del Sol behemoth agent closing some of its offices and downsizing.

A report on investment property forums. Are they worth the web space they occupy? Can you trust the opinions in them? We take a look at some of the best and the most notorious and ask if they serve a real purpose and if the owners are being responsible with them or have an ulterior motive.

New services designed to help the investment property owner as opposed to relieve them of all their money.

Blind to Recession - Or Just Sand in the Eyes?

Now that the press have blabbed on about it enough, the world is officially in a recession apparently.... Or are we? Not according to Emirates Business Salem Almoosa, Chairman and CEO of Falconcity of Wonders!

Last week (20/10/08) we saw possibly one of the most preposterous pieces of PR ever seen come out of the United Arab Emirates. Statements such as "In my opinion prices will never ever go down" and "I believe there will not be a price correction in the market. Who is saying this? I have not heard of any correction or decrease in prices and I am not seeing it either."

Well, it happens to be the above mentioned business man. Saleem Almoosa has a BSc in economics from the USA, and is well connected to the travel industry, the Dubai chamber of Commerce, and the National Geographic Society.
What is he talking about? Where can we get invested in such a place where money grows on trees, the streets are paved with gold and we can all live happily ever after? Quick, tell us now Mr Almoosa!!

FalconCity, Dubai. Now, I don't know about anyone reading this, but sure as there is sand in the desert, I don't think I would want someone making statements like that at this point in time! One has to ask if Saleem Almoosa has ever been out of the Emirates! I can just imagine the reporter doing the interview either stunned almost into silence, or rolling around the floor laughing!

The justification in the article itself behind Almoosas' comments and statements is unreal, the vagueness of his answers pertaining to completion and even the actual business model is just a joke, stating when asked about the completion timing "I cannot tell you the answer to that. Any large-scale project such as this will of course take time and an exact date is difficult to specify. We make plans but they change every year as there are many factors as there are many determining factors. But we hope that in another five years things will be taking shape."

5 YEARS???!!! and then you HOPE you will have an idea?


Ask yourself, this is a company that has no real idea of timescale, has its' head in the clouds, blames the west for creating a recession they can't see and publicly states this!


Dubai and the Emirates have long been an investment hot spot and some serious money has been made there, but this isn't oil. You cannot expect to triple or more the size of the population, housing, infrastructure, import and so on and expect to make the same profit. The real world doesn't work like that. Even the basics of infrastructure cost money to create and then money to run. It isn't like digging a hole and selling what comes out for a fortune and holding the world to ransom.

The extremely comical article can be read in full at Emirates Business 24/7 To see another interesting comment from earlier in the year, go to Backpackers.com - How to see all the Wonders of the World in Just one Day.

Coming Soon, Forums - Are they any use? Can you trust them? Are they just for beating up other companies? The Investment Property Rumour Mill is taking an in depth look at what use the property forums are, which ones are moderated, and is it possible to buy or threaten your way around them?

If you have something you would like us to take a look at, good or bad, post it below.

Red Hot Homes - Some Scams Dont Know When To Stop.

Well folks, we have sent out all the ferrets and weasels into the investment property robbery world on this one!

This is the low down on how particular individuals can come back time and time again to haunt the public, even using the same company name!

There are references here to several companies, some of which are no longer live on the web, but we have linked to some interesting comment where we can. If anyone has any complaints (Chris Devlin or Martin Devlin) please, do feel free to post. If we are proved wrong we will happily and publicly retract any postings. We are waiting by the laptop. As usual, the Investment Property Rumour Mill takes no responsibility for your opinions on what we write, but we will play fair.

This is the tale of some serial fraudsters that will stop at little to relieve you of your cash under the guise of a property investment. They return after at least 3 failed property companies, an after sales company that has fallen off the face of the earth, a police investigation, an offshore company in the British Virgin Islands and no end of complaints. Yes, at least one of them is back, Chris Devlin.

In the forums and bars it is well known that the Devlin Brothers Chris and Martin used to own Golden Coast Estates then Red Hot Homes, and also set up The Diamond Experience to take care of the after sales. (Basically tie you up with their lawyers, furniture people, money movers and so on, all designed to relieve you of as much cash as possible) Now we see two horrifying and galling prospects. List4Leads and the return of Red Hot Homes for more fraud.

Golden Coast Estates was set up some time ago now by the brothers, along with a partner Brian Nelson, (click the link and you will be taken to a forum posting from his wife about Golden Coast Estates.)

The posting itself appears to be a very frank and honest account of the situation.

So, after Golden Coast Estates ceased to exist, with Brian left to cover the debts, Red Hot Homes appeared, followed in tandem with The Diamond Experience. RHH proceeded to sign deals and collaborations here and there in the race to catch up with the main competition of the time, Macanthony Realty International, even to the extent of staff poaching and all sorts. Chris Devlin was at the front of the operation, driving the sales force, seeing that agents were signed up and generally creating hype. Some agents were mysteriously overpaid by Red Hot Homes, apparently at the time a gesture of goodwill. Little did anyone realise that it was merely a ploy to haul in more leads that they didn't declare sales on, no doubt sent on to being rinsed through a later scam, List4Leads.

From there we saw the cogs begin to grind to a halt, and as they did so alarm bells began to rang. Agents had been asked to invoice Red Hot Homes in the British Virgin Islands of all places, a handy little offshore jurisdiction for the amateur tax evader and scam merchant where little law applies and you can filter out money into seemingly nowhere.

Agents where looking for there money after confirming that clients referred had paid, the responses being that "We are waiting for payment from the developer", or "The charges that we split for the inspection trips exceed the commission we owe you, in fact you owe us money"

Eventually unpaid staff left, still unpaid to find other jobs, apparently RHH still ran from an apartment in Estepona or San Pedro on the Costa del Sol. The deal now though was to have clients send the money directly to Red Hot Homes instead of the developer. This way the money could be neatly stolen with the developer never being paid and all the cash neatly disappearing.

Since then, we have seen the attempted rise of List4Leads, owned by Christopher Devlin. This is a site that apparently will generate leads directly for you so you can sell your property. It is set up from the back of a Point2 franchise (A legitimate MLS type portal designed to give agents the ability to share properties and expand their site.) In this particular case, Devlin is using the List4Leads.com domain for the Point2 portal base, and then using List4Leads.info for his own site, hoping that no-one will notice. A whole bunch of spelling mistakes and poor formatting which would suggest stolen content, all in a bid to look bigger than it all really is. Payment for this "service" is by credit card that just happens to auto debit every month (how handy!) or, by bank transfer, but you have to pay up front for 3 months minimum. Ask yourself, what happens when the site goes down and they have an auto debit on your card?

The most astonishing thing though is yet to come. RedHotHomes.co.uk is back to scam more people!!!

The site is registered to a Ben Sykes, an SEO specialist in the UK. Ben is likely unaware of the previous activities of the Devlin's being as the domain at the time of writing is in his name. Nice try to deflect the heat this time eh?

As it stands at this moment in time, there are numerous errors on the site itself, even though it appears at the top of google, they have still left some of the pig Latin used by programmers in the pages to bulk the page out for testing.

Whilst browsing through the site and seeing Christopher's name appear, we then discover an endorsement from none other than Channel 4's Location, Location, Location presenter Kirstie Allsopp! (Note on the site they have managed to spell her name wrong, Kirsty Allsop, instead of Kirstie Allsopp. Another clever ploy Mr Devlin!

As for the whereabouts of both Martin Devlin and Chris Devlin, it has been suggested that Martin Devlin was arrested and later bailed on fraud charges. We will state this is unconfirmed here say at present, but are looking to confirm it shortly. As for Christopher Devlin? Well rumour has it from a couple of sources that he was being looked for at this years SIMA industry exhibition in Madrid. According to the forums, a detective Chris Gay is looking into fraud committed by the pair over Red Hot Homes.

Some simple advice.

If you are approached by one of these companies or individuals, beware!

Any investment you make will disappear.

Any service you pay for is unlikely to be provided.

If you are mad enough to work for them or apply for a job, you are unlikely to get paid.

Have you been approached or contacted by these scammers? Post below, we would love to hear from you.

Being Badgered Whilst Just Looking?

During the past 12 months we have seen some significant changes going on in the overseas property business, most notably of course the global stock market dives and changes in lending, but the high flying sales business that is investment property has gradually started to alter the way it works.



Many new web based companies or "portals" have popped up in the past few years, Properazzi, Lead Galaxy, Property Index and the like to name a few. Not companies you may remember as the public, because they don't sell properties (yet) themselves. All they do is aggregate everybody elses listings, (by fair means and sometimes foul by the less reputable) and then when you the public make an enquiry, your details are forwarded to the listing company.

In years gone by, this invariably worked on a commission based model, if "portal A" acquired a lead, it was passed across to the listing company, then if the listing company made a sale, the portal was paid a commission. Sounds fair by all accounts.


The inherent problems with this in a struggling market are that when said listing company or agent makes a sale, if they are short on cash, the last people to get paid are the portals. As a result, the commission based model is rarely seen anymore. The portals are using new ways to make money from their techno wizardry on the internet.


The larger portals that have good presence and rank well in Google and Yahoo and so on have been fortunate to be able to sell advertising space on their sites, meaning that there is the appearance factor for advertisers, and natural traffic generation too. This however is rarely cheap, unlike many of the international investment property companies out there!


Of late though, we are starting to see other lead generation systems emerge, namely LeadsAndAgents.com and others based on similar models. The basics of Leads and Agents is a qualifying service with all leads having been telephoned and asked questions about their intention to buy.


How does it all work? Well according to the site they are "absolutely unique" in the way they generate leads. It doesn't however say quite how it achieves that, and we'll come back to this part in a moment.


It goes on to very clearly state how the prices start from just £5 per lead and you can bid for up to 72 hours and that it is a good idea to bid over the odds even if you are the top bidder at the time to stop sniper bids and so on.


So how does this affect you? Well there are a few things to take into consideration here. The fact that they don't really explain at all where the leads come from in the first place is one. Fair enough, if they are a survey company, great, bring it on, we can all understand that. The thing is that the site doesn't state that is what they are. this then begs the question of where do they get their leads from?


It states on their site they have a number of marketing campaigns on websites.


Just think about that for a moment. They are advertising on the sites that the agents are already advertising on, calling the leads and then selling them for a fiver?! Believe me, quality advertising space on high profile websites that have sufficient traffic to generate quality leads to the level that is needed would not financially allow you to sell names for £5 a go, or anywhere near.


What about all the general enquiries out there from people that are "just looking" at property. Where you have to leave your name, number and e-mail address to see any detail? I must admit the quality sites out there usually have bullet proof disclaimers and small print to comply with the data protection act, but there are many less scrupulous that will just sell names and numbers on willy nilly for tuppence ago.


The other thing to consider here, whilst they will call you once you sign up as a bidding agent, there is no regulation in place to ensure you are an actual property agent either. You could be an arms dealer, a 419 scammer, or even an unruly investment property agent that just takes deposits and doesn't supply the property.


Just think about it next time you are called about an investment property.........................

Buy To Let Or Bought A Toilet?

With the announcement of the government bail out of Bradford and Bingley first thing in the morning, there has to a be a few quaking in their boots with a buy to let mortgage hanging over them.



What does this mean to everyone?

Northern Rock has been nationalised and seems to be doing OK!

On the face of it, this would appear to be the case. We at the Investment Property Rumour Mill are going to take the toilet brush of property investment and see just how clean under the rim it all is by delving a little deeper and look into how the banks got into this state in the first place, what all this means to the layman investor who thought they might set themselves up for life, and what the likely or possible outcomes are for all involved.

It has long been a British institution to "get a foot on the property ladder" with school, college and university leavers urged on by their parents to buy a house and leave home. We have all heard the saying "as safe as houses". Obviously there aren't too many teenage millionaires these days apart from the most successful of hoodies of course, so one is invariably off to the bank to get a mortgage.

Nothing wrong with any of that you might think, which was true until the banking world discovered marketing and interbank lending, and the concept of buying houses in other countries that we hadn't heard of until last week.

Buy to Let or B2L was born, along with various other acronyms. The criteria to lend came down as the purse strings of the institutions slackened, everyone was jolly with a shiny red smiley government in power offering prosperity and stability and all was good.

When potential property purchasers went to the bank to get a mortgage, few were turned down, and even if they were, there was another bank just itching to lend in on top on behalf of that bank, creating the interbank lending and making the books look good. It even created one of the most amusing acronyms of the mortgage world, a NINJA mortgage (No Income, No Job or Assets)

As a result, the state of play now is a large number of banks with enormous mortgage books that far outweigh their savings and investment balance. According to Bloomberg,

"Deposits at the bank amount to only slightly more than half of loans outstanding, which means it depends on capital markets for about half of its financing. Bradford & Bingley was forced to curtail new business when those markets dried up and the cost of inter-bank borrowing soared causing banks to hoard cash following the collapse of the U.S. subprime mortgage-market. "

So lets just clarify what that means for a moment, Bradders and Bingers, the gents in bowlers have lent out almost twice what they have! Some way to run a bank!

What does this mean for the short term?

Well, those that can pay their mortgages will still need to pay them, the money will just go into the government so it can try and recoup some of the money. The savings arm of Bradford and Bingley will go up for private sale, probably to be hoovered up by the banking behemoth that is Banco Santander.

The medium term?

This is what we fear most have overlooked, and isn't likely to come out for quite some time. The British government is bailing out to because it has no choice, not because it makes financial sense. The Labour party, love 'em or hate 'em isn't fairing well in the polls, and has to earn some brownie points and create some election credibility from somewhere. The key point that remains to be seen here is simple.

The Bank of England sold its' gold reserves a few years ago, (at the lowest price in modern day markets)

The UK no longer exports or produces anything of any significance. As a result, no real income from exports.

The government is about to own a very large number of properties that no one can afford to pay for, (perhaps they can sell them off as Olympic housing, at least they will be ready to use in time!)

The Future of Buy To Let?

Its true, anyone can rant and rave about the failings of others, play the blame game, and say "well you should have" Here are some sound suggestions, take them as you will, they are based on logic, fact and reality, instead of hype, spin and sales banter.

If you are going to buy to let, look for an economy that actually runs on that method. At least with then you know that the common mentality works in tandem with the way you intend to make money.

Unpopular as they might be with the British, the French and German house buying mentality is very different. The general workforce there does not purchase a home until they reach their mid to late 40's, renting for their entire life until then. Why? Partly due to expense, but primarily because they don't have the property ladder greed mentality beaten into them at an early age.

What this means is that as Johnny Foreigner, you can buy a property in France or Germany and rent it to the locals long term, your rent is guaranteed if you do it properly, and you can get a mortgage at Euroland rate.

It wont make you a millionaire in 5 minutes, but then the surrounding properties will still be there and occupied in 10 years time and not sold to a farmer for a fiver because the government needs to buy some paperclips and has run out of cash.

All in all, research first! Just because you can "keep a eye on your investment" in the next street, it doesn't make it a wise investment. If everyone is doing the exact same thing in the same place, no one will be successful. Look to take advantage of systems that work, don't be greedy, and believe it or not, politicians do lie occasionally, and even if they don't, they can get incredibly economical in the truth department. Most of all, beware the seminars and investment property promises of riches. There are some well researched investments out there, just read the small print, research, and make sure you can afford it even if the local economy goes wrong!


Many thanks to Freshome.com for the Toilet Shaped House image.
Apparently the rent on that property is in the realms of $50k a week!

The Instant Access-Inside Track Saga goes on and on

Well after last nights rant at the TV we thought it appropriate that we bring you what is possibly the largest farce regarding the investment robbery world. The tale of Inside Track, Instant Access and all its other brothers and sisters.

There are numerous reports on all of the companies involved from many sources, so for convenience we will list them at the bottom of this article.

The articles mention several companies that all seem to be interwoven like a plot for an Eastenders Christmas special.

Instant Access,

L'Arome, (which went bust in the 90's owing millions)

Fuel Investments,

AfterCare Solutions,

The Pearson Foundation in Panama,

as well as the suggestion of several offshore trusts in the Isle of Man.

For those that are not aware of Instant Access and Inside Track, in a nutshell Inside Track held seminars amidst vast amounts of publicity claiming you could become an investment property millionaire if you paid them 5-10 thousand pounds. For your money they would tell you about the "opportunities they had sourced" (As it happens by people with little or no experience, let alone qualification) Which you the "Qualified Investor" would rush in and buy.

As it happens now, Inside Track and Instant Access are both in administration, no surprise considering the current state of the real estate industry and financing right now.

What the journalists appear to have missed though is a number of astonishing claims on the current Instant Access website made by Jim Moore. (Who signs off as the "Founder" now, when before he was nothing to do with anything at all, how strange!?)

Global Banking and Finance Crisis – IAP’s response for the future

As you will see, a lot of wittering on about how it is everyone elses fault and written in such a way it seems to be treating its' clients like 5 year olds which really adds insult to injury.

The statements that follow further on are just beyond belief though:

"Whilst the current climate is worrying and at best, testing for us all, (and I feel for every one of you with difficult investments at present - I also have my share - some have been the very same developments you may have invested in) I believe passionately in property investment for individuals like you and I, as a powerful complement, and alternative to straightforward "traditional" investments."

"As you are no doubt aware, I founded this business some eight years ago, and so, when other funding could not be sourced, it was left to me to decide the "ultimate fate" of the business.As a result of this, I've worked with my team in "crisis talks" since Friday in an attempt to come up with a solution.Our ongoing aim is to be able to offer you, as closely as we are able, the services and opportunities that you were previously offered, with minimal interruption and disruption. To do this I've been required to commit to further substantial investment in order to take the business forward."

So tell us Jimbo, how are you going to take the business forward? How are you going to get us out of this jolly old mess?

"This has meant it has been necessary to form a new operating company, "IAP Global"."

Whoa! What!!!!?????

"IAP Global is headed up by IAP's previous Managing Director, Tony McKay, and staffed by people I'm sure you will know and recognise.This team will help you to complete on properties that you've invested in, and continue to find new investments in areas of opportunity around the world for you to capitalise on as and when you feel you're ready.
You will appreciate these are difficult times for all of us, and we too have had to restructure and downsize in order to find a solution – as such we would ask you to please be patient with us should you feel you experience any service shortcomings in the near future – the decision was taken that "a smaller IAP was better than no IAP""

Now hold on a moment, let us get this straight. We have been to your seminar. We have paid you say 10K to see all your investment ideas. We have then handed over a huge wedge of cash to a developer that has then paid you a commission. You have let one company fade away, taken out a debenture on it just in time to see that you get paid before any other creditors and now you tell me that a smaller IAP is better than no IAP? Does this mean you can fritter away less of my money?

Apparently not! the page goes on to say,

"In the next few days and weeks, we will be launching a number of new "market appropriate" investment products, with a focus on high growth, minimum investment, minimum risk, and positive returns. IAP Global will also be launching its own website (at the same web address:- www.iaprops.com) - please ensure we have your current email and mailing address, and also, check the website regularly - we intend to make more use of it as a member communication tool.We will make sure we keep you abreast of any changes and developments, hopefully all good from now on. We all know that this is a difficult time for everyone, nobody is immune, but together I believe we can find a way through this and into profit. It’s difficult to be "courageous" at times like this, but you recognised property investment was good when you elected to get involved with us, and fundamentally that hasn't changed."

"Market Appropriate Investment Products". Hold on a moment whilst i climb back on to my chair after falling off it due to laughing so hard.

May we remind you that the last "Market Appropriate Investment Product" you promoted was as much use as a sunbed on a submarine?

An ingenious scheme to calm the heat and extract more cash from already desperate clients, some with debts into the millions already. If you are an Inside Track/Instant Access client, do let us know of the latest propositions. Be aware that any money sent has already disappeared, most likely to the Pearson Foundation in Panama, what is to stop the latest venture going the same way? I can't imagine this lot coming back from Panama in a few years time to face the music!

Irish Independent "On an inside track to a property jackpot"

The Free Library "No more takers for dream of becoming property millionaire"

The Guardian "Champion of buy-to-let boom succumbs to credit crunch"

Yahoo Business "Unanswered questions at Inside Track"

Fools Gold or Golden Fools? Channel 4

Astonished, flabbergasted, lost for words.

If any of you have watched Channel 4's aptly titled "The Price of Property: Fools Gold" with Jon Henly, you too are probably picking up your jaw from the floor. Personally, I have not lived in the UK for over a decade now and whilst no-one has been able to escape the rising house prices in the UK and Europe in general, I find it almost unbelievable to see a woman who managed to spend the best part of a million pounds on property she hadn't seen over a weekend, then on top of that, go to see one of them and wonder why the furniture was made of cardboard and seemed incredibly cheap!?

I must admit, although the numbers quoted seemed somewhat off, it is a stark, long overdue lesson on how not to invest money you don't have in something that is yet to exist and that you can't see! The woman in question (vague as she was) thought when asked that she would be some £400,000 out of pocket if she sold all 7 apartments there and then. (We don't know when this was filmed, so it could well be double that by now!)

The world of property seminars and exhibitions is a very murky one, not just from out and out misrepresentation hype, but the manipulation of the public into parting with their cash for something they know nothing about with the simple aid of a fancy dog and pony show in a posh hotel with big shiny TV adverts. (We'll come back to this murky world in a moment)

First, Ask yourself the question. Do you think you could fly a rocket to your local Tesco and back without crashing after an intensive course from NASA in just a weekend?

"Oh no!, that's just being stupid" I here you cry, well is it? This woman had gambled over half a million pounds of money she didn't have in a weekend.

The Channel 4 show went on, interviewing a young lad on his first "buy to let" investment at auction, saying "I can't lose, everybody needs somewhere to live" HELLO!! has no-one read the news lately???!!! like, in the past year?

Why and how do people manage this? even then when they have, why do they think there is still money in it?

It's simple. Hype, Press and Seminars.

Hype?

Whilst the Channel 4 show in this case has highlighted everyones mistakes after the effect, in an all very nice touchy feely way, we still have the wrath of tv shows to thank for the hyping of riches to be made from property investment, most of which are sponsored by some sales company or another, or in some cases property companies going to the length of buying TV stations to get just that bit closer to your wallet whilst you sip on your Horlicks on a cold winters night.

The press?

Well they will take ads, and sponsor events held invariably by media companies linked to real estate interests in some way or another (we have illustrated just the surface of this in previous posts)

Seminars and Exhibitions?

Dare we say it...... Inside Track and Instant Access. There. What a great idea, send us money and we'll tell you where you could buy. It'll make a profit, honest guv! The Instant Access website(s) does throw some confusion into the mix here, take a look at these 2 very similar links,

http://www.iaprops.com/itsredirect/index.asp

http://www.iaprops.com/

There is a great deal of debate and argument going on around Inside Track, Instant Access and all of it's owners, so we are going to refrain for the moment from commenting in too much depth, leaving you the reader to ask yourselves the question as to why a site might need 2 different versions. Once the dust settles a little, we will have a report on the shenanigans from both of these companies.

Back to the point though, before we rant on any more. Seminars. DON'T go there. No matter what the nice man in a shiny suit tells you or shows you, the chances of you paying off your house 150 times over in 10 minutes if you buy these 5 properties for only 5% down and take a 150 year interest only mortgage and rent them out to all of the 6 million tourists that walk past the front door twice over when it's 40 degrees below in darkest Bulgaria are slim to say the least!

As Public Enemy once said, Don't believe The Hype!

Ocean Estates - The Poseidon Adventure?

This week we take a look at what Ocean Estates is (or perhaps isn't) up to. As the title would suggest is a tale of much peril and trepidation.

Ocean Estates has been around for some 22 years under different owners and guises, of late though, it all seems to be coming to an end with their application for voluntary liquidation of the main business.

A different story from that of Viva Estates that we reported on last week with Ocean having had the foresight to spread its wings into the international market much quicker than its main rival of the times.

The problems that have finally bought it all to a head of late however are interesting to say the least. Earlier this year, there was talk of a takeover of Ocean Estates by none other than Hestiun, "Official Leisure Property Development Partner of Manchester United" under the name of "Royal Resorts"

After much negotiation and book checking however, this threw up a little problem, an outstanding tax bill dating back several years, as a result Hestiun quite rightly pulled out. Well done Hestiun. What has been left behind though is a bit of a mess to say the least.

Ocean still has its' Thai operation running. This was a separate entity from the very start, does very well and provides a fantastic service for clients in Thailand. On trawling around the forums, speaking with a number of agents and ex employees, Ocean Estates Spain does seem to be in rather a pickle.

In a nutshell, Ocean has filed for voluntary liquidation after the outstanding tax bill having been thrown up be the Hestiun/Royal Resorts audit prior to the offer to buy out. The tax bill in question is apparently in the realms of 200k or so. (Not a lot in the high flying world of international real estate!)

Whilst the proposed buy out was being drawn up, much of the Ocean data and sales material was moved over to the new operation, along with a number of members of staff all smiling as they went. At the same time, all of Oceans referring agents (Lead generators) were all being told "All is good, commissions will be through shortly, send us your invoices and we'll get them paid"

Needless to say the situation now for many of those agents is not good at all. The initial filing for liquidation took place around April time this year. To date there is still no resolve. Some agents were asked to "keep sending leads, they will get dealt with" When pushed for payment by agents, Ocean eventually declared the liquidation filing (After requesting invoices for payment) and simply threw up their hands saying it "Was all in the hands of the courts now" Of course, you can't submit the same invoice for payment to another company whilst it's being held up by the courts, so many agents are not thrilled at all.

The Public have not been amused with Oceans antics either, looking at the very popular forum on Eye on Spain there are a number of very unhappy folk, some of which are also ex staff.

Will Ocean survive? Unlikely. As slow as Spain can be in processing paperwork and filings for this kind of thing, if they were able to trade out of the hole, they would have done by now. Ocean is down to one main director as far as we are aware, Paul Blagden who busily fields the calls from agents wanting payment. The Banus office is still there (just) but really just waiting for the final wave to crash over it and drag it to the bottom of the sea.

Why has this happened? The tax situation in Spain is open to much interpretation to say the least having several loopholes in it. What you cannot do though is just say "Oh we didn't know" and expect the tax man to say "Oh that's alright then"

Next week The number of stories out there are extensive to say the least, we still have Red Hot Homes to cover, (We are awaiting confirmation on a couple of things before we bring you that story, please be patient) Polaris is being looked at as we write, and we are compiling something about the various forums out there concerning the real estate industry, both public and insider. Can they be taken seriously? We shall see!

What Happened To Viva Estates?

An incredibly busy week this week in the world of real estate and high finance! Lehman Brothers running around to re finance their failing business, several developers off to the liquidators, MRI's Darragh MacAnthony being hauled through the courts, and the demise of XL airways!

Still, all these stories hit the news and fade away shortly afterwards, often subject to the "Fish and Chip Wrapper" effect. (Today's news, tomorrows chip paper.)

We did promise we would bring people up to speed though with some of the former major players in the international real estate business, the likes of Viva Estates, Ocean Estates, Red Hot Homes and so on, this particular blog seems to be coming up for searches on these companies, so we went to find out.

This week we are going to cover Viva. Set up over a decade ago by Chris Mc Carthy, and having sold according to a press release from last year 8000 properties, one has to ask, where did it go wrong?

Well the truth has been difficult to find and define even when we thought we had it. There are hundreds of people who have worked for Viva over the years, understandable given the time they have been in business and the expansion that went on, but many have jaded opinions, some still have vested interests, and others with the Costa del Sol being the way it is, simply believe if you haven't heard a rumour by 10 am it's time to start one.

Viva had numerous offices on the Spanish Costas, the one pictured is the Los Boliches office, now desolate with a for rent sign in the window. Only 2 years ago you couldn't move for Viva propaganda, front page banner on the Sur in English, Viva plastered all over the buses, and huge road side signs everywhere you looked. Then, Viva Expo took over as the offices began to close. Viva Expo was created to occupy the former Viva head office after that (I would guess) became non cost effective to run. Basically the idea being to fill the huge space with developers, (which of course were charged a rental on the space), then spend some of the rental fees on advertising bringing in new punters from around the globe.

What happened was it produced some astonishing footfall figures for the first month or so, the reason being though was it was all members of the trade looking to see what was going on. The industry had already seen the "Sell your house for 2%" fiasco launched by Viva earlier that year which seemed to disappear never to be spoken of again, and the trade wanted to know what was going on now. Viva Expo now? well the flags are still out, but doesn't look like anyone is home, the Viva website is still up, and Chris is rumoured to have moved back to Liverpool with his tail between his legs.

A great shame to see such an enormous business collapse so rapidly, primarily due to far too rapid expansion with no real thought as to the need to change with the market. McCarthy is on record having said that the height of the market was in 2003, yet in the same breath stating that tourism was on the increase and it was better than ever in 2007.

Viva is not the first, and certainly won't be the last to disappear, the cull of agents in Spain is long overdue having filled up with many rogues who gave up their careers as checkout girls and hod carriers to become estate agents. Fortunately for the public, Viva only really dealt with the re-sale market, meaning most purchasers got what they paid for. Sadly, with the enormous interest in off plan, many companies have exploited the greed factor of those expecting to make a fortune from the off plan market world wide. The reality to come sadly is that many will be caught short with no where to turn, no developer to chase, and no recourse through the non regulated estate agent industry.

We will continue next week to bring you up to speed with Ocean Estate, Red Hot Homes, Parador, possibly Polaris World, and anything else that comes up!

Spanish Developer Colonial, The Next Martinsa Fadesa?

This week we see yet more doom and gloom emanating from sunny Spain in two hefty stories.

The first is regarding the ongoing process of sorting out developer Martinsa Fadesa. In a post on Saidiavacations.com by David Hewitt, Fadesa have failed to file it's half year accounts on time with the CNMV (The Spanish equivalent of the Financial Services Authority) with respect to it's finances. The reason for the delay apparently is two-fold, firstly Fadesa want the approval of the liquidators, and secondly "The chairman of the company, Fernando Martin, declared personal bankruptcy shortly after the company went into liquidation in an effort to separate his personal assets from those of the company." It is claimed that the filings will be made in "A few days more"

A few points of what this likely means to the everyday person out there once you read through the mumbo jumbo and take into account the "Spanish" take on things,

Fadesa wants approval of the liquidators - Likely to mean there is some shuffling to be done with respect to what is where on the finance front, and we have a lot of shredding to do.

Chairman of the company declared personal bankruptcy - Well as much as we don't enjoy kicking someone when they are down, but this could well mean that he knew it was coming, I mean how many billions in debt do you really need to be before the penny drops? Protection of personal assets is likely to be what that is about.

A few days more - Anyone who has lived in Spain has come across the word manana. Contrary to popular belief, it does not mean tomorrow, it means not today. It doesn't state when, just not today. If this is the literal translation of what has been said, then it will be a lot more than a few days before the CNMV get their papers!

Do note though, whilst all this is going on, Fadesa Maroc is still OK as far as we are aware, see our last post about the Morroccan arm of the company.

The second company with major interest is Colonial, they are off for a meeting with shareholders and creditors according to Reuters to have a chat about the possibility of a debt restructuring deal worth 8.9 Billion Euro, a right old tea party by the sounds of it with several major players involved, including RBS (Royal Bank of Scotland) who's shares closed down 3.51% on Friday.

There are others involved in the talks, the likes of Goldman Sachs, as well as Banco Popular and La Caixa, which earned the equity after swapping some debt earlier this year. Some earning that was eh guys!

These two developers will not be the last, Colonial is making the best efforts possible to avoid liquidation, but this isn't likely to disappear over night unfortunately, after the developer bankruptcies, the agents will follow. Some are already in that particular cauldron steeping as we speak, Viva Estates, Ocean Estates, and Red Hot Homes for example. From what we hear, it is sadly unlikely that any will recover.

Having said all that, perhaps it is what the industry needs, a healthy cull within a much hyped business, where almost any Tom, Dick or Harry can set up shop and develop away, or flog houses to unsuspecting people, playing on the "left my brain at the airport" syndrome.

We are researching in depth into the number of developers and agents in main areas of Spain at present that have gone out of business in the past 6 months, and the results are staggering so far, rest assured we will post the report when we are done, and what you can do if you have been affected.

Parking Mad - Investment or traffic stopper?

It's a hot sunny day and whilst browsing around for some inspiration, what should pop up? a report from PropertyWire about the idea that car parks and marinas are a good idea for investment!

OK, I can understand the asset point of view, the old adage of you "you cant make more land" and all that, but what is the reality, and is there any sense?

Well the report does specifically talk of Australia and says "We have had a higher than normal number of inquiries about car parks and marinas,' said Geoff Blaze of Melbourne based property company Blaze and Jenkins."

"As far as car parks go, it is the land that is of interest. Investors are interested because they can see future possibilities with the land and they want to explore the chances of developing these sites in the future,' he added."

This is all well and good, buy a lump of land, turn it into a car park, hope that one day someone wants to build on it, then hope you can get planning permission, and finally, all involved are bazillionaires at the end!

Nice thought! BUT, notice the number of "hopes" for a start, the article does go on to say

"There seems little doubt that car parks can be a lucrative investment. But university lecturer and property book author Peter Koulizos said because the car park market was so small compared with the broader real estate market; it was difficult to get reliable figures for growth. On the positive side, car parks are pretty maintenance-free,"

So do these car parks magically run themselves? hardly! The fact that no real figures seem to exist on the subject as far as growth, gain, CGT and so on does somewhat make you wonder how exactly the proposition is worthwhile. Granted there is money in the car park industry, no question about that in the major cities and tourist destinations, but to begin publishing willy-nilly to the public that this is a good idea?

Aside from the lack of figures, the unknown as to whether you might be able to develop later and so on, one major thing that is not mentioned is the restriction of foreigners buying property in Australia in the first place. There are numerous regulations and restrictions preventing Johnny foreigner from buying in Australia, right down to the fact that unless you are Australian, you can only buy off plan property, and only a certain percentage of a development can be owned by foreigners. There is no immediate sign of change to this ruling at the moment.

So, car park indeed, if you can buy a few spaces in a tourist destination and rent them to the locals year round, great idea! You will be liable for tax on your rental gains. There is some discussion on the Propertyinvesting.com forum, but admittedly no definitive answers. The other thing to consider is maintenance. I am sure like I, most will think "How much maintenance can a car park need?" According to Teignbridge Council in the UK, about £1.5 million should do the trick! Obviously they are responsible for a number of car parks, but it does still illustrate that no investment is ever really what it seems.

The truth about Martinsa-Fadesa.

Having spoken to and been contacted by agents, promoters and the public alike, here is our take on what is happening to Martinsa-Fadesa, one of Spain and Morocco's largest development companies.

Rumour:
Martinsa-Fadesa has gone bust and everyones money has been "stolen".

Fact:
Martinsa-Fadesa has actually filed for voluntary liquidation to protect itself and hopefully trade out of it's situation. Commonly done when businesses run heavily projected cash flow with little or no forethought that "booms" can actually end.

Rumour:
This situation effects all Martinsa-Fadesa construction.

Fact:
Not true, The Moroccan arm of Martinsa-Fadesa is a separate company, Fadesa-Maroc. As unwise as the Spanish arm has been in over exposing itself to vast debt it cannot even begin to manage, the Moroccan is independently owned and is incorporated as a separate company as a subsidiary. In layman terms, the Moroccan side can use the Fadesa name and resources, and the Moroccan side likely pays something in some form or another, whether that be a franchise type deal to use the name, of stock or what have you.

What this means to purchasers of Fadesa product is straight forward. If you have purchased property in Morocco on a Fadesa resort, your investment is safe for the time being, and there is no reason to panic.

If you have bought in Spain, a very different matter. Whilst Martinsa-Fadesa are assuring people they are looking for solutions to trade out of predicament they are in, It is all in limbo at the moment. Projects will get finished somehow, but it could be that the projects are sold on by the banks to new developers to finish. If this is the case, expect delays and specification changes. What is highly unlikely to happen is no resolve at all. This would not be in the interest of the government, local or national in Spain due to the number of properties involved, and the killing that any new developer will inevitably make to complete the project in the current climate.

A particularly misleading article was published in the Times back in July,
"Britons fear for deposits as Spanish property firm Martinsa-Fadesa folds"

The opening to the article is true to a point, it is possible that buyers of Fadesa product could lose their deposits. What it doesn't say is the steps that Fadesa are taking in a bid to get out of its situation. Fadesa also constructs in Hungary, which is also believed to be unaffected by this.

The Times also goes on very sharply to talk of the "Land Grab" situation in Valencia. This has absolutely nothing to do with the situation. "Land Grab" as it been termed by the media hacks in the UK is an alternative way for people to say "I need to complain because I am stupid and didn't read the small print" and "I thought it was just like home"


As a result, many people are in fear of having lost their deposits on Moroccan properties, as of this moment this is not the case and is unlikely to be either. As and when more news arises on this situation we will publish it.

Coming soon! Land Grab, What is it? What does it mean? and, How can I avoid it?