How to avoid property scams

I consider myself to be reasonably street wise - I have been running businesses for over 30 years, and loads of people ask my advice. So, I thought I would not get caught out by scams, but in property investment the people involved seem to be on different level to any other industry. Maybe it is simply the smell of money, but I think that there is a class of people who will do anything to separate people from their savings - and don't appear to care about the damage they do to their lives. I can live with investments not performing - I can live with losses - but what I find abhorrent is serial liars - and this is what I am trying to help people avoid in this document.

My biggest recommendation to anyone looking to make an investment in property is to only invest in something you know about. There are loads of people promoting seemingly brilliant investments - many of them overseas. Please, avoid them all. If it's a property in your street, that you found, then the chances are it will do you well. If it's recommended by someone promoting 'better returns' then you can expect them to charge a fee to sell you something that is almost certainly a bad investment. See my article about my experience with a man called Rod Thomas for a good example. I am not alone; I know people lose money investing in properties in Memphis, Detroit, Florida, and Crete. If you want to invest in property and you live in the UK then invest in the UK. There is absolutely no other country that I have come across that has a property market like the UK. In the USA, properties depreciate as they get older - same as cars. The same probably goes for any location that has lower population densities than the UK, and is not an island so can't make more land.

However, it's not just overseas where property scams exists. I got charged £10,000 by a chap called Glen Armstrong for him to find me a property to be converted in to flats. He found me a property - but planning for the conversion got turned down, twice. I eventually sold the property for a small gain, but nothing like as much as Glen promised.

I have heard of people who have lost their life savings by 'investing' in schemes that make promises about higher returns than pensions or banks typically provide. They promote 'armchair' investments - implying that you invest the money and sit back and watch it grow. Please - don't believe them. They may not be all liars and cheats, but I have yet to find anyone I would recommend - and I have been actively investing in this area for over ten years. If I can't find a decent 'armchair' investment then you are very unlikely to get lucky on your first investment. As a very minimum, only invest what you can afford to lose. Investing your pension in a high risk overseas property deal is very unlikely to have a good outcome.

It is very easy to be persuaded by the sales patter of people promoting property investments. These people can be found at main stream property events, as well as widely advertising and promoting their scheme on-line. A typical aspect is that they have a time limited offer so you need to invest quickly, often on the day or within a week, which is nothing like enough time to do proper due diligence. It takes a long time to get to know whether an investment is worthwhile. Property Tribes is worth looking at for advice, although even this site has had posts removed from people discussing their appalling experience with Rod Thomas after he threatened legal action. Rod Thomas has threatened me with legal action over an on-line post I made about my experience of him, and I have heard of many people promised compensation only if they sign agreements not to publicise their experiences with him. To my knowledge, no one received any compensation, but they still can't inform others of their situation because of the agreement they signed.

Another area to be very careful with is joint ventures if you are the funding party. The other party has absolutely nothing to lose if things go wrong. I have experience of a developer called Dean Powers, who agreed to a fixed interest payment secured against plots of land - and he has failed time and again to make the interest payments, to the point where I will probably have to take legal action against him, and I will almost certainly end up out of pocket. I funded a project in Cobham which one of the founders of the Surrey Property Exchange, Richard Simmonds, convinced me would be a 3 month investment - 4 years on I still have not got my investment back. People might believe they have found the perfect deal and just need funds to make it work, but the reality is that joint ventures often don't work, and when they don't then is the person who provides the funding who ends up out of pocket.

Finally, don't assume any of the institutions there to protect people will do anything. The Financial Conduct Authority (FCA) are particularly unwilling to investigate wrong doing by one of their members, but the police, fraud detection and a host of other organisations that exist to protect good people, simply can't be bothered to help. We are on our own when it comes to fighting property scams.