Thousands of investors who bought investment properties through Blue Chip Financial Solutions must be biting their nails. Their story is a cautionary tale for anyone looking to buy packaged property investments.
The smooth sales pitch the Blue Chip investors received from their “investment advisers”, otherwise known as salespeople, convinced them to buy Auckland apartments and other properties without even being told exactly where the property was, or viewing it. They were “guaranteed” their rents would be paid regardless of whether there were tenants or not.
To make life easy for them, Blue Chip lined up mortgage finance for them and a tame solicitor and accountant to give them “advice”. Yeah right!
As it transpires many of them were sold properties in leaky buildings, others haven’t even received their properties despite paying deposits up to four years ago and many of those with properties haven’t been receiving their “guaranteed” rents over the past few months.
I have my fingers crossed for each and every one of these investors, that they’ll get the money or properties they’re owed. But it’s unfortunate that people are so naïve that they really believe they can simply sign on the dotted line, then do nothing except watch the rents and tax deductions roll in, whilst the property rises in value.
There are of course examples where investors have bought into such investments and they’ve worked. But mostly it was luck. The market was rising anyway and they were swept along with it.
Just this week I was introduced to a couple who were considering buying a managed property in Australia. The husband had lapped up the sales pitch and completely pooh-poohed my cautionary notes. Why weren’t Australians snapping up these properties if they were such good investments? Would they be getting independent valuations or rely on those provided by the company selling the properties? Did they realise that they would pay stamp duty and capital gains tax on their investment?
I was wasting my breath. All too many people let greed overcome caution when offered a sure-fire investment that is going to make them wealthy.
Sure plenty of people have got wealthy on the back of the latest property boom and buying rental property and managing it isn’t difficult. But don’t rely on someone that’s selling the property to do it for you. If the investment looks easy that’s a warning. Unless you’re willing to get independent valuations, legal and accounting advice, just don’t do it.
Do you know someone who has bought a packaged property investment? How has it fared?