Question
I had a cold call from Cavendish Moore. Normally I give cold callers short thrift, especially when they are not regulated, but their pitch was quite convincing. Do you have an opinion about them and their product?Answer
I haven't heard of them before, so can only go by what's on their website. They appear to be property advisers who'll supposedly help you find and buy property/land at knock down prices.
Regardless of their merits, I'd be very wary given they're not authorised or regulated by the Financial Services Authority - if anything untoward happens then you'll be on your own.
A quick look on the Companies House website suggests Cavendish Moore Limited was incorporated on 19 March 2009, so not much scope for a track record as yet. A director called Michael Moore was appointed on 24 June 2009 then terminated within 2 months...odd...but perhaps there's an innocent reason for this.
Anyway, their websites suggests they can help you buy UK properties at 25% - 35% less than a recent RICS (Royal Institute of Chartered Surveyors) valuation and US properties at 70% - 85% off current market valuations. And there are also services to help you buy and develop land. No details of their charges or exactly how they operate.
At face value this all sounds quite attractive, after all, who doesn't want to buy bargain property? However, I suspect it's too good to be true.
My view is that an asset is only ever worth whatever someone will pay for it. That is, you might be able to buy a property for £75,000 that's theoretically valued at £100,000, but it's only worth £100,000 if someone will pay you that much for it - and in the current climate I suspect you'll struggle. After all, if someone's happy to pay £100,000 then why would the seller accept £75,000? Ok, I accept distressed sellers might take a lower price for a quick sale, but that type of investment only tends to make sense in buoyant property markets when you can be confident of selling on at a profit - in the current market I'd be nervous.
The same is even more true of US property. Prices have tanked because there are way more sellers than buyers. So don't be fooled into thinking you're getting a 70%+ discount. Whatever you end up paying is arguably the current market price for the property, so any other valuations are probably pie in the sky.
Buying land with a view to developing can be very profitable, if you can get planning permission and build something that someone wants to buy. But it's not easy. Most landowners who think they can get planning permission without too much hassle will do so, as the price of their land will soar, so finding untapped opportunities is difficult. And with the economic outlook still uncertain I'd avoid property development if you're hoping to make a short term profit.
If you can drive a hard bargain and sit tight for 5-10 years then buying property over the next year or two may turn out to be a decent investment. But it's by no means a sure thing.
Even if you disagree with my above views, ask yourself why any company, including Cavendish Moore, would spend a lot of time cold-calling to drum up investors if they really do have a hot investment proposition? Surely they'd be more interested in borrowing money to invest themselves and make a fortune?
I had a cold call from Cavendish Moore. Normally I give cold callers short thrift, especially when they are not regulated, but their pitch was quite convincing. Do you have an opinion about them and their product?Answer
I haven't heard of them before, so can only go by what's on their website. They appear to be property advisers who'll supposedly help you find and buy property/land at knock down prices.
Regardless of their merits, I'd be very wary given they're not authorised or regulated by the Financial Services Authority - if anything untoward happens then you'll be on your own.
A quick look on the Companies House website suggests Cavendish Moore Limited was incorporated on 19 March 2009, so not much scope for a track record as yet. A director called Michael Moore was appointed on 24 June 2009 then terminated within 2 months...odd...but perhaps there's an innocent reason for this.
Anyway, their websites suggests they can help you buy UK properties at 25% - 35% less than a recent RICS (Royal Institute of Chartered Surveyors) valuation and US properties at 70% - 85% off current market valuations. And there are also services to help you buy and develop land. No details of their charges or exactly how they operate.
At face value this all sounds quite attractive, after all, who doesn't want to buy bargain property? However, I suspect it's too good to be true.
My view is that an asset is only ever worth whatever someone will pay for it. That is, you might be able to buy a property for £75,000 that's theoretically valued at £100,000, but it's only worth £100,000 if someone will pay you that much for it - and in the current climate I suspect you'll struggle. After all, if someone's happy to pay £100,000 then why would the seller accept £75,000? Ok, I accept distressed sellers might take a lower price for a quick sale, but that type of investment only tends to make sense in buoyant property markets when you can be confident of selling on at a profit - in the current market I'd be nervous.
The same is even more true of US property. Prices have tanked because there are way more sellers than buyers. So don't be fooled into thinking you're getting a 70%+ discount. Whatever you end up paying is arguably the current market price for the property, so any other valuations are probably pie in the sky.
Buying land with a view to developing can be very profitable, if you can get planning permission and build something that someone wants to buy. But it's not easy. Most landowners who think they can get planning permission without too much hassle will do so, as the price of their land will soar, so finding untapped opportunities is difficult. And with the economic outlook still uncertain I'd avoid property development if you're hoping to make a short term profit.
If you can drive a hard bargain and sit tight for 5-10 years then buying property over the next year or two may turn out to be a decent investment. But it's by no means a sure thing.
Even if you disagree with my above views, ask yourself why any company, including Cavendish Moore, would spend a lot of time cold-calling to drum up investors if they really do have a hot investment proposition? Surely they'd be more interested in borrowing money to invest themselves and make a fortune?
Read this Q and A at http://www.candidmoney.com/questions/question334.aspx
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