I Tried To Flip 7 Tenerife Properties And Failed

[Frank Hovis]

http://forums.moneysavingexpert.com/showthread.html?t=967681

I suppose they have had some value about this, in that they will have been boring everybody to tears the last few years with talk of their "overseas property empire".

Personally if I was investing £1.05m that I didn't have I would have looked at what could go wrong and paid a lawyer to go over the contract. But hey, that's me, what do I know?

I have got myself into a terrible situation and I need to know if there is anything I can do to get out of it without loosing around £80,000.

In September 2005, my partner and i decided to invest in off-plan apartments in Tenerife. The estate agents are english, have been in the business for 20 years, hold awards for anything that is going ie 'best estate agent in the canary islands,' and we had complete faith in them.

We were impressed by the apartments we saw, felt they were well priced and we decided this was a good investment.

We asked the estate what he felt if we were to purchase several and he told us that there was no problem in selling. We also asked him how we would know if they were to be completed on time which was January 2007. He told us that there were such heavy penalties that they had no option but to complete on time. On that basis we bought 7 and paid the deposit of around £29,000 each.

The rest you can guess. They havent sold - not one. completion has been delayed until we are truly in a property slump. We went out to see the apartments in May and was told that completion was around October. They also said that they didnt now think they had the right market for the property and were putting them out to other estate agents as well.

We have just been advised by the developers that they are now completed and they want the balance of £120,000 x 7 on 3rd July.

Obviously, we don't have that money and a mortgage is not a pheasable option as we are in our 50's and the high re-payments mean that we only have enough to pay for 2 months.

The only thing i can think of is to try and get out of the contract. The contract is in Spanish and it was never explained to us what would happen if we could not pay. The estate agents, who are a spanish registered company, have hinted that if the developer has to buy them back, we loose 50%.

any ideas gratefully received.

In Spanish eh? These slippery Spanish developers pulling a fast one with that.

It continues:

It seems that if we don't comply with the contract then the developer keeps half of our deposit money. Really that is nearer to £101,500 depending on the exchange rate.

We were just so assured that this would not happen. We have just been lied to again and again by the estate agents who we trusted as they have every award going.

If the developer had kept to the completion date, or even near it, then we wouldnt be in this mess now. But i hardly think that will allow us to get out of the contract.

Paying the balance is not an option as it is just so huge.

I think they may have answered their own question here...

well, it was a very long shot posting the thread, I know.

A few points just in case there is anything good that can come of it.

We paid the 35,000 euros x 7 out of money left to me when my mother died. yes, her hard earned cash that i was hoping would bring me in enough money for my retirement and to leave a significant amount to my children.

at that time the market in Tenerife was booming and the exchange rate was good. Buying off plan is common practice and people rarely have the money to actually purchase them.

We bought them purely as a speculation to sell, which the estate agent said would be no problem and they usually sold the same property 2 or 3 times before it was completed.

Theoretically, they have been for sale since the day we bought them. They have been for sale in earnest for a year now with the sales manager and his team of 7 'doing everything they can.'

The sales manager left the company 3 weeks ago, just after our meeting when he said the completion date would be October.

Right now the two directors are on holiday, which isnt helping.

The PA to the directors has asked for a stay of execution from the developers which they have refused.

I agree that we would be lucky to get half the money back.

I will look at the links given

and sadly it is not a wind up.

Whenever it goes wrong people take one step backwards and say they were doing it not for themselves but for their children. I've seen this several times. I presume they mean that had it all gone right then whatever they'd been unable to spend before death went to their children.

This sounds like a non-affluent family, left a few quid, seen too much property porn, go out and buy SEVEN SPANISH FLATS. You couldn't make it up but it may be the tip of the iceberg.

[repetitive bleats]

if a mortgage isnt pheasable then i reckon they are phucked. sounds like a 'looser' if you ask me...

[The 4 Horsemen]

The pyramid scheme has ran out of suckers and they were the last ones in, they only have their own greed to blame.

[talksalot81]

It sucks for them but how many times do people have to get stung before they realise that you trust nobody with their money! Do your own research and don't get greedy!

[crouch]

http://forums.moneysavingexpert.com/showthread.html?t=967681

I suppose they have had some value about this, in that they will have been boring everybody to tears the last few years with talk of their "overseas property empire".

Personally if I was investing £1.05m that I didn't have I would have looked at what could go wrong and paid a lawyer to go over the contract. But hey, that's me, what do I know?

I have got myself into a terrible situation and I need to know if there is anything I can do to get out of it without loosing around £80,000.

In September 2005, my partner and i decided to invest in off-plan apartments in Tenerife. The estate agents are english, have been in the business for 20 years, hold awards for anything that is going ie 'best estate agent in the canary islands,' and we had complete faith in them.

We were impressed by the apartments we saw, felt they were well priced and we decided this was a good investment.

We asked the estate what he felt if we were to purchase several and he told us that there was no problem in selling. We also asked him how we would know if they were to be completed on time which was January 2007. He told us that there were such heavy penalties that they had no option but to complete on time. On that basis we bought 7 and paid the deposit of around £29,000 each.

The rest you can guess. They havent sold - not one. completion has been delayed until we are truly in a property slump. We went out to see the apartments in May and was told that completion was around October. They also said that they didnt now think they had the right market for the property and were putting them out to other estate agents as well.

We have just been advised by the developers that they are now completed and they want the balance of £120,000 x 7 on 3rd July.

Obviously, we don't have that money and a mortgage is not a pheasable option as we are in our 50's and the high re-payments mean that we only have enough to pay for 2 months.

The only thing i can think of is to try and get out of the contract. The contract is in Spanish and it was never explained to us what would happen if we could not pay. The estate agents, who are a spanish registered company, have hinted that if the developer has to buy them back, we loose 50%.

any ideas gratefully received.

In Spanish eh? These slippery Spanish developers pulling a fast one with that.

It continues:

It seems that if we don't comply with the contract then the developer keeps half of our deposit money. Really that is nearer to £101,500 depending on the exchange rate.

We were just so assured that this would not happen. We have just been lied to again and again by the estate agents who we trusted as they have every award going.

If the developer had kept to the completion date, or even near it, then we wouldnt be in this mess now. But i hardly think that will allow us to get out of the contract.

Paying the balance is not an option as it is just so huge.

I think they may have answered their own question here...

well, it was a very long shot posting the thread, I know.

A few points just in case there is anything good that can come of it.

We paid the 35,000 euros x 7 out of money left to me when my mother died. yes, her hard earned cash that i was hoping would bring me in enough money for my retirement and to leave a significant amount to my children.

at that time the market in Tenerife was booming and the exchange rate was good. Buying off plan is common practice and people rarely have the money to actually purchase them.

We bought them purely as a speculation to sell, which the estate agent said would be no problem and they usually sold the same property 2 or 3 times before it was completed.

Theoretically, they have been for sale since the day we bought them. They have been for sale in earnest for a year now with the sales manager and his team of 7 'doing everything they can.'

The sales manager left the company 3 weeks ago, just after our meeting when he said the completion date would be October.

Right now the two directors are on holiday, which isnt helping.

The PA to the directors has asked for a stay of execution from the developers which they have refused.

I agree that we would be lucky to get half the money back.

I will look at the links given

and sadly it is not a wind up.

Whenever it goes wrong people take one step backwards and say they were doing it not for themselves but for their children. I've seen this several times. I presume they mean that had it all gone right then whatever they'd been unable to spend before death went to their children.

This sounds like a non-affluent family, left a few quid, seen too much property porn, go out and buy SEVEN SPANISH FLATS. You couldn't make it up but it may be the tip of the iceberg.

"The value of your investment can fall as well as rise............"

[Nationalist]

The moral of this story is: never sign a document in a language you don't understand.

Given the developer didn't compete on time the wanna-be flipper should have a case to void the contract, but I'll bet it's worded in the developer's favour.

[electricblue]

Greed, greed, greed. Come in suckers...

[Gremlin]

Stupid greedy to$$ers. Although they are probably perfectly nice people it still astounds me that someone going into their retirement years would plough all that money into something they haven't seen, don't understand (contract in spanish!!! )and have no control over. Then they are surprised when the property salesman ( EA ) tells them it is a good buy and it turns out not to be. Not only do these people want money for nothing they can't even be bothered to research it themselves. At home they probably have a genuine piece of the cross, a real sample of Nessie poop and a map to the pot of gold at the end of the rainbow given to them by a rather charming leprechaun ( plus their seven holiday apartments ).

[pepsi]

They didn't even "buy SEVEN SPANISH FLATS", what they did was buy a Future; and no different to having bought Oil for delivery in in 6 months time. I'll bet some people will be doing that soon!

At then end of the day it was a gamble. It's not that different to getting a cast-iron tip on the Derby (or more accurately on a spread-bet).

They could have won big - but they didn't, they lost. Why didn't they look at the potential downside? It looks like they didn't even quantify it. Probably because "Property values can never go down"!

[General Melchett]

PMSL at just your thread title!

[qazwas1]

I have read that whole thread and seems an amazingly sad story. To be fair over the years I have lost and gained money by doing stupid greedy things so I understand that position. Unfortunately when a quick buck can be seen to be made, common sense disappears.

I am now in my mid 40's and those days of wild speculation are behind me, now I am quite content getting the 5% or so from the standard interest rates. Better that then -10%++! There is a huge lesson in that thread, not least the knowledge and the value of taking out insurance against 'when lighting strikes'. Had that couple taken out insurance they would be still laughing now.

[Chriso]

Theres going to infinite stories of these sort in the years to come.

I think I'm too soft for my own good, because when everything was booming and the crap was getting pushed in your face everyday, it was unbarable. Now the kak is hitting fan, and the losses are becoming 'real', and lives are going to start being ruined, I'm feeling sorry for those on the fringes who are going to be affected, kids, trusting partners etc.

I'm sure I'll get over it though.

[The 4 Horsemen]

Had that couple taken out insurance they would be still laughing now.

Didn't know insurance existed that covered losing out on ill-considered investments.

[Mrs Bear]

Whenever it goes wrong people take one step backwards and say they were doing it not for themselves but for their children. I've seen this several times. I presume they mean that had it all gone right then whatever they'd been unable to spend before death went to their children.

It probably was intended to benefit the children. Most people I know think first and foremost of their children, especially if (like me) they have grown-up children who can't even afford half a shoebox at the moment.

My own modest but meticulously researched and relatively successful property investment was a Head v Heart decision, made largely with my children in mind. If I didn't have any I'd have bought something I really wanted.

However daft she may have been, I for one do feel sorry for the OP.

[Selling up]

I'm not convinced it's a genuine post anyway. Just sounds too irresponsible to be true.

£1m, 7 properties, contract in foreign language...

[davidg]

Then they are surprised when the property salesman ( EA ) tells them it is a good buy and it turns out not to be.

That was probably good advice in the context of the 2005 market when they were sold their futures contract.

[Peter & The Wolf]

I'm not convinced it's a genuine post anyway. Just sounds too irresponsible to be true.

If they reply positively to my invitation to invest in a ground floor opportunity: My Ostrich Farm, we'll know they're genuine.

[blankster]

I think this guy was told the truth about the situation as it was at the time. Neither he, nor the estate agent nor the builder phoresaw the coming slump, possibly.

[sossij]

We paid the 35,000 euros x 7....

.

.

.

Right now the two directors are on holiday, which isnt helping.

[frozen_out]

Yeap. One born every minute.

[aliveandkicking]

We are a funny lot.

We are all such perfectly nice people. One lot want the market to crash so they can get rich as it rides higher again.

One lot just want to make a bit of money and go buy 7!!! opportunities to buy 7 completed apartements they never intend owning just to make 7 times the amount of money they might make on only one

I confess to being confused

I seem to be a perfectly nice person but if the prices fall to zero and we can avoid world war 3 and i still have cash left in the bank i say bring it on!

All done in the nicest possible taste of course:-(

[Guest sillybear2]

There is a huge lesson in that thread, not least the knowledge and the value of taking out insurance against 'when lighting strikes'. Had that couple taken out insurance they would be still laughing now.

I doubt they could afford the premium for stupidity insurance.

[Guest sillybear2]

We are a funny lot.

We are all such perfectly nice people. One lot want the market to crash so they can get rich as it rides higher again.

I think you'll find that many would just like a roof over their heads and some stability for their family without having to live a life of penury or beholden to BTL parasites, the future 'value' of a home bought for a reasonable price is niether here nor there, it's a secondary concern to its primary function.

[CviewUK]

Don't get scammed in the Canary Islands.

It is much safer to buy off-plan in Egypt.

They even have the same currency: The Pound.

http://forums.moneysavingexpert.com/showthread.html?t=961631

[Guest sillybear2]

I think this guy was told the truth about the situation as it was at the time. Neither he, nor the estate agent nor the builder phoresaw the coming slump, possibly.

And nor is it their job, they are salesmen working for the developers, they are not there to 'help' buyers or provide financial planning! EA's only have mortgage advisers so they can screw every possible last penny out of a buyer for the benefit of the vendor and their commissions, hence enterprises like Foxtons' "Alex Hall".

Would you seriously walk into a BMW garage and ask a salesman "is this a good time to buy a new car, and what make do you think is best? Shall I buy the small one or the most expensive one possible? And could you help me with the finance so I can pay the highest price possible, oh, and should I buy two cars? Wow, you suggest that I buy 7! Ok, could you put this into a long contract in a foreign language so I don't know what I'm signing, and you say delivery of the cars will be a country 800 miles away, great!"