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Guardian: No More Takers For Dream Of Becoming Property Millionaire

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It couldnt happen to a nicer bunch of ponzi-ponces.

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No more takers for dream of becoming property millionaire

· Buy-to-let investment firm ends learner workshops

· Business model collapses in face of lending crisis

* Patrick Collinson

* The Guardian,

* Saturday March 8 2008

* Article history

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This article appeared in the Guardian on Saturday March 08 2008 on p39 of the Financial section. It was last updated at 00:04 on March 08 2008.

Britain's biggest property investment company, which boasted in newspaper ads that investors could "give up work and be a property millionaire instead", said yesterday it would suspend seminars and cut 40 jobs - in the latest sign that the buy-to-let fuelled property boom is over.

Inside Track operated weekend-long investment seminars at £2,500 a head, which spurred small investors to pour £2.5bn into new-build buy-to-let properties, largely in Manchester, Birmingham and Leeds. At one point, Inside Track and its parent company, Instant Access Properties, were believed to be behind one in 10 of all new-build apartment purchases in the UK.

Yesterday the firm's managing director, Tony McKay, said Inside Track, based in Kingston upon Thames, would axe 40 of the company's 220 employees "due to the current difficult market conditions in the UK". Once its already-booked programme of seminars is over, which according to its website will be March 24 in Guildford, Surrey, the company will abandon workshops aimed at enticing new investors.

"Our seminar company has seen a fall in the number of people who want to invest in the property market for the first time and that is understandable in the current climate," said McKay.

The cutbacks will affect only the property seminar division of the company. Its three other divisions - a mortgage brokerage called Fuel; the property sales arm Instant Access Properties, and AfterCare Solutions support services - will continue operations as before. Inside Track was founded in 2001 by Jim Moore and its clients have since bought 15,438 properties. Yesterday it said that an independent valuation report for 2007 showed that the total return on investment averaged "in excess of 40%".

But fast-eroding confidence in property prices, plus the disappearance of 100% mortgages and stricter lending terms, have seriously damaged Inside Track's business model. Fewer people are attending the seminars and cheap finance has dried up.

Melanie Bien, of Savills Private Finance, said: "Lenders are either pulling out of the buy-to-let market or reducing their maximum loan-to-value. Some are refusing to lend against certain developments, and there is a lot of concern in the marketplace about discounts offered on new-builds. Surveyors are also being far more cautious about valuations, for fear that the lenders may go back to them later and query valuations if prices subsequently fall."

Nearly 60,000 people attended Inside Track's free workshops in the year to March 31, 2007 but that figure was down on the year before, and has fallen further since.

At the workshops, held in hotels around the country, investors are encouraged to spend £2,500 for a single or couple for weekend-long seminars in which they are shown the secrets of property millionaires.

At the paid-for weekend seminars, investors are asked to part with a further fee, typically £5,000 to £10,000 to obtain membership. By becoming a member, investors are given access to the "hottest deals in the UK and overseas".

Most are discounted new-build buy-to-let properties in Manchester, Leeds and Birmingham, plus holiday villas in Spain, Florida and Portugal.

Ray Boulger, of John Charcol, said: "It comes as no real surprise that there are cuts at Inside Track. Lenders are tightening criteria at a rapid pace. We have just seen Woolwich cut its maximum loan-to-value on buy-to-let from 85% to 75%, while other lenders are demanding higher rental cover."

Inside Track is owned by Instant Access Properties, itself majority owned by the Panama-based Pearson Foundation. Minority shareholdings are held by Isle of Man trusts, including one designated for the founder Jim Moore and his former wife Kim.

The last available figures for the entire Instant Access group - to April 30, 2006 - showed turnover of £44.8m and pre-tax profits of £10.9m, a fall of £1.1m on the previous year.

How it works

Want to climb on to the buy-to-let bandwagon and become a property millionaire? The secret, according to property investment clubs, is to obtain discounts on new-build apartments so you can start building a portfolio with virtually no upfront payments.

The trick is to find a property where the developer is willing to offer "off-plan" buyers a discount of at least 15% off the brochure price. This means a buyer can apply to a lender for a buy-to-let loan equal to 85% of the "value" of the apartment - even though this amounts to 100% of the cash needed to buy the property.

In a rising property market, the trick works. But once property prices fall, tenants fail to pay expected rent levels, or lenders are unwilling to accept that discounts are real, and the model fails.

Surveyors are now taking a more conservative approach to valuations, which means that buy-to-let borrowers are finding it tougher to raise the cash. And lenders have also clamped down on "day one" remortgaging to extract equity, preventing buyers from rapidly building themselves a portfolio.

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We have two threads on this.

All I can say is wow!!!!

No more radio ads on LBC, with corny references:

"I just couldn't see how to move forward with my property porfolio. So I took the inside track. Now I own 20 properties."

"I've massed a property portfollio worth inexcess of £2m."

"Blah blah blah blah"

Some one should do a documentary on the winners and losers.

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"Inside Track is owned by Instant Access Properties, itself majority owned by the Panama-based Pearson Foundation. Minority shareholdings are held by Isle of Man trusts, including one designated for the founder Jim Moore and his former wife Kim."

So does that mean when people start to sue them the money has already flown the nest?

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We have two threads on this.

All I can say is wow!!!!

No more radio ads on LBC, with corny references:

"I just couldn't see how to move forward with my property porfolio. So I took the inside track. Now I own 20 properties."

"I've massed a property portfollio worth inexcess of £2m."

"Blah blah blah blah"

Some one should do a documentary on the winners and losers.

"£200,000 profit, maybe more...I can never remember."

"Would I recommend them? I think I just did."

Almost as bad as the Win Investing ads.

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No more Radio ads :(

"Thanks to Inside Track I've amassed a portfolio of debt in excess of £2.5 million!" :lol:

Still it'll give them something to bore everyone with for the rest of their lives: "I was doing so much debt, man. I just couldn't stop. It was the time of free money - If you didn't owe over a million you weren't there."

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This is great news - fingers crossed they go bankrupt :)

Maybe some of those greed-driven BTL-lemmings who attended the seminars will sue the firm now that their 'investments' have fallen in price so much - heres hoping! :P

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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