Property Investor Today recently spoke with Alex Cook, Litigation Solicitor and Partner at Helix Law to discuss the rise of property development mentoring and how to avoid the pitfalls of property development training.
What is property development training?
There’s a whole host of people out there telling us we can all be property millionaires. The world of property development education, training and mentoring isn’t all it seems, however.
Potential targets are told that with little or no experience, they can learn everything there is to know about investing in property, with seductive returns.
They’ll guarantee mentoring and support – the premise according to shady trainers is simple – pay up and your success awaits you. ‘Property development’ appears to be more popular than ever, and now low interest rates and soaring property prices are among the factors fuelling this trend.
What could go wrong?
Unscrupulous training companies and individual brands sell the property dream – they can ‘help you on your journey’. So what’s the catch? The inflated price is a good place to start.
Increasingly, in London and across the UK, I see evidence of failed property investments. Examples include failed loans, joint ventures, partnerships, HMOs, commercial and residential conversions as well as land and building investments.
None have been thoroughly researched, prepared or executed within workable, professional and legitimate parameters.
The haunted looks on the faces of the people I represent stay with me. Their stories have common themes. At stake could be someone’s entire life savings, their pension, or the future of their business. The consequences can be devastating.
How can I spot an unscrupulous training company?
You’d be forgiven for thinking you could easily spot the perils of such a scheme. Property developers can be individuals, joint partners, new or established businesses. They can be on both the lending and the borrowing side of the equation. Don’t be fooled though; some of these training companies are sophisticated in their approach in order to convince you to part with your cash, much of which can often end up lost.
As we’re often told, doing your due diligence on any business partner is wise. However, these property development companies are sophisticated and will often have a host of accomplices keen to reinforce their message including brokers, surveyors, and even lawyers.
It will seem there are hordes of other paid up members, mentees and trainees, happy to reinforce how great their own decision to invest has proven to be, how they’re happy to have ‘started their journey’.
Unscrupulous hustlers spot their ‘marks’ and act accordingly. Such courses are not easy to identify; you may think since the course is free, there is little commitment or investment required on your part. This is simply a way of attracting people in to ‘property development.’
Don’t assume an unscrupulous company is a small one – crooked companies turning over millions of pounds in this industry aren’t unusual. It isn’t uncommon to see incomplete or incorrectly drafted documents that are full of legal holes, risks and problems.
What should I do if I’m unsure about a company?
Trust your instincts – even if you feel grateful to have been given the opportunity or if you are close to the mentor involved – be sure to get any contracts and documents looked at by an independent legal professional in advance.
Any reputable developer would be more than happy for you to do so. Even if everything seems legitimate, if you have any doubts err on the side of caution and don’t get involved.
How many training companies like this are there?
In my opinion, a considerable proportion of the seminars, workshops, courses and education programmes on offer currently are sales funnels.
Sign up to that free event and you’re on someone’s radar and in someone’s scope. Many of these events are cash generation systems.
Don’t companies and individuals need an accreditation to teach?
You may be surprised to hear there is no accreditation required to teach or mentor would-be property developers; there is no governing body. The result? Almost anything can go wrong.
Loans aren’t repaid, joint ventures fall apart, and partnerships fail. Sometimes the rising market has helped plaster over the cracks. In a more challenging or even falling market? The potential impact and fallout can be terrifying.
I think I may have been duped – what should I do?
I deal with transactions and ‘deals’ when something goes wrong. When something isn’t delivered as promised, your loan isn’t repaid; the joint venture fails or partners don’t do or deliver what was promised. There is hope out there and not all is lost.
Our team are happy to back our own advice and only to be paid if we’re right. It’s important to leave any embarrassment at the door; a reputable solicitor who specialises in this area will understand how this type of scheme works and the convincing techniques used to make people part with their money.
I have years of experience in this sector, and while I can’t advise how to invest your money, I will do everything in my power to help you recover some of your money or assets should you fall victim to such a scheme.
Are there any reputable property training companies?
Not all training schemes are bad and some mentors add considerable value. ARLA Propertymark, the National Landlords Association and the Residential Landlords Association all offer excellent education and learning programmes.
Most landlords, investors, companies and funds I work with would advise you to think long term – it’s unlikely you’ll get rich overnight. Don’t be pressured, railroaded or forced into doing anything you’re uncomfortable with.
‘No deal’ is better than a ‘bad deal’ – genuine property developers will tell you about the pitfalls as well as the triumphs.