Are we being deceived by Overseas Property Developers?

[PRP]

I’ve recently been discussing with a few well know Overseas Property Developers about some off-plan and ready to move in apartments in Bulgaria and I can’t believe what I am hearing!

Am I the only one who feels this way?

The phrases “unbelievable”, “never to be repeated” and “never been a better time to invest” sales patter are extremely convincing to the less investment savvy. However, I am beginning to find some of them using an approach that is downright deceptive in the way the investment opportunity is being presented.

For sure, there is a lot of development going on and the prices are still attractive but those investors seeking to buy on a buy-to-let basis are surely being taken for a ride.

In one of the developments, over 70% of the units already sold, have been purchased on a buy-to-let basis - people who need to rent out their property to meet the ongoing financial commitments of a mortgage. I was told on not one, not two but three occasions by the sales manager, the rental proposition and demand is extremely high and that I should easily be looking to secure between 25-30 weeks of rental income each year. This is a blatant lie!!!

Achieving 25-30 weeks of rental income each year is possible for some but not in a development that is saturated with this level of competition. With the saturation of rental properties in such a small area (and this was just one of about 12 new developments in the local area) I predict that for many buy-to-let investors the outcome will be financial ruin.

Has anyone else experienced the same?

Chris Thomas
Property Rental Profits

[just-alex]

Good point but I think it goes even further than that............there are strict guidelines for estate agents and marketers of property in the UK which do not seem to apply or are being flouted by anyone who is primarily using the internet as a commercial sales tool for property abroad..............

First duty is that of not misleading clients by providing erroneous, ambiguous, confusing, inaccurate or exagerrated info.....and making outrageous claims.

Out of date info on the internet is also a huge problem....some agents and developers are leaving inaccurate old info on their site up to a year or more after its posting.

Secondly it is not permitted to take advantage of a client's lack of knowledge or experience. Thus those who follow the above methods are breaking the rules twice over.

The websites are often poorly researched and make ridiculous 'ease of travel claims' and do not check or deliberately mis-supply distances and availabilities.

Telephone conversations which follow after the 'bait' has been swallowed frequently follow the same misleading path with claims about progress, planning permissions etc all being exaggerated. Reservations have been know to be 'double booked'.....in order to transfer clients at a later date to a different, harder to sell, property and to get money in quicker...

Developers and agents who produce contracts bias them heavily in their favour and leave little time for clients to read , digest and thoroughly examine the nuances disguised within, often in poorly written and confusing grammar no matter what language ,by clever lawyers.

All in all I am having serious second thoughts about the International Property World and it's dubious and unethical practices.........based on two years researching and buying experience and treatment in Spain, Dubai and Morocco.....I don't expect other countries are any better............

You have consider if the risks are worth the investment, I suppose, but there are going to be a lot of casualties along the way.................

[Goldberg Global]

Chris, interesting. There is So much bull in international real estate, I hear of 1 or 2 hard luck stories every week. Mis selling is so rife, I think maybe regulation needs to come in.

Just out of interest who was offering or blagging in Bulgaria?

[Sunny Days]

Yes there are too many unethical players in real estate (worldwide). There are always unethical players in any "game" when there's big money involved.

RESEARCH is the key to avoiding them. Know the facts - don't believe what you're told. Speak to independent parties already involved in the area. If you can't find out the facts, don't go into the market. Don't shirk on your responsibility to research.

GO IN WITH YOUR EYES OPEN. dON'T GET EMOTIVE OR EXCITED ABOUT AN INVESTMENT - it's just numbers and money and it has to make a return for you or else you're not being a very good investor. If you get excited or emotive about a property / investment you are more vulnerable to these deceivers.

[Goldberg Global]

Well said above. True do you own due diligence, get your own independent lawyer, try to avoid pressure sales inspection trips.. use the internet as a forum and a tool for research, ask for rental guarantees and yields to be proved, be prepared.

[just-alex]

Everything everyone says is true , but you are all speaking with the benefit of hindsight and are the survivors.......what I am saying is that in order to protect everyone there needs to be more legislation in this field and all concerned parties should write to Meglena Kuneva either directly or via their Euro MP . She is very thorough and is in charge of European Commission on Consumer Protection

fax 02 2995372
phone 02 2993684

address: Meglena Kuneva, Member of the European Commission, Rue de la Loi 200, B1049 Brussels.

Solidarity!!!!

[David Thrift]

IDIPs help overseas property buyers



Unlike the government’s HIP scheme which was widely criticised by real estate professionals for its inefficiency and ineffectiveness, the new IDIP (International Developer Information Pack) resource is being welcomed as a useful tool for agents and property investors alike. IDIPs enable thorough checks to be carried out on overseas developers and developments to minimise risk.
Many international property advisors have claimed that using IDIPs will soon be common practice for overseas investors, and have hailed IDIPs as a revolutionising resource for global property markets. Hopefully now the sort of investment disasters we saw recently in Spain, where thousands of investors, including a large number of Britons, lost their homes because of illegal development, will be a thing of the past.
The UK’s largest property websites like the Buy Assosciation who supply Rightmove.co.uk have praised the IDIP scheme, claiming it will be hugely advantageous to investors in overseas off-plan developments. Felicity Quigley of Buy Association commented:
“As a service, the IDIP provides peace of mind that the most important aspect of a property purchase is taken care of by qualified legal professionals who have extensive knowledge of their local markets as well as a UK presence. For those investors looking to be more ‘hands off’ with their off plan investment, an independent due diligence assessment will save them valuable time and effort whilst ensuring that the property they are buying is legally sound.”
Contact 08452300787 or visit idipreport.com

[Paul_in_Crete]

Originally Posted by PRP

I’ve recently been discussing with a few well know Overseas Property Developers about some off-plan and ready to move in apartments in Bulgaria and I can’t believe what I am hearing!

Am I the only one who feels this way?

The phrases “unbelievable”, “never to be repeated” and “never been a better time to invest” sales patter are extremely convincing to the less investment savvy. However, I am beginning to find some of them using an approach that is downright deceptive in the way the investment opportunity is being presented.

For sure, there is a lot of development going on and the prices are still attractive but those investors seeking to buy on a buy-to-let basis are surely being taken for a ride.

In one of the developments, over 70% of the units already sold, have been purchased on a buy-to-let basis - people who need to rent out their property to meet the ongoing financial commitments of a mortgage. I was told on not one, not two but three occasions by the sales manager, the rental proposition and demand is extremely high and that I should easily be looking to secure between 25-30 weeks of rental income each year. This is a blatant lie!!!

Achieving 25-30 weeks of rental income each year is possible for some but not in a development that is saturated with this level of competition. With the saturation of rental properties in such a small area (and this was just one of about 12 new developments in the local area) I predict that for many buy-to-let investors the outcome will be financial ruin.

Has anyone else experienced the same?

Chris Thomas
Property Rental Profits

Hi Chris, It part and parcle for the property investment game, you risk purchasing in a Country with poor legistation for a high investment return.

From my experince of working in the property Industry, you will get all types of developers/lawyers/estate agents honest and not so honest. You have to judge each country on it own merits, and the law protecting the buyer.

If you are looking for a more mature market have you considered Crete in Greece. As the Greek law is more protective of the buyer.

Paul Elwood (Property Consultant -Crete Property & Construction Company - Theo Construction)

[JMBroad]

Originally Posted by David Thrift

IDIPs help overseas property buyers



Unlike the government’s HIP scheme which was widely criticised by real estate professionals for its inefficiency and ineffectiveness, the new IDIP (International Developer Information Pack) resource is being welcomed as a useful tool for agents and property investors alike. IDIPs enable thorough checks to be carried out on overseas developers and developments to minimise risk.
Many international property advisors have claimed that using IDIPs will soon be common practice for overseas investors, and have hailed IDIPs as a revolutionising resource for global property markets. Hopefully now the sort of investment disasters we saw recently in Spain, where thousands of investors, including a large number of Britons, lost their homes because of illegal development, will be a thing of the past.
The UK’s largest property websites like the Buy Assosciation who supply Rightmove.co.uk have praised the IDIP scheme, claiming it will be hugely advantageous to investors in overseas off-plan developments. Felicity Quigley of Buy Association commented:
“As a service, the IDIP provides peace of mind that the most important aspect of a property purchase is taken care of by qualified legal professionals who have extensive knowledge of their local markets as well as a UK presence. For those investors looking to be more ‘hands off’ with their off plan investment, an independent due diligence assessment will save them valuable time and effort whilst ensuring that the property they are buying is legally sound.”
Contact 08452300787 or visit idipreport.com

Hi David,

Just curious, sounds like a great plan especially if eventually there is enough clout to get the developers to answer within a reasonable time-frame or utopically before launching the development itself.

How do you envision making it not only secure for investors but also feasible for best RoI? In most cases (as you state you get your information from the developers) the developments which are selling fast and furiously are also the slowest to provide the information.

I can see the benefits for someone buying a second residence but wouldn't it be counterproductive for the pure financial investors?

Undeniably the best possible DD has to be done before every and any purchase, whether it be by the buyers themselves, agents or an independent source such as yourself or all of the above. The legal representative of the buyer should also do most of what is needed (assuming they are competent) before signing the contract?

[David Thrift]

Originally Posted by JMBroad

Hi David,

Just curious, sounds like a great plan especially if eventually there is enough clout to get the developers to answer within a reasonable time-frame or utopically before launching the development itself.

How do you envision making it not only secure for investors but also feasible for best RoI? In most cases (as you state you get your information from the developers) the developments which are selling fast and furiously are also the slowest to provide the information.

I can see the benefits for someone buying a second residence but wouldn't it be counterproductive for the pure financial investors?

Undeniably the best possible DD has to be done before every and any purchase, whether it be by the buyers themselves, agents or an independent source such as yourself or all of the above. The legal representative of the buyer should also do most of what is needed (assuming they are competent) before signing the contract?

Hi JM
The service is for off plan investors this is done prior to even putting the deposit down It is the only service available and full investifgations are carried out. The report covers the legal side of the property development, checking planning permission, land tile ownership, building licenses, shareholders and directors, the management contract and everything you need to know about your proposed project.
We already have lots of agents and the public taking up the service and it is conducted via international lawyers in the country who investigate the whole affairs of the developer and development.
The investigation is managed to completion by The Live Overseas our exclusive partners who are a representative of First Title Insurance plc, which is authorised and regulated by the Financial Services Authority. First Title Group is a wholly owned subsidiary of The First American Corporation, they not only have the backing of the world's largest provider of business information, but over 115 years experience in property matters


It will enable you, the purchaser, to have full control of your decision making rather than relying on an unknown source to provide you with information that may not be totally correct. If you are an agent it will allow full independant due-diligence on any developer in the world prior to sale to the consumer
You the investor are now in the driving seat - it enables you to make sure your investment is sound for the future. Lets be honest no one wants to be another statistic with a property nightmare