The Property Voice

Musings: Scammers, bloodsuckers & leeches…and how to avoid them!

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The Property Voice Podcast – Musings: Scammers, bloodsuckers & leeches…and how to avoid them!

The Property Voice Musings are one-off episodes designed for an opportunity for us to share what is on our mind at the moment. Today we will be talking the darker side of property investing…and therefore about human nature in reality. In the fight of good versus evil, how can you make sure the bad guys don’t win? Listen to find out…

Resources mentioned
  • Property Investor Toolkit – here is the book link on amazon.co.uk & amazon.com in case you would like to get yourself a copy to accompany this series
  • Shout Out – Scam Awareness Month thread on Property Tribes, which reveals manner of the tactics that scammers use and how to avoid them
  • Due Diligence Checklist – send us an email: [email protected] if you would like us to send you our due diligence checklist, summarising some of the important steps you can take with your property investing
    • Today’s must do’s
    1. Read the thread on Property Tribes and get yourself up to speed with some of the latest scam tactics, plus some of the best practices to keep yourself and your investment safe and secure
    2. Subscribe to & review the show in iTunes – The Property Voice Podcast…and while you are at it please help us to spread the word by telling all your friends too!
    3. Send in your property stories, questions or moans to [email protected] and we will try and feature YOU on the show too!
    4. If you would like to, grab yourself a copy of the book: Property Investor Toolkit (link in Resources above)
      5. Get talking!
      • Join in the discussion, either here in the comments section below, or anywhere else on the Blog
      • Start a conversation on Twitter with us @PropertyVoiceUK or on our Facebook page
        • Transcription of the show

        Hello and welcome to another edition of The Property Voice Podcast, my name is Richard Brown and as always it is a pleasure to have you join me again today. As I mentioned last week, in between series allows me to share some of my personal thoughts in this musings mini-series.

        One quick word following last week’s show…where I discussed the tax benefits of converting our home into a rental property. As if by magic, the Chancellor decided to make a few changes to the tax rules that had some effect on what I was sharing! In truth, it does not change the heart of what I was saying, even if has impacted on any investor paying a higher rate of income tax, or renting furnished accommodation. However, as far as my last episode was concerned, the biggest benefit that persuaded me to make my bold claims, were down to the capital gains tax rules and these remain unchanged as far as I can tell right now.

        The Chancellor did respond to some of the pre-Budget speculation by introducing a cap on mortgage interest relief for BTL investors. This will now be capped at the basic rate of tax, regardless of what rate of tax you pay. This will reduce BTL profitability for higher and highest rate taxpayers clearly.

        In another change, the Chancellor raised the threshold before any tax is paid under the ‘rent-a-room scheme’, for homeowners taking in a lodger. It was raised from £4,250 to £7,500, so quite an incentive there for homeowners.

        I believe both of these changes could eventually lead to some changes in the market, but let’s save that discussion for another day.

        Meanwhile, let’s get cracking with our main discussion topic this week with Property Chatter then…which I am calling scammers, bloodsuckers & leeches!

        Property Chatter

        That was quite a heavy description wasn’t it? Scammers, bloodsuckers & leeches? I could have added in sharks, crooks and bandits into that too…when there are significant sums of money involved, sadly there will be unsavoury types operating too unfortunately.

        Today’s episode has been inspired by an excellent thread on the Property Tribes forum called Scam Awareness Month, which I have contributed to and am happy to support further through this podcast episode. My thanks go to Vanessa Warwick all those that have contributed to that thread, although these views are my own I should say.

        The format of the show will be to look at some of the common areas & people that we get involved within the property investment community, highlight some of the potential for things to go wrong and then provide my top tips to stay safe in each.

        Towards the end of the show, I will them share my Top 6 General Principles to help us to stay safe. Finally, for those looking for more, I also have a Due Diligence Checklist to guide you, which is available by sending us an email to [email protected].

        Right then, let’s get started…

        Letting agents

        • Pocketing our rent
        • No client money protection in place
        • Foxtons case – trade mark-ups, admin / management fees, kickbacks
        • Small print – lock in notice, fees, sale fees, etc.

          • Top tips

          • Member of a recognised industry body & redress scheme, with client money protection
          • Read & understand the agreement
          • Discuss and agree how works will be undertaken, confirm no fees or kickbacks are in place & set up a process for multiple quotes based on works involved

            • Estate Agents

            • Ghost buyers
            • Failing to pass on offers
            • Brown envelopes

              • Top tips

              • Check out the reputation of the EA online – membership of trade body & redress scheme
              • Try and have some form of communication with the vendor & submit all offers in writing. If you are suspicious, consider a letter to the vendor but beware that could damage your relationship with the EA
              • Operate with personal integrity, walk away if brown envelopes are involved…if we all do that, then eventually this will cease

                • Tenants

                • Absconding
                • Sub-letting
                • Cannabis farms
                • Malicious damage & theft
                • Identity theft

                  • Top tips

                  • Thorough tenant referencing & regular inspections
                  • Adequate & comprehensive insurance
                  • Multiple contact info recording at Land Registry

                    • Rogue traders

                    • Hourly contracts
                    • Works not required
                    • Works not done

                      • Top tips

                      • Fixed price contract with retention
                      • Multiple quotes
                      • Inspect work: yourself, a friend or even the tenant

                        • Bogus professionals & partners

                        • Fake solicitor
                        • Fake advisor
                        • Dodgy deal sourcers

                          • Top tips

                          • Check on the professional body registers
                          • Client money protection / escrow & reduce extent of up-front payments as far as possible
                          • Secure data & IT systems

                            • Deals

                            Are they too good to be true?

                            • No money down
                            • Rent guarantees
                            • Massive discounts

                              • Scammy or riskier structures

                              • R2R
                              • Sale & rent back
                              • Gifted deposits
                              • Overseas property

                                • Top tips

                                • Do your own research & due diligence
                                • Take your time – too much pressure to do a deal before adequate research often suggests a problem…some deals do go quickly but take your time with the introducer before moving quickly on the deal
                                • Check the legality of what you are doing – ignorance of the law is no defence

                                  • Catfish

                                  • People pretending to be somebody else
                                  • This charming man
                                  • Strange approach – not previously known

                                    • Top tips

                                    • Check addresses with 192.com and other similar websites & any professional bodies such as SRA for solicitors FCA for mortgage brokers & IFAs, etc.
                                    • Google image search
                                    • Get comfortable with people, do not work on 6 degrees of separation – find people that know the people and get a recommendation

                                      • Virtual community

                                      • Phishing – email links and websites that collect personal data
                                      • Telephone – fake bank / credit card callers
                                      • Bank details – can be used to set up direct debits

                                        • Top tips

                                        • Try and avoid sharing your bank details with people – consider using PayPal or confirm other people’s bank details over the phone or in a letter not just in email
                                        • Invest in full anti-virus, anti-spam and network protection software & password protection tools like Last Pass – it is worth it
                                        • Never give security details over the phone & be careful on where you click online

                                          • General principles

                                          • Guard your wallet, bank & credit card details (client money protection, escrow, reduce up-front payments
                                          • Keep your data safe & secure (online tools & protection, Land Reg contact info)
                                          • Understand what you are getting involved with (read the contract and ask questions)
                                          • Build in safety checks (two pairs of eyes, physical inspections, etc.)
                                          • Don’t take things at face value (Google is your research & due diligence friend)
                                          • Don’t go it alone & suffer in silence (reach out to others for recommendations and referrals)

                                            • So, I guess this week’s show is more of a cautionary tale really. Whilst I have not gone into lots of detail, there are many, many potential scams and traps that we could fall into, so take care out there.

                                            If you would like a copy of my Due Diligence Checklist then please drop me an email at [email protected]

                                            The show notes and details of the listener bonus materials offer will be on our website, or by sending us an email to [email protected] instead. Meanwhile, thank you very much for listening to the second in my Musings mini-series. And a big Shout Out has to go to Vanessa Warwick from Property Tribes, who largely inspired this week’s topic. A link to the Scam awareness Month thread on Property Tribes will be included in the show notes.

                                            Right now though and until next time on The Property Voice Podcast…ciao-ciao

                                            The post Musings: Scammers, bloodsuckers & leeches…and how to avoid them! appeared first on The Property Voice.

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                                            The Property VoiceBy Richard W J Brown from www.thepropertyvoice.net