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Hello All

I've currently dabbled in property (have 2 UK props and one in the USA). My idea has always been to build a portfolio with good yields and then give up my full time job, the only problem has been I've never had the spare time in my job! I've subscribed to Ajay's email for ages and he seems to offer the ideal package, no money down, high yield props below market value, management of the portfolio etc; totally hands off from my point of view.

My concerns are obvious, poor properties in bad areas but high yields as a result, lots of promises etc etc; but the guy seems to have been around a long time now, I'm intending to build a 2m+ portfolio with him over 12 - 18 months using none of my own money, his company says he can do this without problem and totally hands off if required.

Whilst I will look at the properties before I buy and do some of my own due diligence, it almost sounds too good to be true which is never a good sign!

Has anyone any experience of dealing with him, does he do what he says?

Can anyone  offer me some viable alternatives? I'm happy to share profits as long as we both meet our goals!

Have a look at my post of the 5 April 2008.

Because of my friend's experiences, I would strongly urge you and anyone else considering dealing with Ajay Ahuja to stay well away.

I would have to say that the idea of building a £2m+ portfolio with none of your own money sounds great.

 A few things to mull over:

1.  To do no money down requires you to buy extremely cheap and (generally) remortgage.

2.  Every time your remortage, your monthly mortgage spend goes up and as a result your yield goes down.

3.   Ideally you need a rising market in which to sustain this.

4.   You need very good starting yields.

5.  This is the killer - your long term costs.  You need sufficient capital growth to remortage on a periodic basis to generate sufficient cash flow for major works.  Eg, if you have a £2m portfolio with 20 houses, you need to factor in 20 new boilers every 10 years, 20 redecorations every 3-5 years, a new kitchen in 20 houses every 5-10 years, 20 new re-flooring every 7-10 years.  However every time you remortgage you are squeezing out the options for future years.

£50,000 = 20 x Kitchens @ £2500 each (basic)

£20,000 = 20 x Redecoration @ £1000 each (very very basic)

 £24,000 = 20 x Boilers @ £1200 each

 £20,000 = 20 x Reflooring @ £1000 each (basic but durable)

£114,000 every 10 years.

 6. A £2m portfolio sounds great but you will have NO real equity as you will have remortgaged to cover your costs.  Eg, a supposed £130k value against £100k purchase price.  Do you REALLY think you could re-sell at £130k?

7.  finally - do you trust someone else to make the decision about this for you?  I know I do not.

A very good post Wickerman, these costs are all too often overlooked.  In addition I would add the following costs: -

1. Void periods - 30% of the time your property will be sat empty earning no income. So, say £300 per month mortgage = £3600 x 30% = £1080 per property. 20 props = £21,600 per year! £216,000 over ten years.

2. Professional Fees - Unless you have the time and knowledge to do everything yourself you will need to appoint an agent, usually fee for reputable firms are 10% of rent.  Say the rent is £450 pcm the fee for 20 props would be £10,800 per year. £108,000 over ten years.

3. Your drawings - Unless you are taking on all this work and hassle for a laugh you will presumable want to take out a bit of an income......? if there's anything left!

4. CGT - Lets assume you have managed to build a £2,000,000 portfolio, and over 10 years you acheive 50% capital growth, but you have had to remortgage to £2.5mil to cover costs and cash flow, your CGT will still be calculated on on the actual gain i.e. £1,000,000 at the prevailing rate, and not £500,000 - your tax position is not your cash position. 

In the commercial property world investment funds will spend £000's on a whole life costing report before they exchange on a deal.  These reports are designed to calculate the true cost of a property over the life of the investment. There's no reason why this should not be done on small scale residential deals, but the people offering training courses and "too good to be true" schemes never go into detail on this element of property investment - its the boring bit, but probably the most important bit.

John

Hi Vistaro ,

Basis my real life expereince of dealing with this company,my advice will be avoid at any cost and deal at your peril. Anything which sounds too good to be true is not  true.  I reserved a property in Feb and the valuation came out lower by 25% of OMV so lost the survey fees, they will not refund your reservation fee. Further was given three deals all sold as tenanted with positive cash flow, a misleading lie , two out of three were in a condition that mortgage company will not lend on them, again lost the survey fees, total loss so far  has been in the region of £2800 +£5.4k stuck with them as reservation fee .

All the best with your property investment.