Advice needed - St Martins Lane (Icon Central Ltd)

[Vaco]

I have been following this for a while and ask this-to an overseas investor doesnt the management lease option suit better on the condition that there is no distortion on the true rental and value of the unit?

[Searcher]

Internet research

Dear xlancer,

this building has been operational for a year. You can check out tripadvisor for reviews by travellers.

There were complaints about car park design which the management said was being upgraded. Reviewers mentioned a cemetery nearby and homeless people wandering about and were not too impressed by pool or gym.

On the plus side, there were some good reviews which you can read for yourself, eg good view from balcony.

You can go to the waldorf website marketing the serviced apartments to see the current rates offered to travellers but rates vary over the year and longer term rates may be lower so it's hard to assess with accuracy but you can come up with an estimated gross yield.

I doubt the 8% net return is sustainable after the rental guarantee period. Don't know what the actual net return is. If it's, say, 4%, that would barely cover bank interest. So may not be worth taking on the risk of currency and property price drops.

Good luck in your research and evaluation of this project.

[xlancer]

The GST I was talking about was GST on the value of your unit.

If it was valued at NZ$400k and you changed it from it's current use to residential you would have to pay the tax man $50k or $60k from later this year.

Of course you could get a valuer to value the unit and if it really was only worth $250k that would reduce the tax you need to pay but by then you would have already lost a lot of money.

This has given me an idea. One thing you could do (an apologies to anyone who has already suggested this) is hire a good valuer to do some research on this for you. They will do this on an hourly rate and can give you a good briefing on the Auckland apartment market, this property, other similar properties and other options for investing your money.

As you are paying the valuer they are working for you. They will give you independent, unbiased advice and will probably convince you that this is NOT a good type of property to be buying.

They will also be able to tell you other properties that have sold recently that may fit your investment criteria. This will give you a good idea of what property is actually selling for.

Just make sure you don't pick a valuer "recommended" by the sales people trying to sell you this property.

I am sure people here can recommend a valuer who knows the Auckland apartment market well.

Thanks graemeh & One for your suggestion. Do you know how much it would cost to get a valuer to provide a valuation?

[graemeh]

Thanks graemeh & One for your suggestion. Do you know how much it would cost to get a valuer to provide a valuation?

It's been a while since I've had one done but I guess around $500-$600.

Just make sure you get one who knows inner city apartments well and talk to them about what you are after.

You can also arrange that they discuss the valuation with you after they've done the research but before they write the full report. If you don't need the full written report this can often save $100-$200.

[Chan]

Investment in Waldorf Property - I am another victim

Hi Xiancer,

I was kicking myself as I went through all the replies to your enquiry .
So David Yuen of Austpac International did it again. His company is currently holding a 2 days seminar in Singapore on 26-27 June 2010 promoting Waldorf apartment. I have attended the first day seminar and paid S$5000 deposit for a 2-bedder apartment for price of NZ$373K! Can you share with me what was the outcome of the valuation and what action have you taken? Did you managed to get back you deposit? Chan

[speights boy]

Hello Chan

xlancer has also posted here.

http://www.myrealestate.com.my/viewtopic.php?t=2199&highlight=auckland

so you may also try to contact him there.

SB

[xlancer]

Hi Chan,

I'm sorry to hear that you are going through what i went through.

In short no I did not get back the deposit.

It'll be tough even the very one-sided clause in there that says 'under no circumstances' will the deposit be returned.

The fellow forummera have been extremely helpful in providing very realistic views of the sensibility of the deal to us consumers. I've spoken to some local NZ realtors with the same conclusions. Feel free to let us know if you need any advice.

[Chan]

Thanks very much Speights Boy for your help.

Hi Xiancer, do you think it would help if we highlight this case to CASE (Consumers' Associaton of Singpapore)? If no one is doing anything but just forgo the $5K deposit, then Austpac would not stop, as evidenced from the 2 days seminar they are conducting now. The recent landbanking investment problem faced by Singapore investors was made known to public because those investors have taken action.

[Lame_duck]

Hi Chan,

I am sorry to hear that you are in such a difficult situation. During the sales pitch, Mr D will tell you all about 'positive cash flows', and how he made his fortunes from a tiny house he bought while he was a student-how easy it is to purchase a property, rest on your laurels and await to reap a hefty profit. Next, he will probably tell you that it is a triple low, low currency, low interest rates, low prices. Maybe even a quadraple low, with taxes at an all time low. All this while wearing a smile on his face with a giggle or two and a spring and a swagger in his steps. Arrogance is the stance.


Such an invigorating and moving speech. After the sales pitch, the agents will move around and call out units that have been sold - like serving hotcakes in macdonalds. You will feel uneasy. Is this a investment of a lifetime? Will this opportunity ever come again ? Mr D is the guru, and if he says buy, we buy. Agents will probably tell you that there have several properties of their own - and more on the way. Envy is the emotion of the moment.

Before you know what hit you, your heart beats faster, and in the next moment, you have signed on the dotted line, and given the agent your cheque/credit card.


Promises of guaranteed yields, juicy returns and triple yields are made. Take a step back. Think. Close your eyes. Think. Would there be such a wonderful investment product? Truth be told, such lucrative investments would have been sold to a private buyers, and not mere mortals - not the man in the street.

Based on the details gathered:

1) Interest rates
Interest rates are expected to shoot up over the next 3-5 years as governments tries to rein in runaway inflation from easy credit. Banks will continue to assess creditworthiness of loans. Is your loan provided by the bank ? Or is it a syndicated loan to sweeten the deal? Doubt the loan can be extended in the near future at the rates promised by them.

2) Guaranteed Returns
Who is the guarantor for the payment of these GRs ? Is it a $2 dollar company in paid up capital ?

3) Rents
What is the market rates of rents for serviced apartments in auckland? Is the yields projected by them realistic/sustainable? Or did they pull them out from their behinds? Based on the occupancy rates of 50%-60% of these serviced apartments, coupled with the steep discounts given to let them out, I anticipate that the yields would be low.

4) Capital gains
Capital gains for such serviced apartments are based solely on rental yields. Do wary that part of the GRs is actually YOUR money paid to YOU during the course of the GRs. Be careful of Lemon-inflated properties.

5) Valuators
Is the valuator/ valuation report done up by the bank who is going to give the loan? If it is, it is probably a fair one as they want to mitigate risk of defaults and loss of loan principal by loaning close to true valuation. Be wary if the valuator/valuation is performed by the company-even if they are well known valuators. Hire your own valuator.


Friendly Advice
If I were you, I'd walk away from this investment and lose the deposit. Encourage your friends and family to stay away from this company. Years of regret and loss will follow suit if you go ahead with the S&P agreement.


Source: Used to sell similiar lemons under Mr D - not proud of it. And have since become an independant financial advisor. Do leave your contact details if you wish to know more.


Cheers,
Lame-Duck

Disclaimer:

1.The above information is the author's opinion given, and should not be taken or construed to be professional advice. The author will not be held liable for any losses, in contract or tort otherwise, arising from actions taken based on the gratuitous advice provided. Please consult your own financial advisor/'independant' property agent, for investment advice.

2. Information provided is based on author's best knowledge, and includes certain elements of creative thought. Any reference/description to persons, dead or living, is purely coincidental.

3. Caveat emptor! Beware of the 'Rich teaching others to be Rich'.

4. Hongkongers are nice and honest people- generally. But there are exceptions. Just like how there are nice Singaporeans and dishonest ones. Becareful with your hardearned monies.

[xlancer]

Hi Chan,

I've actually went down to CASE already to get advce on my case as initially I was still hopeful I could get my $5k back.

I've asked them whether there are already complaints filed against Austpac but they can't reveal for confidentiality reasons. They cam take action if there are sufficient complaints to warrant a full blown action.

The course of advice offered by them will be the usual route of mediation, and if not resolved it can be brought up to the Small Claims Tribunal Court. I did not pursue this as it would be mentally and psychologically taxing and I've got to admit I was being naive and did not do my due diligence prior to committing.

@Lame_Duck - your description of the sales tactic is very apt indeed :-)

[Chan]

Hi Xiancer,

I think no harm trying, I will contact CASE to discuss my case.

Lame Duck : This is exactly what I have experienced during the seminar. But before I signed on the dotted line, I have in fact asked many questions. Honestly I didnt feel comfortable with some of the answers to my questions but at the end I still signed the SA, guess it was because I have been planning to invest in overseas property and NZ is one of the
countries in my list. And then this "good deal" come along..... Well, no point crying over spilled milk, I would just take this as lesson learned (very expensive one though) and concentrate on Singapore properties instead.

[Lame_duck]

Hi xlancer,


CASE generally does not entertain transactions involving properties, or almost any investment-related issues for that matter.
They mainly represent consumers- retail consumers. You are right. They would most probably tell you to resolve it amicably.

Though in my recent memory, I cannot recall any instance when the issue was resolved amicably for both sides. It would be hard to quantify/qualify any fraud/deception in tort, or any loss arising otherwise at the point of signing the S&P.

Sometimes in life, you have to pay to learn the lesson. Companies that sell such products are not illegal, they pay taxes too. If it were so, many hawkers would be sued for selling lemons, grapes and what not.

Do your due diligence. As always, caveat emptor. And please do be careful with what you post in this forum. It is, afterall, a public domain. I would refrain from mentioning any specific names/companies in your posts. Please do drop me a private message if you want furthur advice/more info. A meetup cup of coffee is also fine.

Well, the modus operandi is the same for firms that sell fruits like lemons. When you want someone to blame, don't blame the sellers, as they are just the employees who work for food on the table. What they see and know is what you yourself can see. Blame the person who 'handpicked' the lemons from the lemon tree and called them strawberries for sale. He/she should either be laughed at for being colour blind, or be ashamed for making such a ridiculous statement.



Cheers,
Lame-Duck

[Lame_duck]

Hi Chan,

Goodluck to your appeal to CASE. Wish you all the best, but do not get your hopes too high.

If you had asked more questions, it would not have made much of a difference. My previous employer (contact me if you want to know), had instructed me to just accentuate the positive points and avoid talking about the metrics of the transaction. Afterall, we were just agents of the vendors, and not YOUR agent. We do not owe you any responsiblity.

If you wanted more photocopies of the sales phamplets, we would tell you that we do not have a photocopier.

But we are still able to make a copy of your IC. Surpriseeee !

Just take this as a learning lesson. You can easily recover the $5k deposit with a more prudent investment.

Hi Xiancer,

I think no harm trying, I will contact CASE to discuss my case.

Lame Duck : This is exactly what I have experienced during the seminar. But before I signed on the dotted line, I have in fact asked many questions. Honestly I didnt feel comfortable with some of the answers to my questions but at the end I still signed the SA, guess it was because I have been planning to invest in overseas property and NZ is one of the
countries in my list. And then this "good deal" come along..... Well, no point crying over spilled milk, I would just take this as lesson learned (very expensive one though) and concentrate on Singapore properties instead.

[xlancer]

Hi Lame Duck,

Sounds like you really do know them inside out :-) yeah I was quite amazed how fast they moved to do all the paperwork when we kinda said ok... And it was quite ridiculous that we didn't even get a proper pamphlet with floorplan etc considering that it's a couple of hundreds of K property.

Well the lesson I learnt is that if it's too good to be true, it usually is :-)

[graemeh]

If you've paid by cheque or credit card have you explored with your bank to see if you can cancel the payment?