Karma in Indian religions is the concept of “action” or “deed”, understood as that which causes the entire cycle of cause and effect, originating in ancient India and treated in Hindu, Jain, Buddhist and Sikh philosophies. In Indian beliefs, the karmic effects of all deeds are viewed as actively shaping past, present, and future experiences. The results or ‘fruits’ of actions are called karma-phala. In Western thought processes Karma can be expressed as “What goes around comes around”, and also as a natural balance of the Universe. Melissa Cohen – when being fired from The Apprentice – hissed that her competitors would get their comeuppance “when the balance of the Universe was restored”.
Phil Martin
The online property world is currently buzzing with the closure of the Property Forum Singing Pig, Liquidation of the Portfolio Building Company Rapid Property, and the Bankruptcy of their owner Phil Martin. Several who have met Phil have spoken up in his defence, saying what a nice guy he is. Others have countered that by saying that successful scammers have to appear nice for their scams to work. There seem to be many who paid five figure sums in advance for Rapid Property’s services, only to lose their money, and they quite naturally are outraged and distraught.
There are others who operate similar businesses to Rapid Property – some or all of:
- sourcing property,
- arranging mortgages,
- setting up legal contracts,
- conveyancing,
- managing property portfolios,
All currently trading in this area are very keen to demonstrate the difference between how they operate, and how Rapid Property ran it’s business.
For those unfamiliar with the concept of Portfolio Building the concept is as follows:
A Portfolio Building Company sources “BMV” Properties. BMV stands for Below Market Value, and most often the property is acquired below what it is worth because it is owned by a “Motivated Seller” – an industry euphemism for someone who is desperate. Typical motivations can be:
- Divorce.
- Illness.
- Suicide in the Property making it unlivable for the survivors.
- Redundancy
- Financial Crisis
- The property was inherited and they want nothing to do with it.
- Owners are ill, in poor health, elderly, retired or disabled.
Having acquired a property for less than it is worth, it can be Mortgaged for it’s full value, with the intention that the Investor can now withdraw the deposit that they used to buy the house, and use it to repeat the process. Rapid Property offered to build a portfolio of £1,000,000 worth of houses for a down payment of £50,000. The houses would of course be mortgaged, and the interest on the mortgages would need to be covered from renting the properties.
Some would consider that building a property portfolio based on the misfortune of others was morally unsound. Others would argue that the BMV purchaser isn’t the cause of the misfortune, but part of the solution of the problem.
Image by freebird (bobinson|??????????) via Flickr
Regardless of your view it is clear to me that people paying money in advance to Rapid Property were driven by a greed for riches which would fall easily into their lap. As always some will call for such people to be protected from themselves, and their own folly and greed. Others will say that we are all adults in a dog eat dog world, and people should be allowed to make their own mistakes. There may even be a view that the investors should lose their money, as a retribution for seeking to profit from other people’s unhappiness.
Has the balance of the Universe been restored? What is your view?
I also know of a couple of people who were relying on Rapid Property, to take over their properties and relieve them of their current debt burdens.
They were advised that they could stop paying their mortgages as this would be paid via an option agreement.
As it turns out nothing was done regarding their properties!
The end result is that these people are now even more in debt. Even worse some are being hounded for council tax.
For some people this went on for many months.
Good point Nick and one that didn’t come up in the original discussion on propertytribes (unless I missed it). Distressed sales are a murky area and make me uncomfortable too. I’ve never done them, which is not to say I wouldn’t but it clearly throws up moral issues. Hmmm, I think I’ll post a link back here.
What is the moral problem with buying from a motivated seller (distressed seller)?
To provide some contrast, assume no one purchased from a motivated seller? What would they end up doing to get rid of the property?
Good point – the moral issue is not the buying from them, but paying a lower price to take advantage of their “motivation”. If a fair price was paid there would be no moral issue.
The idea that buying from a distressed seller should require the buyer to pay a fair price is a non-starter.
What defines a fair price? In a market where ever deal is different the price is what the two parties agree. If the seller does not like the offer they can wait for a better offer. If they need to get the deal done and they have only one offer that is the price, the fair price, given the choices.
With a distressed seller they rarely can afford to wait. If they wait they will either receive less or they will suffer some other economic hardship. Better to take the price they are offered than to wait until they receive nothing. Like any F2F transaction the two parties come to an agreement and that is the price. A few folks will argue the price is then the value so the seller received the true value.
Didn’t folks read the Singing Pug forum? This is one of the scams that made Andy Shaw a reviled bankrupt man and his story was well documented on the site.
As for Karma … Lessons & learning for everybody I guess. And first principle would be ‘it’s not what you do it’s the reason why you do it’. Again applies both parties.
I was very hesitant about motivated sellers until a very old and good friend became one. His view was that the person who bought and rented back his house to him was a saviour because his alternative was to have it repossessed and be evicted. What happened was that it had a modest refurb and he lived there on a low rent for the (sadly far too short) rest of his life.
hi it served phil martin right he also coned me some money last year.
This also brings into question what is being said to vendors about lease options and leaving people worse off than had you not met them. This will always be a recipe for disaster….Johnny, if you know of anyone where they have been told that their mortgage will be paid by an option fee it is not that easy. I am adopting a different strategy which allows the vendor to move on as soon as the legals are completed.
I also agree with Richard about the morality of BMV investing. I have been on the other side of some of these people and they are merciless and mercenary. I hope I never become “motivated” to sell my property. John says that we’re doing them a “favour”. Are we really? As John is aware, other strategies can be used that help the vendor much more but doesn’t result in them having to relinquish all their equity. Using just a BMV strategy is pure greed and in no way should it purport to “help” distressed sellers. We’re all out to make a profit but let’s make it because we give excellent service not just because we’re lucky enough to be in a position to take advantage of others misfortune.
Terry
Terry,
What other ways are you taking about when you say there is an alternative to an outright purchase at below the market value?
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After looking through all these comments and finding out about Phil Martin going into liquidation, I am particularly worried with regard to my house which he took over from me in 2009 and any correspondence from my building society with whom my mortgage is with and on my credit rating – it is still in mine and my son’s name – I am now starting to worry about whether this mortgage has been paid as promises by Phil Martin (he advised me that he had put tenants in the property) But I have recently found out that my house as it was – was put on the market in December 2010 and again in January 2011 but as far as I can find out, has been taken off the market and has not been sold. Now I have to find out if I am in trouble with my mortgage, etc…and I am starting to get really stressed about it – is there anyway I can get the house back?
Trish Laraune
Trish,
I will contact you privately and put you in touch with someone who can help you. There is also a discussion of the case here.
Hi Nick
I can really do with some help right now especially after I have been in touch with the Building Society (house has been sold) so would really appreciate any help I can get. Also I have this document which was drawn up by Phil Martin’s solicitor and am wondering whether it will be of any help to me in my plight.
Regards
Trish
Hello
Can you tell me whether pm has set up business in his wife’s name please? I am seeking legal advice regarding what he has done to me and I need all the info I can get on him
Kind Regards
Trish Laraune
Yes, another business doing the same stuff
Can you tell me if he, (Phil Martin) has set up another business in his wife’s name?
Kind Regards
Trish Laraune