Opinion on Cavendish Moore?
|Investment | Property
Asked by webwiz, submitted
09 December 2010.
I had a cold call from Cavendish Moore. Normally I give cold callers short thrift, especially when they are not regulated, but their pitch was quite convincing. Do you have an opinion about them and their product?
Answered by Justin on 10 December 2010
I haven't heard of Cavendish Moore before. Their website suggests they're property advisers who'll help you find and buy property/land at discounted prices.
Like many property advisers, they are not authorised or regulated by the Financial Services Authority (FSA). I'd always suggest being careful when dealing with companies that are not regulated by the FSA as if anything untoward should happen the FSA won't step in to help and you won't be eligible for compensation via the Financial Services Compensation Scheme (FSCS).
A quick look on the Companies House website suggests Cavendish Moore Limited was incorporated on 19 March 2009, so not much scope for a track record as yet. If you speak to the company I'd suggest asking more about the investment personnel who work there and whether they have a demonstrable track record in property investment. You'll then be in a better position to judge their merits.
The Cavendish Moore website suggests they can help you buy UK properties at 25% - 35% less than a recent RICS (Royal Institute of Chartered Surveyors) valuation and US properties at 70% - 85% off current market valuations. And there are also services to help you buy and develop land. No details of their charges or exactly how they operate.
At face value this all sounds quite attractive, but is it possible to snap up such property bargains?
My general views on property investing are as follows:
Firstly, an asset is only ever worth whatever someone will pay for it. That is, you might be able to buy a property for £75,000 that's theoretically valued at £100,000, but it's only worth £100,000 if someone will pay you that much for it - and in the current climate I suspect you'll struggle. After all, if someone's happy to pay £100,000 then why would the seller accept £75,000? Of course, distressed sellers might take a lower price for a quick sale, but that type of investment only tends to make sense in buoyant property markets when you can be confident of selling on at a profit - in the current market I'd be nervous.
The same is even more true of US property. Prices have sunk because there are way more sellers than buyers. So be wary if offered a 70%+ discount. Whatever you end up paying is arguably the current market price for the property, so any other valuations are debateable.
Buying land with a view to developing can be very profitable, if you can get planning permission and build something that someone wants to buy. But it's not easy. Most landowners who think they can get planning permission without too much hassle will do so, as the price of their land will soar, so finding untapped opportunities is difficult. If you buy land where permission has already been granted there may still be money to be made, but given the uncertain economic outlook I'd avoid property development if you're hoping to make a short term profit.
If you can drive a hard bargain and sit tight for 5-10 years then buying property/land over the next year or two may turn out to be a decent investment. But it's by no means a sure thing.
I think the only way you'll find out more about Cavendish Moore is to talk to them. But, as with any marketing calls from investment companies, be vigilant and carry out thorough due diligence before parting with any money.