BIO: Mark Morris is an expert at building developer relationships and helping housebuilders achieve discreet volume sales at speed.
STORY: Mark bought an off-plan property for $200,000 with the hopes of selling it for a profit. Unfortunately, a project that was supposed to take 12 months took two years to complete. The US financial crisis hit just a few months after completion, and now Mark could not sell the property.
LEARNING: Be careful when investing in an off-plan property because you are simply buying a dream. Most homes just take money away from the owner, making them liabilities instead of assets. Take advantage of the cooling-off period in your contract should you think you made a mistake.
“I’m not against off-plan investments, but they are just riskier.”
Roshan Cariappa
Guest profile
When you hear the name Mark Morris, I want you to think, “High cash flow portfolios.” He is an expert at building developer relationships and helping housebuilders achieve discreet volume sales at speed. Alongside an IT freelance career, he has been a property investor for the last 20 years, building a portfolio of buy-to-let apartments and houses across Greater Manchester. He has also created a solid income-generating portfolio in the midwest of the US.
Worst investment ever
Mark saved up quite a chunk of money around 2005, and when his friend, a real estate agent, invited him to see some property, he did not hesitate to go. The property was a development in a marina that was being sold off-plan.
The 12-year plan
The owner was selling the properties for $200,000, and the plan was to have the apartments ready in 12 months. So the catch was that Mark, should he buy the property, would sell it for about $260,000.
Mark was itching to add properties to his portfolio, and so he quickly bought into the investment. He was still new in the property market and knew nothing about such investments, but this did not stop him from purchasing the property.
The promised 12 months turned into 18 months and 18 months turned into two years. In 2007 the project was completed, and now Mark could sell his apartment.
Here comes the US financial crisis
Within months of completion, the US financial crisis happened. Now Mark could not get anyone to buy the apartment for a profit. Mark decided to rent the apartment, but the rent he collected was too little to even pay for the mortgage. Mark still has this property to date, and it’s still not covering the mortgage.
Lessons learned
Understand the investment you want before you make any payment
Do your research and your due diligence. Look at the fundamentals of whatever you want to invest in.
Have a plan B
Do not focus too much on the upside. Consider that your investment could go south and so always have a plan B.
Choose long-term over short-term investments
Always be looking at the long term, not the short term, when it comes to investing.
Andrew’s takeaways
Most houses are liabilities and not assets
Most people buy homes using bank loans, turning the house into a liability instead of an asset. This is because it is just taking money instead of giving cash flow to the owner.
Buying off-plan is akin to buying the seller’s dream
When you are buying off-plan, you are buying a startup company; you are buying a dream. This places you at a considerable amount of risk to get to the final result because you invest in the person selling you the dream and in their business, not in property.
Find out about any cooling-off periods in your contract
Check on any existing cooling-off periods related to your contract. This helps if you sign a contract, and later you feel you made a mistake, you are allowed to break the contract as long as it’s within the cooling-off period.
Actionable advice
Get yourself educated, do your research and just commit to personal development. Make sure you understand the investment that you are getting yourself into. Do your due diligence before you put money into it.
No. 1 goal for the next 12 months
Mark’s number one goal for the next 12 months is to create another high cash flow and income stream.
Parting words
“Do not be afraid to make mistakes. Take ownership of your mistakes but learn from them.”
Mark Morris
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