The success of Surrey based Inside Track, the agressive off-plan property investment and investment seminar company, has come to a shuddering halt. The news, reported in the Guardian yesterday, will not come as much of a shock to insiders in the industry who felt the company's 'buying off-plan to flip' model of property investment was intrinsically flawed. It was generally felt that such a model works in a rising economic cycle, just about, but comes to grief when economic conditions are less than favourable, as has been proven to be the case. Even where the company claimed property could be let for a profit these claims were often without foundation, leaving many of its clients in large negative cashflow situations.
The company was the leader of a slew of 'property investment clubs' around the UK which promoted the purchase of off-plan city centre apartments claiming to have sourced from developers for reductions of 15-20%. Accusations have recently been made that developers were merely inflating their properties by this amount in order to offer the reductions, thus falsely inflating the market and leaving buyers with properties worth less than they paid for them. So 'successful' were these property investment clubs that they were responsible for up to 30% of all UK apartment sales in 2006, but then the wheels started to come off.
It would appear that, even in the good times, Inside Track's clients were struggling to achieve the profits claimed by the company. You can see an article on one of their 'clients' who ran into trouble here.
The announcement last month that the company was to cancel its controversial 'property seminars', which could cost potential clients anything up to £15,000 if they were to go through the full seminar course, was a sign of things to come.
If you've been burned by Inside Track and want to have a good moan about it you could visit here, it'll give you plenty of opportunity to vent your spleen.