Back 2004 I set up a property sourcing business. I used to have a site called property hotspots and I mentioned once that I had a deal that I couldn't buy as I did not have enough funds and my email inbox got bombarded!
Between 2004 and 2011 I had over 1,200 clients and over that period I sourced probably 4,000 properties. We had around 120 property sourcers across the UK sending us deals everyday and we used to match these deals to our clients.
In 2009 the credit crunch really started to bite. Properties started to get down valued by surveyors, lenders were pulling out of the buy to let game and certain novice clients were deciding that buy to let was not for them.
Our terms were clear. No refunds on sourcing fees unless the deal failed to complete due to no fault on their own. Property sourcers would not have worked with us if we kept on introducing them to flaky buyers. We had to have the client motivated to buy. 99% of our clients understood this however there were a certain number of clients who did not understand that.
As a result we had about 50 clients instigate issue court summons. About 30 of them we settled out of court. The other 20 went to court and we won half of them the other half we lost. Where we lost was when the client was able to prove they were a consumer and claim consumer rights even though the product they bought was an investment.
We had both the BBC and Sky News film at my home trying to expose a "scam" which was quite clearly untrue. I have to say I learnt a lot from this experience. If I had my time again I would have kept the same terms however I would have refunded quicker even though the terms didn't allow for this. I would have also only paid my sales team once a deal had properly completed. The benefit of hindsight eh?
This lesson in life has taught me two things. If you are going to take money off someone make sure they understand the risks and they can afford to lose it. I can understand the FCAs thinking behind sophisticated investors and high net worth individuals only being allowed to make investments. These people understand the risks and can afford to lose it. I only seek investment for my films from sophisticated investors or high net worth individuals.
All the information on this site can make you in to a high net worth individual and it is all completely free. Maybe one day, when you become a high net worth individual, you can come to me and invest in my film business!
Click here for more about Ajay Ahuja.