Passive Investments In Liquidation | The Money Gym
by NicolaCairncross on November 19, 2009
in Money Gym | Diaries
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Nicola says: Following the shocking news that Passive Investments have gone into liquidation, and that Andy Shaw and Greg Ballard are being made bankrupt by one of their larger creditors, many people are asking us to comment, both on the blog and in our private google group.
When I first met Greg and Andy, back in 2004 I think it was, they struck me as two highly intelligent, funny, energetic, successful guys, who had been in traditional business before, who thought very differently to many people and who had created a FANTASTIC model for investing in property. They were also helping their friends and family invest in the same way, on a fairly small scale, as well as building their own portfolios which numbered about 150 properties in those days.
I immediately knew that our Money Gym clients would love to meet them and hear about this method of investing in property, getting your money back out and going again, as the need to leave money in a property was frustrating many of our clients. We organised an Open Day at my hotel, The Acacia, and many of the clients who were there wanted Greg & Andy to do it for them, like they were doing for their nearest and dearest. Greg and Andy put together an offering, and I spread the word into the Money Gym group of clients and subscribers.
I introduced them to Gill Fielding, my first wealth mentor, who immediately invested with them, ditto Maria Davies. Gill then started presenting this opportunity for them. When Gill could no longer present, Maria Davies took over for a while.
Everyone loved the concept, especially busy professionals and people who wanted to invest in property but didn’t have the first clue about how to go about it. Most people really took to Greg and Andy too, as they shared their knowledge freely, helping many, many people make money along the way. I particularly remember one lunch where they helped a Money Gym client to negotiate a purchase, making him an extra £80,000 along the way. They then took him under their wing and mentored him for a while in his own property deals.
Pretty soon, they were so swamped with people wanting them to invest for them, that they had to create a company to handle the demand. Passive Investments was born.
We are also aware that they then developed a “private investor” scheme whereby people with money sitting idle in a low interest bank account lent the money to Greg and Andy personally for bigger property projects, and because I was not one of those people, I didn’t find out any further details and they never sought a public platform for that opportunity though the Money Gym.
My sister Sarah and brother-in-law Nick invested, my sister Heather invested, Steve Watson and I both bought a “place” each too. I would have happily bought more “places” if I could. The company still owe us for some of the second “place” so my family and I are all out of pocket as well as those of our clients who chose to invest alongside us.
One ray of hope is that those of our clients and family who have properties may make up the monies they have lost (by having paid a fee for a service that now won’t be delivered) AND may ultimately end up better off, due to now not having to pay Passive the agreed “back end” fee on the eventual refinancing of their properties.
Judith Morgan, ex-accountant, Money Gym client and now our business partner, invested the entirety of her inheritance from her Mother into her two “places”. This should have meant ten properties in the fullness of time but she only has three. Her portfolio could not be grown once it became impossible to achieve mortgages or re-finance.
I have heard some horrible stories going around about things that Greg and Andy are supposed to have said and done and while I have no personal knowledge of those things, I’m working on the “innocent ‘till proven guilty” theory. I have always liked and respected Andy and Greg, and I feel sure that most of the rumours are unfounded.
Only yesterday Andy’s website was apparently hacked into, allegedly by someone known to the company, and a personal message to members and investors was changed beyond all recognition to cast the worst possible light on Andy. Here is a link to Andy’s correct personal statement. Remember to click on the Free User button and then the blue Download button.
We have also been re-educating our clients during the credit crunch to take a more active role in managing ALL their investments, including this one which was originally intended to be passive. You might want to read about one of our clients (who is not alone by any means) who feels that she will go forward with Tudor Equity, the company that some of the management team is putting together to take the portfolios forward.
Feel free to comment on the blog here but be aware that we reserve the right not to publish any comments that are potentially libellous or are simple repeating content from other people’s blogs or emails.
Later Note: James Tickell, director of Portland Business & Financial Solutions, the insolvency practice chosen to disband the Passive Investments empire, says the matrix of firms will formally enter liquidation on 11 December.
Contact: London Office, 43 Pall Mall, London, SW1Y 5JG, Tel: 020 7925 2651 / Fax: 020 7925 2652 / Office email: post@portbfs.co.uk
I met Greg and Andy on various occasions and would like to give my 100% backing to Nicola’s comments. They had a model that was pure GENIUS and I can personally vouch that they are businessmen of integrity, working very hard for their clients. While my heart goes out to the people who haven’t made the return on their investments, I cannot help but feel for Andy and Greg who have lost everything and whose health is suffering as a result. I don’t think they are the villains of this story at all. Given the havoc, s/he’s caused for so many people, I wonder if this private investor is able to sleep peacefully at night?
And Karl posted over at another thread on this blog:
Dear Nicola,
Thank you for your reply and Money Gym statement. I have had time to consider the situation and believe the only sensible course is to support Steve Howson in getting the new company, Tudor Equity, up and running. It seems that the new company can start with the assets, staff and expertise of Passive, without its financial Albatross.
They appear to have learned a lesson and restructured their marketing to a much more reasonable level. They should now be able to attract many clients with cash in almost zero-paying accounts who are attracted to the old Passive concept, but balked at a £37,500 up-front non-secured fee. (We must have been mad!)
As Andy Shaw says, the concept still works, especially at the bottom end of the market. The risk in supporting Tudor Equity must be quite small in relation to the potential gains. New investors should be encouraged as the timing, cost-of entry and risk for them could not be better.
I would certainly be interested to know what others are thinking and doing, but I am continuing. They seem determined to prove themselves.
Best wishes
Karl
From your link, it seems Andy Shaw’s personal statement is only available on Rapidshare to Premium (paying) Members? What the heck is that?
I wrote in this thread some time back that there were very real inherent risks in the AS model and unfortunately I seem to have been proven right. It gives me no satisfaction to see anyone fall into financial difficulties but highly geared financials are always going to go South in a downturn just as fast as they went North in the heady days of double-digit property inflation.
Greg
No Greg, you don’t have to be a premium member, just click on the “free” button then on the big blue “download” button and the PDF will download or open, depending on your browser settings. Nicola
Nicola
The link is a pying link – when you click the free link it says that this download is only available to premium members. Perhaps you could publish it here?
As for paying an extra £2.5k I’m not sure if it is a case of throwing good money after bad. Certainly Maria Davis thinks so – as you probably know as you are a follower of hers on Twitter.
I personally think that Tudor should honour all Passive Contracts for free – especially since £2.5 k is a sum that is so small I can’t see how it will fund anything. I particularly object to being given only a week to make my mind up.
Since you and Judith were advocating (and benefitting financially from) Passive as a no-brainer, I think you could perhaps provide more guidance – perhaps as some form of intermediary – to Tudor and their future prospects.
Niall
One of the important lessons to be learnt from the demise of Passive is the error of relying on one property investment strategy. Whilst working out a great system for the boom times Andy and Greg seem to have convinced themselves of the infallibility of their system. Rather than see the objective reality of the completely changed economic conditions that meant their system wasn’t going to work they subjectively just tried to convince themselves and everyone else that it would. If only they had been open-minded enough to look at other complimentary property investing systems such as lease options for example things might have worked out a lot different.
Hi Nicola, Rapidshare is only giving the link to premium members currently because the site is overloaded. It’s only a 145kb file, can’t you upload it to your own site? Or use ShareBee, it will upload it to lots of different hosting sites at once.
Thanks
Hi Daffyd, I can’t upload the link to my own server, as the demand might crash it. I tried Sharebee and you can try and download the statement from here >>> but that service seems to make you sign up for stuff before you can get to the report too.
Niall, I don’t know because I haven’t seen the business plan, but I would think they need the Loan of £2500 to pay people to work in Tudor Equity, and to cover the initial overheads until the first refinances happen and they start to earn from the reduced fees. When you say “provide more guidance” I’m not sure what you mean….we are investers too, as you know.
Cmon Nicola… you’re memory so short is it?
Quote: “I wonder how many of you giving Andy a pasting, are worth a hundredth of what he’s worth?”
If he is heading for bankruptcy – with his feeble claims it’d all be alright if his creditors allowed him xx-years for property values to recover – it seems I’m a lot wealthier than he is, unless he has a lot of secret money hidden away. Why should he be allowed to keep a Negative Equity portfolio he can’t make the payments on?
You said beware the sharks Nicola… well I’m a shark here with money just waiting to buy a good property on the cheap from someone over-extended and desperate like Andy, or more likely the receiver.
What I didn’t like about what was going on, on the property forum website, was that it seemed to be all personal and largely written by people who were not even clients of Passive. I was defending Andy and Greg because they have been good friends to me. I feel the same now “innocent until proven guilty” and all that.
However, I gave up trying to put the other side of the picture, as they rightly pointed out that there would be no “winning” that battle – people had made their minds up and they were not about to change them on my behest.
Now, I know that some people have not had great customer service from Passive and that some are very unhappy, like Maria. However, I also know that there are two sides to every story, and that lots of clients who are very happy with their service.
Many of the happy clients (and a good proportion of the unhappy ones) are choosing to back Steve Howson and Tudor Equity, as they feel that it’s the best way to get their portfolios built. Others in the Money Gym community are choosing to go it alone and we are helping those people to find lettings and management companies local to their properties.
In light of further developments over the last week, I have issued a further statement about Passive Investments and you can read that here http://www.themoneygym.com/blog/2009/11/passive-investments-liquidation-money-gym-statement/ – this thread is now closed for comments.
I was a Passive client and whilst absolutely acknowledging that some people have been badly stung particularly those who were part of the JV situation, I for one have learnt a lot about property investing and myself as a result of the partnershp! I have been down to see Tudor and have decided not to invest further but everyone was very helpful and I have the files of my properties and all the necessary information needed to carry on myself – I spoke at length to Greg and came away feeling everyone has had a tough time and we all learn lessons. I wish Tudor well even though I will not be a part of it.