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due diligence

Discussion in 'Brazil Property' started by mitico67, Jun 9, 2008.

  1. mitico67

    mitico67 New Member

    Absolutely - however as mentioned a million times before - always check the due diligence of a development you are thinking of investing in. We did our Due Diligence on those two which is why we haven't sold any there.




    Hi JB, just to let you know that back in Sept 2007, the Brazilian solicitor referred to me assured me that the due diligence for Lago de Coello was fine. I didn't go ahead with the deal just because of my gut feelings. If you cannot trust a solicitor........:confused:
     
    Last edited by a moderator: Jun 9, 2008
  2. robh

    robh Administrator Staff Member Premium Member

    It depends what the report from the solicitor said. Doing due diligence means checking that everything that a developer says is in place is exactly as they say.

    Although I don't like ??? and they have scammed me too, I would guess that the solicitor wasn't lying.
     
  3. Golfingworld

    Golfingworld New Member

    This "Due Diligence" cliche is another nonsense. A Solicitor cannot check if a Firm and/or their Associates or Agents are, might be or could be in Financial trouble sometime in the future. It could well be that a Solicitor dots every i and crosses every t, but he cannot and will not give you a gut feel on the market or the future. These developments like GNG and Lagoa may indeed have all the permissions, they also didn't plan (hopefully) to get into difficulties...but they allegedly did, so it seems, for whatever reason. And as Mitico says, he did his but his gut tells him others. You cannot just sit there and say "Due Diligence" this means nothing apart from covering your backs, it is real market information, proper knowledge and extensive in the market research. Even then, these developments seem to have (allegedly) big problems and many invested. Why, because they were unlucky, didn't properly evaluate things, didn't go there and smelt, saw and tasted and almost certainly believe the hype which is/was peddled about. There is no substitute for rolling your own sleeves up, not saying "They've done The Due Diligence" so it must be ok.
     
  4. JMBroad

    JMBroad New Member


    I know but at the same time, I've received several DDR's from different lawyers sent to me by different agents and some of them state categorically "can not be sold" - the problem is it was in Portuguese so the agent sending it to me didn't even realise.

    However although the DDR report from the lawyer I received for Lagoa was also fine, when I went out there and stood on the plot it was easily apparent that things weren't fine, which is why we decided not to market it.
     
  5. Dotty

    Dotty Banned

    G.W ,

    Well said! Rolling up the sleeves and getting stuck in is the best advice you can give.
     
  6. JMBroad

    JMBroad New Member

    Problem is not everyone has the time or wants to spend that much money to get it done and even if they did to get access to the number of developments which agencies do to be able to compare would take too much money and time for them. You yourself said once that you "drove up and down the north coast and saw no developments already under construction", whereas as an agent I know of loads of developments in the north coast of Natal already under construction and have visited a lot of them. Doesn't mean I'd recommend all of them, in fact I'd only seriously look at a couple, but I have a comparison to base my decision on.
     
  7. robh

    robh Administrator Staff Member Premium Member

    Unfortunately not everyone has the amount of free time that you do to do that amount of research which is why we don't sell anything we haven't seen with our own eyes and met and researched the developer.
     
  8. Golfingworld

    Golfingworld New Member

    In which case, where did the "Due Diligence" help all those that invested in the failing developments that are now out of money or in Administration? "DD" might tell you that everything is in place and that a Bank Guarantee is watertight, but it won't tell you about a downturn in flights, currency fluctuations, economic changes etc etc. Even if the Bank Guarantee is in place, just read the other posts on here about trying to recover deposits! "DD" probably said they were all "cast iron", but it didn't stop some of them failing before they started!

    As for Thomson, I find it very hard to believe that a Winter 08 Programme is not now available for sale if it is going to happen. Remember that flights should start in October, only 4 months away!

    Simple and easy way to confirm it is go to The Visual or Pestana and ask "Are Thomsons coming again this year"..they'll know!

    Sorry, we couldn't find any holidays to match your requirements.This might be because we don't have any flights available for the dates you selected.

    Thats the result of a Thomson Brazil search for Holidays, Oct-Dec 08!
     
    Last edited: Jun 9, 2008
  9. Dotty

    Dotty Banned

    Hi Rob,

    What do you mean research the developer,how would you know if a successful developer is about to be hit by major problems as in the case of various developments up and down the coast of Rio Grande Norte recently??
    What about cases where building work appears to be cracking ahead and then suddenly stops and the investors have done as proposed their due dilligence ??

    I think Mr Broad said in a previous posting that investors don't have the time to go backwards and forwards to a country because of commitments,well would you not have a commitment to a purchase overseas and want to visit frequently ?

    I have never bought without seeing and feeling and have never been ripped off along the way,this has to do with not being arrogant ,standing on my feet
    and looking with my eyes and using my senses.May be if people tried the same thing they would have promising investments.

     
  10. JMBroad

    JMBroad New Member

    Erm no, the DD on those developments said "stay away" - so the idea is that having done the DD, you can advise clients to invest elsewhere. That's how doing DD helps. For GNG it was the legal DD, for Lagoa it was the finall DD - visiting the site.
     
  11. Dotty

    Dotty Banned

    So for all the people that invested and I understand there were many would have done their Due Dilligence and if it is was only in English how would that be translated by an overseas lawyer who may have been acting for clients??

    How many truely have lost their cash any idea ??
     
  12. Golfingworld

    Golfingworld New Member

    The important thing here is that DD is not doing its job properly..as I am sure everyone said that the two developments in trouble are "cast iron" but they weren't, so how did DD help these people that have lost their deposits or just wasted a lot of time and money?
     
  13. JMBroad

    JMBroad New Member

    First off - GNG got their first license - in case you weren't reading the thread about them. However, there is a huge factor you both seem to be either overlooking of forgetting. It's been mentioned before more than once however let me repeat it again.

    GNG - Grupo Sanchez was being sold and promoted as "Pre-Launch" - that means that there was always the risk of licenses not being granted. We as a company don't promote "pre-launch" as we prefer lower risk investment solutions for our clients. So we chose not to market it - other companies decided to offer it and I suspect they probably regret it.

    "Pre-Launch" means that the investors had the chance to invest at a very early stage when prices were at their lowest on that development however at the same time the risk is going to be obviously higher as not all licenses had been granted and there is always a risk that they won't be granted or that they will be delayed.

    While the legal Due Diligence said that the risk was high on that particular development, the fact that they had public figures such as Ronaldo and Antonio Banderas/Mellanie Griffiths advertising the development for them, as well as the background of the team behind the development lent credibility that the development would eventually get their licenses. And as mentioned earlier - they received their first license a couple of weeks ago!

    Don't forget that not only have the investors lost out on this deal, but the estate agents who were promoting it have also bitten the bullet and in a big way. Apart from "lost opportunity" - money they could have made by using their marketing budget to promote another development, they have had a lot of money tied up in commissions from this development - cash flow nightmares on this development will have helped more than one small agency close it's doors.

    While Pre-launch investments can give the big payoffs, they are also the higher risk ones and therefore not ones that I'd go for personally, but everyone has their own opinions.

    As to what you can do to check if the DD has been done - find out exactly what the agent calls "due diligence", what was checked and how they know it is a safe investment - and use your common sense. If some one tells you the water is deep enough to dive into, you'd normally ask them how they know, rather than take the plunge blindly.

    As far as I know, everyone who bought on GNG knew it was pre-launch and that the licenses hadn't been granted yet.

    As I've always said - doing your own Due Diligence on a property in a foreign country in a foreign language and without living there for a long time is almost impossible for the layman to do, especially considering that laws are different in each country.

    However doing your own Due Diligence on a company in Europe - checking their reputation, speaking to the person to get a feel for what they know about the company is often much more in line with the possibilities of each individual investor.
     
  14. Dotty

    Dotty Banned

    Well as far as I know a property is reserved WITHOUT money changing hands and then when the licenses are granted you begin to pay,but that's my experience in Brasil ,so why go ahead and put money on a product without the licenses??Not very smart!
     
  15. timatthebeach

    timatthebeach New Member

    well not sure where you buy property dotty - but buying a property (either already built or off plan or indeed just land) a deposit is always, in my limited experience required. that is waht people have paid for GNG.
     
  16. timatthebeach

    timatthebeach New Member

    and lets face it speculation is another name for gambling. I knew GNG was pre-launch and didnt expect to have to enforce the bank guarantee but knew it was a possiblity (I would imagine like all who invested in GNG pre-launch). I decided it was a gamble I was prepared to take so I paid my money (deposit) and rolled the dice - sometimes you win and sometimes you lose - in this case hopefully not too much we will have to wait and see how the bank guarantee goes.
     
  17. JMBroad

    JMBroad New Member

    I still have Dotty on my ignore list - was she suggesting that reservations should be made without deposits?
     
  18. timatthebeach

    timatthebeach New Member

    it would appear so. as far as I could make out dotty says that reserving WITHOUT paying a deposit is normal ???
     
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