There are so many nasty things to say about this Blue Chip fiasco, I have met personally with 2 clients who have lost nearly $1.5million between them because of Blue Chip.

The story getting to the media about Blue Chip investors is terrible, but what about the Blue Chip clients? They have already settled on properties that are worth hundreds of thousands of dollars less than what they paid for them and they have no way of paying the mortgages because they are either on pensions or lower incomes.

One of the annoying things for me about the Blue Chip debacle is that they have tarnished the good name of property investing.

For over a decade we have helped our clients select property that is appropriate for their needs and have helped them create many millions of dollars of wealth for their retirement. Property is an excellent vehicle for creating wealth when appropriate and when it is part of a long term fnancial plan.

Unfortunately many people and organisations have used it to create elaborate scams.

With all good scams there is a lot of truth and very good theory. Which is why they work so efficiently, people beleive what is being told to them because most of what they are being told is the truth, it is only in the detail that things start to get murky.

And thats where the Blue Chip saga rankles! They took a fantastic product and combined it with some very well known and fundamental financial services products to create something that looked just fantastic.

This is one of the ways they sold property. (Article from the NZ Herald)

Blue Chip sold investors apartments – many not built – via numerous methods and schemes.

It even engaged in “apartment futures” trading using a daredevil method it called Premium Income Product.

Here, the mainly older investors entered agreements with Blue Chip to buy an apartment at a guaranteed price at a future date.

But in a high-risk exercise, Blue Chip was to sweep in just as the unit was being finished – and buy the place back, paying the elderly a profit and netting the gain expected to automatically accrue between when the place was planned and when it was finished.

The older investors are now the ones left to buy those places.

Without Blue Chip, developers are fully expected to hold those investors to the terms of the original contract, forcing one Waihi couple to face parting with $1 million for two apartments in the Stadium development, rising in Auckland’s Quay Park.

A distraught older woman called the Herald, astonished to find she had unwittingly become an apartment futures trader – set to buy Stadium apartments for $450,000 each, when Blue Chip was meant to buy them back from her just before the structure was finished.

Barrister Daniel Grove put her in touch with a group of 20 other “apartment futures traders” at Stadium, all attempting to escape the deal they never expected to occur.

source: Anne Gibson – NZ Herald

My advice to those investers is to go and see a financial planner!

My experience at the moment is that the people advising these clients are providing bad advice. Advice such as just hold on and ride it out, or just wait and see what happens, or there is money coming from the liquidators.

This advice is dangerous.

Go and see a financial planner, someone who understands lending, real estate and financial planning so that they can help you work out a strategy to exit these deals (if that is appropriate) without loosing too much money.

You can call us for a free reveiw of the situation. We will let you know in writing our advice is and if we can help you.

Terry Rota

akl@nzpis.com

093033305

(Terry Rota is the head of the Advisory panel for the Financial Gain Group of companies and is the director of Financial Planning practices, mortgage broking firms and the principal of a Real Estate Agency.)