Lesson from a couple who lost $300k in property investment deal

Agreement signed stated the money they 'invested' was a loan and there was no mention of a 20% profit

- Tan Ooi Boon

A couple lured into investing in a private business on expectations of lucrative returns learnt an expensive lesson when they ended up losing over $300,000.

Any private business investment carries an inherent risk: If you can't easily cash out, you will likely not get your money back if the enterprise reneges on the deal.

The couple who learnt this very hard lesson suffered even more pain because they spent tens of thousands of dollars on court action to get their money back and all they managed to retrieve was about $20,000 — not even enough to cover their legal costs.

Their plight should serve as a good reminder to always think twice before risking your hard-earned savings with someone you barely know.

The couple were ensnared in the sham deal after they hired a contractor to rebuild their house. After the job was completed, the contractor told them he had just bought a house for about $3 million that was to be redeveloped into two new units that could be sold for at least $6 million.

The couple were told the project would be handled by two of the contractor's companies — one as the developer and the other as the builder to manage the work.

The developer, which was helmed by the contractor's brother, had nine shareholders, including the builder, which would bear the construction cost of $1.7 million.

The contractor gave the couple a chance to take part in this "heavily subscribed and popular" deal by offering to let them invest $340,000, or 20 per cent of the builder's stake in the project.

He told them the deal would "minimally yield a 20 per cent profit", or $68,000, after the sale of the two new houses.

He further assured that the deal would be "safe and profitable" because he was the owner and controller of both companies and his brother was a "sleeping partner" who left everything to him.