Realcor also known as Purple Rain Properties No. 15 has had their financial service provider license suspended yet it was reported in the Saturday Star that they continue to trade. This is yet another case of a company that sells unlisted shares with the value in property syndication schemes. We have written about the risks and potential rewards of investing in unlisted shares as well as the property syndication business which has come under increasing scrutiny from the FSB in recent years and the FSB has warned investors against investing in shares offered by Realcor.

Realcor is linked to Queensgate and Sharemax and it would be wise to take heed of the warning issued by the FSB. Realcor has posted letters to the reserve bank on it’s website stating that it no longer deals in the sale of unlisted shares yet the fact remains that the FSB suspension is still in place and a further warning sign to investors is that ABSA has filed for the liquidation of Realcor.

Property Syndication in boom times has given great returns to some investors who were lucky enough to get out before the property market became stagnant and the lending criteria of the banks was a lot less stringent. The “recession” has seen the banks tighten up significantly on their lending criteria making property investment a risky one in the current market and decreasing the number of prospective buyers in the market.

While property investment has the potential to show better returns than some of the more conservative retirement investments like annuities, you are not guaranteed anything and the companies managing the investments are often development companies and not investment advisors. The choice to take the risk is entirely yours and unless you can prove that you were mislead by the sales person or financial advisor, the risk is entirely yours. Buyer beware!