Friday, February 20, 2009

WALTON INTERNATIONAL
another investment gimmick? or opportunity?

Attended the Seminar by Walton CEO and COO in a dual presentation format. I must say i am impressed by the presentation or sales pitch whichever we call it. End of the day, the business model presented seems too good to be true.

In the land banking business, it works the same way we buy land, wait for developer to buy den make a tidy profit from the sales...In short, "buy low sell high". Many questions and many doubts about this investment scheme. Not a fraud definitely but not a guaranteed profit either.

1. How do you know that the land is really good?Walton explained that they have a group of architects, urban planners working on it. How good are the architects? What are their profile?

2. Does Walton mark up the price before subdividing it to individual investors? That is to say if walton buys raw land, 1 acre at $500 den mark up to $1000 den divide into 10 portions, sell 10 portions and gain $500 from sale....(on top of recoup capital). As such if they manage to sell at high price, how high can the price go?Is it like what is being marketed?

3. This investment scheme is not liquid. Not able to cash out anytime during the waiting period. So, as such, if it takes 10 yrs to cash out, one must consider inflation, currency rates and opportunity cost as well. As such, is it really that lucrative for 20% simple interest ROI? It depends really...Its a choice for this point. Some people might wanna invest for long term.den it might be feasible.

4. For every investment, there is a need to diversify and hedge. Hence, i recommend buying both canada and US land, subjected to a max of 20% of your portfolio. Meaning if one had $100,000, put $20k in land banking cos this is not liquid. Put the rest in FD, equities(which are liquid) and of cos, your insurance and local bank savings..