The Blue Chip lesson

When Blue Chip's empire collapsed, many buyers had paid large deposits on properties that hadn't been built. The money then disappeared into a tangled mass that the liquidators are still trying to unravel.

Most buyers were cold-called and then visited by a salesperson posing as a "financial adviser". They were given a "financial plan" that involved buying property, some of which was off-the-plan.

Although Blue Chip gave buyers "independent valuations", in some cases people paid hundreds of thousands of dollars more than the property was worth on the open market.

Virtually all of the people who signed up for properties were encouraged to use accountants and lawyers hand-picked by Blue Chip.

What these "independent" professionals failed to tell the Blue Chip investors who were buying off-the-plan property was that the contracts and deals were weighted against them. The contracts, for example, didn't have sunset clauses or finish dates and they were often unconditional.

Marketing companies

You'd think that the companies that hard-sell off-the-plan property would be hiding out after the Blue Chip collapse. But our researcher was cold-called three times by companies selling such deals. These companies were LJ Hooker Developments, Iron Bridge Real Estate and Wealth Buy Property.

In May 2008, while researching this article, we also saw emails from companies such as New Zealand Property Solutions advertising apartment "investments" in Wellington's Forte apartment building, which included a one-year rental guarantee.

There are more than 20 companies marketing new apartments and standalone houses. Some of the big names are Merlot Property Investment, Catalyst2, Key2, and NZInvest. There are also many smaller ones such as Home Invest and Secure Invest.

Usually these companies offer buyers an investment plan that shows them making significant sums of money over 10 years or more. They may arrange accountants, lawyers and property managers for the client.