As a person reading my blog you may be aware that I address a lot of doctors – should be in the 3-4k doctors that I must have addressed. So some of them do come and talk to me AFTER the lecture or in the form of an email and I have seen some real bad deals. I would like to call them ‘doctored deals’!! Seriously such ‘doctor deals’ are made only for doctors and the deals are really doctored to look good, and are a complete rip off.

When somebody makes you an offer to invest, you must do some due diligence – and if you do not understand, say NO very fast. To invest you need a lot of due diligence – to say no just one or 2 bad signals are good enough.

Here is one such deal which a doctor should have said NO when it was offered.

A time share offered by a foreign company. No no, not Mahindra Holiday Resorts!

A time share with ‘appreciation sharing’. Well doctors (like all of us) are now allowed to invest US $ 200,000 every year and there is no need to even tell the government what happened with that investing. Obviously you want to use the money when you travel abroad. What is the best thing to do? Buy a Time share which will allow you ‘life-time’ vacations, and after say 10 years allow you to sell it back to them at a fantastic price. Good offer?

I am not getting into the numbers – it was in the region of US $ 140,000 per installment payable for 3 years. Which means about US $ 420,000. Now this is a big amount (Rs. 2.9 crores!!) and obviously only the ‘elitist’ doctors were being approached. One doctor wanted to ask me whether the deal was worth doing. I have no clue whether he had done it all ready and wanted my ratification or he was genuinely asking me BEFORE he did the deal.

On digging the whole investment was so hollow that I laughed. Well almost. Like a typical time-share you had to pay for using the rooms when you went and stayed. YOU had to pay US $ 13500 a year over and above this amount for ‘using’ this time share. This was the guaranteed MINIMUM that you would pay for 30 days of ‘free’ usage a year. At US $ 450 a night. I once stayed in a luxury hotel in Rajasthan (off season, and paid by he client, of course) where a ‘luxury room’ was listed at prices in that range and it was real cool. Do I know of doctors who take vacations spending 30 days a year in such luxury? No, I do not, and this doctor was also not in that category. I asked him bluntly ‘How many nights have you stayed in a luxury hotel PAYING your own money in your whole life’ – he had not spent more than Rs. 8000 for a night stay and just 2 or 3 times. So this was not attractive.

Of course it was an asset he was buying and he had to pay a 1% Asset management fee – $ 4200 a year hurts and sucks!!

He could sell it off after 5 years – and he had to find a buyer himself.

He could give it to his friends – and that meant he would be docked $ 100 per night. Which meant his friend paid $ 450 for using the Luxury resort (breakfast free), for the lunch, dinner and other services and an additional fee of $ 100. How many doctors have such rich friends? I do not meet such docs for sure. I meet much poorer doctors.

The luxury resorts would be all held in a company registered abroad and owned by the same company which was managing it.

There would be an annual ‘independent valuation’ from the 5th year onwards. Wait a minute, the 1st year started after you had paid all the 3 installments.

By this time I had enough due diligence to say NO. Seriously, you do not need to do more research once you see some shit.

This was a recipe written ‘disaster’ all over it. I am sure there are docs who have parted with $ 420,000 and are licking their wounds. I do not move in their circles.