A reader’s summary of Walton’s Land Banking as an investment

I used to visit Project Senso abit. Now i totally don’t but this guy (xLawyer)  posted back in 2005 did come up with a comprehensive summary of what he would be getting himself into if he invest with Walton:

From my days of reading and scrutinizing this excellent deal

All I can figured from the stack of propaganda by Walton is that

- Walton already made huge profits by selling 90% of the land they acquired to the investors. Land that’s worth only $1000 may be sold for $20000. We have no idea what is the actual value of the land.

- Walton also earns from installment plans taken up by investors. I was baffled when the consultant insisted that an installment plan at 11.95% is a better option compared to lump sum investment.. Citing reasons being .. high profit goes into high tax bracket.

- If freak happens and proposal for development doesn't get through, Walton loses that 10% while investors 90%, But refer to point 1. Walton doesn't really make any loss since they have already earned from the initial deal by selling the land to investors.

- Investors are exposed to exchange rate risks, as it's traded in C$, they might have ended up paying more and getting less than expected due to rates fluctuations. There is no guarantee to currency stability when time is involved, past performance is no indication for subsequent similar results. .  

- Their theory of low risk (or no risk as claimed) but high returns is much against all investment principles. It could be no risk to Walton since they earn at the head start, but a different story for investors.

- Investors may own the deed to the land, but it does not represent what they have paid for and will get in return. The piece of land which they paid $20000 for might just worth $1000 and that's what you get in return.

- Great examples quoted in their presentation based on past performance could be during the good years of Canada's real estate history, it could be blooming at the instant, but doesn’t guarantee the same for the next decade or two.

- There is also no guarantee that Walton's proposal for development will be accepted by the Canadian govt. Investors are investing in a hope that it will happen, a piece of land that’s rejected for development is worthless.

- There may be a money back guarantee or the sell-back option, but will there be a penalty fee or admin charge for that? It can't be as good as 100% cash back business. And just how easy is it to get back one’s money? Selling in the open market is also an option, but just how easy will it be to find a buyer ?
No vested interest .

This plan can only take up 5% of my entire investment portfolio, certainly not for retirement as suggested by Walton.

From the looks of it, investors are taking on more risks then the company, or rather the company ain’t taking much risk of the plan gone bad.