Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
One other question that I would evaluate: Did the expertise come from information purchased from an infomercial, or did they receive a traditional education in real estate? If it is from an infomercial course, I would RUN in the other direction because there are pitfalls with such courses, such as being too generic, not accounting for state law, etc.
__________________
All the world's a stage, and all the men and women merely players: they have their exits and their entrances; and one man in his time plays many parts, his acts being seven ages.
~William Shakespeare (As You Like It Act II, Scene VII)
So basically a friend who got involved with real estate told me if I loan $100,000 so I can get a 15% return on investment within 8-9 months. Basically he asked me to give him $100,000 he would go out and buy a rehab home. The properties he says they are in the South Bronx and Canarsie Brooklyn. He says 20-30k will go into fixing it up so he can rent it out. He said I will get my monies back with the 15% is thru him refinancing the home bc the appraisal will be higher then the actual value what the home is worth and thru receiving rental payments from tenants. The title would be in his name since he refinancing and he says Im secured bc I will be a lien holder on the property. He basically says this is a trust deed investment. Would you invest $100,000 with 15% with him or does this sound like a scam ?
Default/refinancing risks aside, promising that return within 8-9 months, assuming that starts when you cut them the check is risky. You're basically assuming the following will happen with no issues:
- They will search and close on property within the timeframe,
- Property will be within the budget
- Renovations will be on-time and on-budget. Not likely, but for overruns, who assumes that cost?
- The appraisal will meet thier targets
- They will find tenants that will agree to the rental price tied to appraisal
- Tenants will be current on payments
^ first i'd have to get the $100,000, then I'd
doubt if I'd want to risk it for $15,000.
I'd rather figure out how to flip it and make
$200,000, because $15,000 is not enough
money to wait or work 9 months for, unless
you really have nothing better to do.
So my friend says he can get bank foreclosure homes from bank inventory. Do you think he can actually get cheap properties being in South Bronx and Canarsie Brooklyn for $100k ? He said the properties will have no back taxes and will only require 20-30k in rehabbing. I tried searching for properties in NYC myself and couldnt find any for 100k. But he keeps insisting he has access to unlisted inventory for the cheap prices. Well according to him he said South Bronx and Canarsie BK is prime real estate. He said time the purchase is made he can have it be ready to rent out or sell on the market. He says he can rent it out within a week from Craigslist especially if he gets the South Bronx property is which he says he most likely will get with the $100K. Plus he says once he refinance and I get a lien on the property I should be secured bc he will have the money from the initial investment plus getting rent money to cover the 15%. He says he can put everything in writing as well.
Your friend wants to play speculator with your money.
Heads I win, tails you lose sort of deal. Very little risk in it for him. He'd be free rolling you.
Ask him/her what their skin in the game is.
If you want to gamble, you're better off buying 10k worth of options on high beta equities. At least you know your downside and if your gambling pays off, you'd make more than a 15k payday.
a friend ... told me ... I can get a 15% return
... does this sound like a scam ?
Your definition of friend is different from mine. A friend offers you a job. A friend does not want your money, for whatever reason.
Jake's Rule #1: "NO ONE is in business to make money for you. They are in business to make money for themselves."
I know this is an older thread, but I found it interesting that NO ONE brought up the single biggest problem with this entire deal. Can the friend actually qualify for the refinance he will need to repay the loan, or is his credit crap?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
