Warning to people starting out !

16 Replies

I want to share this experience for the benefit of all new investors: 

My partner found this awesome contact somewhere who was a guy specializing in REOs and distressed properties. We met him two days ago. He showed us a fixer upper in Linden and spoke to us for a long time on how the bank will keep giving great deals only to investors who buy so-so deals at first, from them. The numbers did not work out and we didn't take it.

The next morning he sent my friend this awesome foreclosure house in awesome Westfield where there are all houses 700k and above, The  holding company was asking only 250K but wanted an answer in under an hour.  We said ok immediately and I rushed to view the house as a drive by We then called him to find out where his office was, to come to give the deposit. He did not want to meet in the office. He asked to meet outside, but he wanted a cashier's check for 10k. We said ok. We asked him the name of the Trust Account to which to make out the check. He said no attorneys were to be involved-they would need to come in only after 60 days.  Now , the hedge fund company that was holding the property needed a deposit in their company's name . This guy did not know I was a real estate agent  myself or that we had done any deals prior to this. He called us "scared investors" and said the company would not give any more properties if we did not give him a deposit right away. I googled-the "hedge fund company " who was the seller . It turned out it was this guy's own company !Everything he said was a red signal and sounded so fishy! 

We politely said we would give him any deposit he wanted, to His attorney of choice , provided our attorney could be involved. Boy, was he pissed off! He tried at length to convince us, to the point where my partner was even tempted slightly to give him the money. I would hear nothing of it. And I could sleep well at night. 

Please do not be lured by too-good-to-be true deals that promise you instant success. I almost made 400K that day , lol 

Please be aware, ask people around you for advice and DO NOT LET GREED OVERTAKE YOUR SANITY! WIsh you success!

Hi Fahima, I enjoyed reading your story. Thank you for sharing. 

Thanks for the stern reminder... I’m looking for my 1st deal, have analyzed a bunch & feel that I am getting close... this will serve to remind me to keep my guard up!!!

wow.... RED FLAG from the beginning to end.. trying to suck U in.. i bet he gets  a few takers.

no one sells 750k houses for 250 in todays market.. and as you know being and agent EMD go to title co or closing attorney not to sellers.. thats just plain nuts..

@Jay Hinrichs is precisely right! From start to finish, snake~oil salesman. If it sounds too good to be true, it is.

Houses worth $750K, but was asking $250? Strike one. Wanted to meet outside with a cashiers check ? Strike two. Called you "Scared Investors" and and the company will not give any more properties unless you gave him the deposit right away? Strike three. HE'S OUT!!!  Never, ever give your hard~earned money to someone quickly. EVER.

Be prepared to walk away from anyone or anything at the FIRST sign of red flags or something fishy.

You will thank yourself and save yourself heartache and financial loss. :)

Cheers!

Thank you so much for posting this. I'm in Brooklyn and having a hard time finding good deals. The ones that seem too good to be true are already gone before I get a hold of the realtor. NY's MLS is kinda shady as are some of the people who have claimed to be agents.

Special deal for you only... Don't tell anyone else lol. 

Great story !! If someone willing to invest around that area, they will know better not to hand he money to them.

This post has been removed.

Sounds about right. If someone turns down a property that I have for sale I never ever sell them anything again. Doesn't everyone do business that way lol?

Good story and excellent reminder. I am currently working a deal with a good friend and it's easy to get into a handshake deal and skip something in that situation.

GREED ....The investors Achilles Heal. It is by far the biggest factor in taking down the majority of newbie investors.

@Fahima Hilal He would have lost me at "the bank will keep giving great deals only to investors who buy so-so deals at first, from them"

That alone has the stench of bull crap.

@Victor Evans I an SO tempted to post his name here, but I’m a “ Scared Investor!” Lol!

@Fahima Hilal , You absolutely should post his name and his company's name so other investors know who to look out for. Why protect this creep?

@Fahima Hilal thanks for the post. Scams always have a tight time constraint as well. In the first example, the holding company needed an answer in under an hour. Not even enough time to see the place. In @Account Closed 's example, they wanted the funds in 2 days. Absolute absurdity.

@Eric M I want to, but I'm trying to protect myself from the mafia! lol !

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here