Please help me to identify the risks in this investment

7 Replies

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If this is how they're representing it, then yes it's fishy. Find out if the two LLC's have any connections to each other, which would be a big red flag. The "sober house" lease may not last...also find out if there is connection between the sober house operator, and either one of the LLC's. what would the numbers look like at normal rental rates....not good I imagine. Being conservative, and perhaps having an over sensitive scam radar, I'd pass.

I'd require an explanation of the $193k sale, both from XYZ and, if possible ABC since they still hold a note. There may be a solid explanation. I would also absolutely do my due diligence on the sober living company. I'd require talking to them pre-purchase and to some of their other landlords assuming they lease their other facilities (if they don't, why not). If your lease is similar to their others and they have a good reputation with the other landlords that would be ideal. I agree with @Wayne that if there was any inside connection between the sober living co, and either of the LLCs that had ownership in the property I'd likely pass.

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I can think of much more fun ways to throw my money away; a nice trip to Vegas and some high roller tables?

I would want to know if sober living co is going to be in existence for the next five years and if they have any ties to the sellers.

Account Closed 

Something still feels a bit off.  The tax move seems like a bit of gaming.  Can you verify payments made by the sober living facility and what expenses they have been putting in.  Maybe confirm the lease specifics with them as well.  Calling the town and/or talking to neighbors may shed some light (even if it has to be over the phone).  

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