Growth Equity Group - How 170+ investors were scammed

Growth Equity Group - How 170+ investors were scammed

Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes

In 2014-2015, more than 170 investors purchased 2 and 3 bedroom condo units from Growth Equity Group. This company specializes in investment properties in a self-directed IRA. More than 85% of their sales are bought in this fashion.

Business was solicited mainly at investment conferences (Las Vegas a popular site), and some here at BP. I was one of those people who fell for their marketing.

I was sold a condo in a neighborhood in Virginia (specific details to be disclosed later). They sold me the condo for almost $90K. The property value was however, at best, $65K. They came with sweet talk, a personable friendly nature, like a predator (although I didn't know it at the time.) They only allowed an appraisal to be performed through them. One can see why, a legitimate appraiser operating legally would not appraise these condos for what they were selling for.

Growth Equity Group sold units to more than 170+ investors. 3BRs went for $96K, 2BR for $86K. Of course, they also used an "in house" lender specializing in non-recourse loans. They wouldn't allow you to use your own lender. It sounds fishy looking back at it, but not when they present it in a such a welcoming and favorable way. The rate would be 5%, which would balloon to 9% in 4 years!

I see three main issues with what transpired:

1. Sales. Growth Equity Group knowingly sold condos which were valued at $60-65K, for $85K-100K. They did this with open eyes and a smile. They even rushed me to sign on the dotted line.

2. The Appraisal process. Appraisers in the past have been fined and jailed for falsifying numbers, for elevating the appraisal amount. If the appraiser is on the payroll of the company who is selling you a property, or they are getting business or money from the company who is selling you the property, this is a major conflict of interest.

3. Financing. Industry standard for a non-resource loan is - during the balloon period, the interest rate cannot go up more than 0.5% per year or more than 2% total, no matter the interest rate environment. Growth Equity Group again used a lender that they were "working with" and did not let you use your own lender. Their loans carried an interest rate of 5%, which immediately jumps to 9% at the 4 year mark.

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Asheville, NC · Member since 2017 · 170 posts · 242 votes
7y

@Andrey Y.

I’m so sorry this happened to you.

I would comment further but I got stuck at the part where you refer to people in their 50’s as elderly.

See this reply in the discussion

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  • Lewisville, TX · Member since 2015 · 344 posts · 264 votes
    7y

    @Andrey Y.

    I was approached by them several times & everything they offered & did seemed very fishy & unrealistic. Not just this deal that scammed 170 investors but the whole company & all deals! I even blocked one of their head sales guys from my phone. It’s eerie & weird to see this break now!

  • Tacoma, WA · Member since 2018 · 230 posts · 257 votes
    7y
    Originally posted by @Andrey Y.:
    Originally posted by @Josh Carlegis:

    Can you refinance to a lower fixed rate and make it cashflow?

     We have been discussing that possibility earlier in the thread. Haven't found a lender yet that would fund a non-recourse loan below $50,000.

     I haven't read the thread in it's entirety, so forgive me if someone already covered this - but have you considered borrowing against other assets you own to pay off some or all of the condo loan? Perhaps you own something that you could re-finance at a better rate than 9%. Just giving you something else to consider. Cutting your losses and selling might still be a better option.

    I can't believe all the people giving you flippant "buyer beware" responses with zero focus on the people who scammed you. I agree that buyers need to exercise caution, but it is those people's flippant mentality that allows scammers to be so prolific in our society. I hope you get some resolution to this.

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Jeremy Z.:
    Originally posted by @Andrey Y.:
    Originally posted by @Josh Carlegis:

    Can you refinance to a lower fixed rate and make it cashflow?

     We have been discussing that possibility earlier in the thread. Haven't found a lender yet that would fund a non-recourse loan below $50,000.

     I haven't read the thread in it's entirety, so forgive me if someone already covered this - but have you considered borrowing against other assets you own to pay off some or all of the condo loan? Perhaps you own something that you could re-finance at a better rate than 9%. Just giving you something else to consider. Cutting your losses and selling might still be a better option.

    I can't believe all the people giving you flippant "buyer beware" responses with zero focus on the people who scammed you. I agree that buyers need to exercise caution, but it is those people's flippant mentality that allows scammers to be so prolific in our society. I hope you get some resolution to this.

    This property has a non-recourse loan and is in an IRA. Not sure if there is any option to pay it off.. seems like that transaction wouldn't be allowed?

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Andrey Y.:
    Originally posted by @Jeremy Z.:
    Originally posted by @Andrey Y.:
    Originally posted by @Josh Carlegis:

    Can you refinance to a lower fixed rate and make it cashflow?

     We have been discussing that possibility earlier in the thread. Haven't found a lender yet that would fund a non-recourse loan below $50,000.

     I haven't read the thread in it's entirety, so forgive me if someone already covered this - but have you considered borrowing against other assets you own to pay off some or all of the condo loan? Perhaps you own something that you could re-finance at a better rate than 9%. Just giving you something else to consider. Cutting your losses and selling might still be a better option.

    I can't believe all the people giving you flippant "buyer beware" responses with zero focus on the people who scammed you. I agree that buyers need to exercise caution, but it is those people's flippant mentality that allows scammers to be so prolific in our society. I hope you get some resolution to this.

    This property has a non-recourse loan and is in an IRA. Not sure if there is any option to pay it off.. seems like that transaction wouldn't be allowed?

    Ya check that out with your custodian before U use personal money for your IRA investment. seems to me you would need to contribute the payoff amount to the IRA and then let it pay off the note.. but I could be wrong.. you could ask @Brian Eastman  he would know for sure 

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Andrey Y.:
    Originally posted by @Jeremy Z.:
    Originally posted by @Andrey Y.:
    Originally posted by @Josh Carlegis:

    Can you refinance to a lower fixed rate and make it cashflow?

     We have been discussing that possibility earlier in the thread. Haven't found a lender yet that would fund a non-recourse loan below $50,000.

     I haven't read the thread in it's entirety, so forgive me if someone already covered this - but have you considered borrowing against other assets you own to pay off some or all of the condo loan? Perhaps you own something that you could re-finance at a better rate than 9%. Just giving you something else to consider. Cutting your losses and selling might still be a better option.

    I can't believe all the people giving you flippant "buyer beware" responses with zero focus on the people who scammed you. I agree that buyers need to exercise caution, but it is those people's flippant mentality that allows scammers to be so prolific in our society. I hope you get some resolution to this.

    This property has a non-recourse loan and is in an IRA. Not sure if there is any option to pay it off.. seems like that transaction wouldn't be allowed?

    Ya check that out with your custodian before U use personal money for your IRA investment. seems to me you would need to contribute the payoff amount to the IRA and then let it pay off the note.. but I could be wrong.. you could ask @Brian Eastman  he would know for sure 

    I will definitely check. I don't think the custodian would care that much. What I am worried about is a prohibited transaction (using personal funds / not arms-length). Although, I am not a CPA or self-directed IRA expert by any stretch.

    @Dmitriy Fomichenko any comments?

    Paying off the loan would not only get me out of those ridiculous financing terms, I would have the option to dump the non-responsive PM company.

    Have a HELOC at 2.4% interest only for 10 years, so that would work ideally for this if I end up keeping this property.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Andrey Y.:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Andrey Y.:
    Originally posted by @Jeremy Z.:
    Originally posted by @Andrey Y.:
    Originally posted by @Josh Carlegis:

    Can you refinance to a lower fixed rate and make it cashflow?

     We have been discussing that possibility earlier in the thread. Haven't found a lender yet that would fund a non-recourse loan below $50,000.

     I haven't read the thread in it's entirety, so forgive me if someone already covered this - but have you considered borrowing against other assets you own to pay off some or all of the condo loan? Perhaps you own something that you could re-finance at a better rate than 9%. Just giving you something else to consider. Cutting your losses and selling might still be a better option.

    I can't believe all the people giving you flippant "buyer beware" responses with zero focus on the people who scammed you. I agree that buyers need to exercise caution, but it is those people's flippant mentality that allows scammers to be so prolific in our society. I hope you get some resolution to this.

    This property has a non-recourse loan and is in an IRA. Not sure if there is any option to pay it off.. seems like that transaction wouldn't be allowed?

    Ya check that out with your custodian before U use personal money for your IRA investment. seems to me you would need to contribute the payoff amount to the IRA and then let it pay off the note.. but I could be wrong.. you could ask @Brian Eastman  he would know for sure 

    I will definitely check. I don't think the custodian would care that much. What I am worried about is a prohibited transaction (using personal funds / not arms-length). Although, I am not a CPA or self-directed IRA expert by any stretch.

    @Dmitriy Fomichenko any comments?

    Paying off the loan would not only get me out of those ridiculous financing terms, I would have the option to dump the non-responsive PM company.

    Have a HELOC at 2.4% interest only for 10 years, so that would work ideally for this if I end up keeping this property.

     well if you can only use your roth funds to retire this.. and a sale is too painful. each year you contribute to the roth.. just use that contribution to pay down the note.. it lowers your effective interest cost and in a few years its paid for.. and once paid for it will have some cash flow.    Also talk to your Brian or Dmitriy about how loses in your plan are reported to the IRS.. that would be good to know to.

  • Brian EastmanPro Member
    Self Directed IRA & 401k Advisor · Wenatchee, WA · Member since 2014 · 2k+ posts · 2k+ votes
    7y

    @Andrey Y.

    The IRA would have to pay off the loan. You could not do so personally.

    You would potentially have the option to bring in your own private lender, depending on the existing note terms.  Not sure a lender would be particularly interested in the project however.

    Met with some of the guys who ended up being principals at Growth Equity when they were with a different group years and years ago. They wanted to leverage our IRA services to promote high end condos in Florida. They were swooping in like vultures and buying in bulk all the pre-construction stuff people had bought before the crash. They just saw that IRA money sitting there as prey, and had not real interest in ensuring they provided a good product that benefited the investor. Pretty quickly identified these are not the type of people you want to be associated with, and felt like taking a shower after meetings. Fortunately all before actually doing any business.

    The world has many such sharks out there.  Diligence is critical.

  • Tacoma, WA · Member since 2018 · 230 posts · 257 votes
    7y
    Originally posted by @Andrey Y.:
    Originally posted by @Jeremy Z.:
    Originally posted by @Andrey Y.:
    Originally posted by @Josh Carlegis:

    Can you refinance to a lower fixed rate and make it cashflow?

     We have been discussing that possibility earlier in the thread. Haven't found a lender yet that would fund a non-recourse loan below $50,000.

     I haven't read the thread in it's entirety, so forgive me if someone already covered this - but have you considered borrowing against other assets you own to pay off some or all of the condo loan? Perhaps you own something that you could re-finance at a better rate than 9%. Just giving you something else to consider. Cutting your losses and selling might still be a better option.

    I can't believe all the people giving you flippant "buyer beware" responses with zero focus on the people who scammed you. I agree that buyers need to exercise caution, but it is those people's flippant mentality that allows scammers to be so prolific in our society. I hope you get some resolution to this.

    This property has a non-recourse loan and is in an IRA. Not sure if there is any option to pay it off.. seems like that transaction wouldn't be allowed?

    I forgot you mentioned it was a non-recourse loan in an IRA. I don't have experience with that situation. I did a quick search of non-recourse loans and didn't see anything in particular about prepayment penalties. There could definitely be implications with your IRA though. Looks like Jay pointed you in a good direction.

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    7y

    @Jay Hinrichs and @Andrey Y.

    As Brian said the loan in an IRA can't be paid off using personal funds.

    As far as the losses in an IRA reporting to the IRS - they are not reported, the losses simply reduce the value of an IRA. The same concept as buying $100,000 worth of stocks and then selling them for $65,000. Your IRA is now worth $65,000 instead of $100K, doesn't affect your personal tax situation in any way.

  • Real Estate Investor · Grosse Pointe, MI · Member since 2016 · 10 posts · 28 votes
    7y

    @Jay Hinrichs and others who asked about the outcome of significant legal matters, Mr. Immell was acquitted on the charges related to the GO-Zone tax incentive, and below is a quote and then link to an article for awareness.  

    Note for some on this thread, an indictment is just a notice that there is a belief a crime was committed.  Would never preclude anyone from continuing their business. . . but any due diligence as an investor and seeing indictment(s) would/should make you run away in my opinion.

    "Mr. Immel, a partner in Hanover Companies, introduced investors from across the country to investment properties along the Gulf Coast. The government alleged that Mr. Immel conspired with a closing agent and title attorney to conceal Hanover's role in the transactions, in part through the creation of two different HUD-1 settlement statements, only one of which was provided to the mortgage lenders who financed the investors' purchases of properties from developers." 

     (https://www.prnewswire.com/news-releases/brett-imm...)

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tim Ryan:

    @Jay Hinrichs and others who asked about the outcome of significant legal matters, Mr. Immell was acquitted on the charges related to the GO-Zone tax incentive, and below is a quote and then link to an article for awareness.  

    Note for some on this thread, an indictment is just a notice that there is a belief a crime was committed.  Would never preclude anyone from continuing their business. . . but any due diligence as an investor and seeing indictment(s) would/should make you run away in my opinion.

    "Mr. Immel, a partner in Hanover Companies, introduced investors from across the country to investment properties along the Gulf Coast. The government alleged that Mr. Immel conspired with a closing agent and title attorney to conceal Hanover's role in the transactions, in part through the creation of two different HUD-1 settlement statements, only one of which was provided to the mortgage lenders who financed the investors' purchases of properties from developers." 

     (https://www.prnewswire.com/news-releases/brett-imm...)

    sounds like they were double closing.. this is one reason many title companies wont do these any more.. but its typical wholesaler strategy.   Where there was a lot of heartache was those buying for gozone tax benefits and they subsequently got denied..  not saying these guys did that but I know others that did.. and there was a guy in Hawaii that got in hot water there as well.. same time same assets. 

  • Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @Caleb Heimsoth, it is rather naive to not consider the share market gambling and speculative. Ask anybody who survived the 80's crash. Companies can vanish. People had millions of dollars of share certificates that are now liners for their drawers. There is no comparing RE with shares in terms of risk. It is comparing apples and bicycles. RE is insurable, consistently out performs any and all other asset classes, (on average), throughout history they aren't making any more land and your land can't go broke overnight and vanish.

  • Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Dean Letfus:

    @Caleb Heimsoth, it is rather naive to not consider the share market gambling and speculative. Ask anybody who survived the 80's crash. Companies can vanish. People had millions of dollars of share certificates that are now liners for their drawers. There is no comparing RE with shares in terms of risk. It is comparing apples and bicycles. RE is insurable, consistently out performs any and all other asset classes, (on average), throughout history they aren't making any more land and your land can't go broke overnight and vanish.

     Can you please provide sources to substantiate the claim that "RE consistently out performs any and all other asset classes (on average), throughout history..." 

    -What is the measurement metric used to define "outperforming"? ROI, CoC, cumulative return, IRR?

    -What is the time period for "throughout history"? Is it when humans first developed the ability for abstract thought around 50,000 yrs ago, first record of recorded history, the beginning of agrarian capitalism in the 16th century, or perhaps with the rise of mercantilism? 

    Also, what does the ability to be insured have to do with the the price of tea in China? I can insure against lose of capital in stocks too.

    You do raise an interesting question though:  What is an investor? Does the act of buying a TK rental make one an "investor" or is it something more? I'm not that clever so I'll use Ben Graham's definition. An investment is"one which, upon thorough analysis promises safety of principle and an adequate return". An investor must be one who 1. does a thorough analysis, 2. protects against large capital losses, 3. have defined what an "adequate" yet not extraordinary return is for them. 

    Asset classes has nothing to do with the what makes an investor, but rather the process one follows to make that investment decision. People can invest in stocks and Re. People can speculate in the stock and RE market.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Dean Letfus:

    @Caleb Heimsoth, it is rather naive to not consider the share market gambling and speculative. Ask anybody who survived the 80's crash. Companies can vanish. People had millions of dollars of share certificates that are now liners for their drawers. There is no comparing RE with shares in terms of risk. It is comparing apples and bicycles. RE is insurable, consistently out performs any and all other asset classes, (on average), throughout history they aren't making any more land and your land can't go broke overnight and vanish.

    no wont vanish but it can get trashed and stripped and all sorts of other bad things in rough tough areas..  

  • Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @Jay Hinrichs, absolutely true Jay but then I would I would say if you are in those areas you aren't investing!

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y

    Quick Monday update.

    I have received less than 10% of rent due since Oct '18. Two months of maintenance fees and 4 months of mortgage are unpaid, because no income. It took the PM company 3.5 months to evict the tenant, which they started in December when they should have started in October.

    The PM company has too few employees for the amount of units they manage (but my own observation and their own admission)

    I was quoted a turnover cost of $3600. All of the estimates ended in "$x00.00", telling me that the numbers were made up and inflated. Bunch of added fees like "$200 oven cleaning fee" when this should be part of the $300 move-out clean. $500 to "haul away large and broken items", when in fact there are no large and broken items to haul away.

    When I question these fees, they don't budge and take 1-2 weeks to respond to an email. There is around $3000 in collections for the tenant.. I doubt I will see that money anytime soon.

    Right now, I have no idea if they even started the unit turnover. And I have no way of knowing.

    The mortgage balance is about $43K, the value of the unit is around $60-63K and dropping, and the property management company is unresponsive and trying to make money off investors but clearly overinflating the turnover costs.

    Since the loan is non-recourse, I am thinking of just mailing the keys to someone. I want to be done with this. There are other things in life I am enjoying doing and will be doing other deals. This is a loss of about $35K as well speak. Kind of sucks but I'm not going to spend $1000 and a week of leave to fly there, when this may or may not change anything.

    @Dean Letfus @Jay Hinrichs @Brian Eastman @Dmitriy Fomichenko

    Would love your guys' thoughts. Putting the Newport News Virginia VA just in case. I have pretty much conceded a complete loss on this one.

  • Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @Andrey Y., sadly it's not a city I am familiar with or I'd get you to send me the keys :-).  What I would do though if it was me is fire the PM immediately and get someone on BP to recommend a decent manager. At least that stops all that nonsense. Then you need to establish what the floor is for the value. You say it is 63K and dropping but if the real value is say 55K and you owe 43K if you can get it cash flowing why not let it get paid off and recover. This is assuming the location is OK and the construction quality s decent. I always think it's sad to just walk if you can rescue it with some help. Getting a decent PM in there is job number 1.

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Dean Letfus:

    @Andrey Y., sadly it's not a city I am familiar with or I'd get you to send me the keys :-).  What I would do though if it was me is fire the PM immediately and get someone on BP to recommend a decent manager. At least that stops all that nonsense. Then you need to establish what the floor is for the value. You say it is 63K and dropping but if the real value is say 55K and you owe 43K if you can get it cash flowing why not let it get paid off and recover. This is assuming the location is OK and the construction quality s decent. I always think it's sad to just walk if you can rescue it with some help. Getting a decent PM in there is job number 1.

     What makes this even more of a joke, is that due to the unfortunate event that Growth Equity Group had bought all of the 210 units/construction in bulk FROM the current property management company (who they still owe money to!), the property manager that is in place has to be in place unless the note (my mortgage) is paid off. They flat-out said that I cannot switch property managers unless my mortgage is paid off. I asked him hypothetically since investors do this all the time if there is a disagreement or people want to go different ways. The guy I spoke with said "nope, only if they note is paid off."

    When I thought that the list of things that Growth Equity Group did to screw us over couldn't get longer, this is just another one that is written on the list. Of course, we weren't told about this little slice of heaven a priori.

  • Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    I would think the likelihood of that being legal is about 0%. Get a decent attorney's advice and change the management?

  • Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    7y

    @Andrey Y. I wouldn't send keys because it will hurt your credit which you might need in future and get you in even worse situation than now.

    List property for sale with an agent, take whatever you've offered and be done with that. Even if this will make your losses slightly higher, it will be the closure.

    Don't get rid of the problems just walking away - someone else might solve it much worse for you

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    @Irina Belkofer  these are private non recourse notes.. no credit will get hurt.

    either he stops paying and voluntarily signs a deed in Lu or he makes them go through the whole process. 

    some times you can get a few grand for cash for keys so the lender does not have to do the whole process.

    @Dean Letfus  agreed I highly suspect a note holder cannot add PM into their note.. I would read the note. 

    and I would switch what are they going to do foreclose on you ??? 

    Andrey list it on market place all sorts of Beginner BP investors would love a low down owner carry and you just sell it sub too the note. since its non recourse if they fail so what.. 

    it really sounds like a management issue is to blame here as much as anything else. keep in mind any rental you buy anywhere in the US if you want to exit in a few years your going to lose money.. unless you bought it at 50 cents on the dollar like the flippers do.

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Irina Belkofer:

    @Andrey Y. I wouldn't send keys because it will hurt your credit which you might need in future and get you in even worse situation than now.

    List property for sale with an agent, take whatever you've offered and be done with that. Even if this will make your losses slightly higher, it will be the closure.

    Don't get rid of the problems just walking away - someone else might solve it much worse for you

     It won't affect my credit. Non-recourse loan.

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Jay Hinrichs:

    @Irina Belkofer  these are private non recourse notes.. no credit will get hurt.

    either he stops paying and voluntarily signs a deed in Lu or he makes them go through the whole process. 

    some times you can get a few grand for cash for keys so the lender does not have to do the whole process.

    @Dean Letfus  agreed I highly suspect a note holder cannot add PM into their note.. I would read the note. 

    and I would switch what are they going to do foreclose on you ??? 

    Andrey list it on market place all sorts of Beginner BP investors would love a low down owner carry and you just sell it sub too the note. since its non recourse if they fail so what.. 

    it really sounds like a management issue is to blame here as much as anything else. keep in mind any rental you buy anywhere in the US if you want to exit in a few years your going to lose money.. unless you bought it at 50 cents on the dollar like the flippers do.

     Quick update. There's basically a $900 balance due on the account. Even though the tenant first didn't pay any rent around October of last year, it took more than three months to evict the tenant. So in addition to the $900 balance on the account, they are quoting the $3,600 for the turnover cost. I questioned some of these crazy costs and the on-site maintenance guy will be calling me back this week.

    I basically told him that there is not enough money in my Roth IRA account - I will NOT be sending them a check for $4,000. I will not send that kind of money to a company that I don't really trust that they are on my side.

    So unless they can lower the turnover cost to around $2,000, my plan is to walk, I'll take the $35K hit. Selling the unit will be next to Impossible without turning it over. The only problem that I could see that if the lender doesn't try to foreclose, that the condo association might and this may affect my credit? I don't know. Even with a non-recourse loan maybe if the HOA tries to collect the property there may be some issues.

  • Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    7y

    Usually HOA won't foreclosure on you - it cost a lot of money to spend on lawyer and they are the last in line after taxes, mortgages etc.

    So, if your loan is non recourse, then just walk away. Give the keys to the bank, negotiate some cash for keys and be done.

    Sorry for your loss

  • Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Irina Belkofer:

    Usually HOA won't foreclosure on you - it cost a lot of money to spend on lawyer and they are the last in line after taxes, mortgages etc.

    So, if your loan is non recourse, then just walk away. Give the keys to the bank, negotiate some cash for keys and be done.

    Sorry for your loss

    The funny thing is, I know the name of the LLC that is the lender, but getting ahold of them would be interesting. I have to go through Growth Equity Group to get in touch with them, this just shows how shady this whole thing really is.

    Working on financing options now, if I'm able to refinance this would possibly give the option of salvaging this. If not, looks like I will probably just walk away. I hate to say it, but the chance to save an extra $10,000 in my IRA and stuff for months and months of headache from it, is not something that I'm probably going to do.

    I would sell the property to an investor for $56,000, which is significantly under market. Not sure if anyone would be interested. It does cash flow pretty well and has rented for $780 per month over the last three years or so.

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