I grabbed this YouTube video from Chris Lengquist's real estate blog. This one is a little different from the real estate scam that I recently wrote about but you could consider it a variation on the general theme.
A couple of rules of thumb:
- If it looks lucrative and easy then you're about to be taken for a ride.
- Beware of "package deals" where an advisor delivers the property, the lending, the appraisal and the tenants. These parties, if delivered as a combo deal, will always collude against you.
- Don't sign anything you don't understand. Loan documents can be intimidating for new investors - but if it smells fishy then ask questions until your gut tells you everything is ok.
- Any counterparty who is willing to be dishonest on your behalf will cheat you in the end.
- These people in this video aren't necessarily dumb. The scam artists are pros, and they look for amateurs as their victims.