Posted by Donna on January 20, 2001 at 06:19:39:
Thanks for your comments JohnBoy, I was pretty sure it wasn’t a good deal. But I just wanted to check around and see if others agreed with me. Thanks again, and I will check out the sites to do it myself.
Is this Legal? - Posted by Donna
Posted by Donna on January 19, 2001 at 16:12:59:
Recently an oppurtunity has arisen for me to invest in real estate. The “group” says that they pay people who have a hight beacon score to purchase property. The group does all the work, and makes all the payments if for some reason the tenants can’t make payments, the only time I would be held responsible, is if the “group” went under. The tennants are required to refinance in 6-8 months, and if there is any equity built up in that time, it would be split 50/50 with me? Now I find this a little to hard to swallow. Please tell me if this sounds like it is legal. Thanks. Donna
Re: Is this Legal? - Posted by T Jent
Posted by T Jent on January 20, 2001 at 20:48:47:
They would only want to do this if their own credit was poor. And if it is, then why should you trust them any more than the lender?
Re: Is this Legal? - Posted by Bob (Md)
Posted by Bob (Md) on January 20, 2001 at 01:22:27:
Doesn’t sound right to me. When I was growing up, my best friend’s dad was a junk dealer. He taught me to negotiate. He had a bunch of sayings - all of which have proved to be painfully astute over the years…
He also taught me to ask for the sun, moon, stars, clouds in the sky, the guy’s house and firstborn male child, and his car – then settle for about half that.
Just some food for thought…
This is a common scam in Baltimore - Posted by SCook85
Posted by SCook85 on January 19, 2001 at 22:33:32:
There are a group of guys in Baltimore who look for people with high beacon scores.
What they do is contract to buy cheap homes then simultaneously close them to the buyer with the high score. In this area they typically contract the homes at about $15k each and sell for about $55k. They show a 20% down payment.
Everything is coordinated so that the buyer with the high score can buy about 15 houses and settle on them all within a couple of weeks. They use a different lender for every home and do it all within a couple of weeks so that no loans show up on the credit report, and the lenders don’t realize what is going on.
The seller of the homes makes a boat load of money, gives some to the buyer, and the seller is willing to make some payments on the loans. But they do this just long enough to keep the banks from crying foul. Meanwhile they are looking for another eager investor with a high credit score to do it all over again.
Some of them are going to the same hotel that Rusty F. is at.
Steve
Probably not . . . - Posted by JoeKaiser
Posted by JoeKaiser on January 19, 2001 at 22:00:17:
We have a fellow here in town who did this very sort of thing a few years back, Rusty F.
He even held seminars and produced an info pack for folks looking to get into real estate with no prior experience.
They put up their financial statements and borrowing ability, and Rusty put together the deals. The investors got loans for the property purchases, pocketed $1,000 or so for their efforts, and owned a house for nothingdown.
Problem?
They all paid way too much for the properties, rents didn’t cover mortgages, and problems developed when Rusty couldn’t keep up with the payments for them like he promised.
Result?
Lots of foreclosures, lots of upset investors, and lots of lawsuits.
Last time I checked, Rusty was still making little rocks out of big rocks at the graybar hotel.
Joe
RUN AWAY FAST!!! - Posted by Charity
Posted by Charity on January 19, 2001 at 19:57:42:
We just had a huge scam like this in Atlanta. Wish I could remember the guy’s name. It was the same exact scenario. He was keeping some of the money, ruined everyone’s credit score and he still lives in a $700K house that other people bought with their credit. Legal system is still trying to get him… Bad situation. Don’t dare get involved.
Charity
they’ll find a way to make money… - Posted by dewCO
Posted by dewCO on January 19, 2001 at 19:14:40:
that’s for sure, before they go under. But doubt that you’d get the benefit of any of it.
Something Smell? - Posted by Randy M
Posted by Randy M on January 19, 2001 at 16:41:15:
John Boy is right. You can do all the deals you want without this “group.” This is a good place to start. I advise you to grab your money and run away from the “group” as fast as you can!
Re: Is this Legal? - Posted by JohnBoy
Posted by JohnBoy on January 19, 2001 at 16:35:45:
Sounds like what they want is to use someone else’s credit by having them sign for the loans and taking all the risk while they sit back and collect 50% of all the profits.
“IF” there is any equity??? My guess is they would be creating equity when they L/O to their tenants by selling to them above market value.
In any event, WHY would you even want to consider doing this? Just do your own deals and make ALL the profits for yourself!
How much CASH does this GROUP have sitting in their account to use for reserves in the event they end up with NON PAYING tenants or have to incur legal expense to get the tenants out if they don’t pay, go in and clean up the place and repair the damages and pay to advertise to get new tenants in the properties???
Guess what! If this GROUP doesn’t have a sack full of money sitting in reserves to cover any problems that could develop, THEY ARE GOING UNDER AND FAST!!! That leaves YOU holding the bag with the mortgage to pay since it was YOU that signed for it! They have NO RISK! They just collect 50% or more of the profits while someone like YOU steps in and takes on ALL the RISKS involved!
You can do the same type of deals on your own and you don’t even need to use your credit! Read this site and all the “how to articles” and “success stories” to get ideas on how you can do this stuff on your own!