Should I trust this Guy??? - Posted by Kristy-AZ

Posted by js-Indianapolis on April 17, 2003 at 05:42:35:

Doesn’t sound like you know what you’re doing.

I’m kidding!! Sounds like you’ve got a good business going on, and know exactly what’s up. I swung a hammer on my first house, and learned enough to know I’m not a rehabber. Put a nail half way through my foot one day (only half way because it hit my heal bone), and cut the tip of my finger off the next, cutting carpet. Going up on the roof? That’s what the guy I pay to fix leaks does. Not me, no way. You’ve got me beat, and I weigh a little more than 105 pounds.

On the note of this sketchy deal, I’ve got almost the exact same scenario on a place. Guy wanted 10K in earnest $$, no inspection clause, no “I can sue you if you flake after I pay for inspection, appraisal, etc.” clause, and on, and on. The part that’s really killing me is that I have a cash buyer lined up, and an attorney who is fine with representing me in a double close. $7500 profit, just for signing some papers. Oh, it’s only a $22,500 house, contract with the buyer is for $30K.

However, the fact that this guy is shady to begin with, has lead me to drag my feet on this one. I have been able to get him to lighten up on the contract. Also, I could get away with maybe $2000 in earnest money, but still don’t like that. Did I mention that I found this “seller” through a federal court case he lost? Yeah, real scumbag defrauding old people. Yet, I could make $7500, if he comes through. If not, I should be able to recoup my $$, if this lawyer is worth anything. First time I’ve used him though.

What do you think, after your recent run in with Mr. Sketchy? Should I proceed forward with caution, or just let this one go? Anyone else care to chime in, feel free.

Should I trust this Guy??? - Posted by Kristy-AZ

Posted by Kristy-AZ on April 15, 2003 at 19:39:10:

Hi All,

Wanted your opinion on a possible deal.

I talked with another investor. (I have never done any deals with him before)
He told me he has a pre-foreclosure under contract and just want to wholesale the house and make some fast cash. HE says it just needs approx $5K worth of repairs. And is probably worth $120. He wants to sell it to us for $90K, and this includes his assignment fee of $15K, and the closing costs.

We haven’t seen the inside of the house yet. I pulled the comps. the highest comps I found was $115.

Here’s the red flag for me. We CAN close in a week. We have the cash, however, he wanted us to put $15K in escrow till we close on the house, then we could get money back at closing. He siad he got the bank to agree to a short sale, but it has to close before the end of April. The auction is scheduled for May 29th.

I pulled records and found his “Affidavit of Memorandum” filed, that states he put this house under contract in February, and will close on or before May 31st.

I told him I wanted to see the house, he says he has a hard time scheduling things with the owner who is still in the house. So I drove by the house today and saw the outside which needs alot of work.

Investor said we can see it tomorrow, but we should meet at the corner before going to see the house. Huh?? I think he is expecting us to sign papers prior to us seeing the inside. NOT!! I also told him that I WAS NOT going to put $15K into escrow, the most I have ever put up for earnest money is $5K. And why can’t he wait till closing for the $15K? His response was, he wanted to protect himself, should we decide not to purchase the house.

I did some more snooping and found he just got his LLC on 9/2002. His web site has 3 houses up for sale as L/O or owner carry. HE also just bought a very expensive house ($277K) as his primary residense. Now my feeling are, he is getting behind on his own payments and needs that $15K NOW.

As I mentioned, I have never dealt with this investor before and I don’t feel comfortable with his actions.
#1) He put the house under contract in February, yet still hasn’t gotten the homeowner out.
#2) He wanted us to give him $15K up front and close on the deal before the owner is out.
#3) He wants us to meet around the corner instead of just meeting in front of the house?(He told me that he did tell the owner he wanted to show it to some investors, so why meet around the corner?)

Does this sound shady to you? Let me know… And once again, thanks.


Re: Should I trust this Guy??? - Posted by Karine

Posted by Karine on September 01, 2003 at 15:28:24:

I have dated a guy throughout the internet once & he’s
asking me to see him again for dinner. Meantime he posted his picture & keeps checking his profile every day. How do I trust him? How do I know he’s a good guy & I should continue dating, at this point I am having doubts, especially that he posted his picture just today and knowing that we are very new & need to get to know each other needing time. I don’t know what to do & what to think? I don’t want to think negative, but I am suspecious. I don’t want to be used or waisting time not knowing what he’s doing out there.
Please tell me your opinion. What do I do?

R.E. Investors want to Know??? - Posted by investorrob

Posted by investorrob on April 16, 2003 at 14:34:53:

OK Kristy now that you have posted on this one. We are all wanting to know the latest ;)-- so * wink please keep us in the loop. Is he is he not trying to take you on this. We know you will never let that happen to you are your husband.

What’s the news ??


Re: Should I trust this Guy??? - Posted by Len–VA

Posted by Len–VA on April 16, 2003 at 10:52:53:

Hi Kristy,

I was surprised to see that no one brought up the numbers on this deal. If all the numbers you present are accurate, you’ll make about 25K MINUS holding costs during the rehab, and the wholesaler will make 15K. Maybe it’s just me, but that doesn’t seem like a great split of profits (for you anyway). Of course, it could be that I’m not asking for enough of an assignment fee in my own wholesaling…
Good luck, and keep us posted on this one!

Escrow… - Posted by JT-IN

Posted by JT-IN on April 15, 2003 at 21:25:33:

As defined by my dictionary on the shelf, says…

“contract, bond, deposited with a third person”


The way that you are speaking of this “Escrow”, (regardless of amount), is as if you will be depositing the funds with HIM, the Seller/Assignor. This is NOT recommended under any circumstance, even if you were talking about hundreds of dollars, let alone thousands. The answer on that subject is: STOP, DON’T DO IT… Now, if I misinterpreted who/how the eascrow/earnest funds were to be paid, so be it, but that is how I understood it to be.

A good rule of thumb is, do not move ahead in any deal when you have feelings of misgivings. Otherwise stated by JT… “I would rather pass up 10 good deals, as opposed to getting burned on 1 bad deal, doing something that I should not have done; (miscalculation)”. This includes getting eager or being intimidated into doing something that wouldn’t otherwise be construed as prudent.

Deals are too plentiful to be jumping into one that you aren’t quite sure fits you well enough. It is difficult to become comfortable with a deal such as this, once you internalize these type of feelings about one of the deals principals… If I felt that skeptical about my dealings at this point, I would probably tell him that you have NO interest in the deal, and not look back. Then maybe, but only for the sake of education, keep an eye on this deal, and attempt to determine from a distance, (what, how, etc.) the deal really is/was. Follow it, albeit discreetly, so that you strengthen your instincts about this and other deals like it… I find this to be of utmost importance in establishing confidence in your analytical people skills… but then I am digressing into too heavily terrritory for my limited knowledge of this deal…

Anyway, don’t be afraid to trust your instincts… and don;t be too bashful at telling Potash about your experience… LOL Good going Kristy.

Good luck on the outcome…


PS. You can always count on old Potash to add some levity and sometimes uneeded or wanted sarcasm. I do personally, although not at your expense, do find many of his comments hilarious… even if they are not useful/constructive. I’m sure you are too emotionally involved in this deal to see that, but it is just his M.O.

Re: Should I trust this Guy??? - Posted by investorrob

Posted by investorrob on April 15, 2003 at 20:08:45:

Kristy you have the GOLD remember the ones with the GOLD make the rules.

Counter offer with a lower price and tell him you will only put up $1000.00 in escrow. No up front fees — he gets his money at closing and you must see the home inside BEFORE you sign and bring someone that knows how to estimate repairs. You can close in 5 days. No need for up front fee. If he says no – on to the NEXT one.

The very best of investing to you

Re: R.E. Investors want to Know??? - Posted by Kristy-Az

Posted by Kristy-Az on April 16, 2003 at 19:27:41:

Boy, Impatient!! :slight_smile: (wink back)

Here’s how it went… Met at the corner, no papers brought out. That was good…Went to property, remember, this guy said it needed only $5K repairs and was a 3bdrm. My comps for 3bdrms were maybe $115K

Anyway, turns out to be a 2 bedroom with the carport enclosed as a seperate room, but no access to it except thru back yard (a door would need to be added, plus it would have to be vented for A/C. Bath room had minor plumbing problems, then I asked if they could set the ladder up so I could look at the roof…
Both the owner and the NEWBIE investor looked at me funny and hesitantly agreed. Guess what I found, a really bad roof. Sooo, after thanking the owner, we went to the vehicles and I explained, I would not pay $90K for the property. his estimate of $5K repairs was off by $3K min. Plus, the comps I pulled earlier will not pertain to THIS house. His reponse was I’ll take of $2K for the roof.

Told him I would get back to him after I re-run the comps. Back at home, the comps came in at $95K and that was for a house a little bit bigger that had been completly remodeled.

So I called him and told him, thanks, but no thanks, the number just don’t work. He asked how much I would pay for the house. Told him less than what he was paying.

I feel sorry for him, as I don’t think he knows what he is doing. Went through all the work of getting the bank to short sale, yet still paid too much and he said he has to have this thing closed by the 26th, or the bank won’t accept the discount. Now remember, he’s been working on this since February and I think I was the only one who showed any kind of interest, till I actually saw the property.

I did ask him if he even looked at the roof… he said “NO”. Guess if he had, he could have asked for a bigger discount.

I think he was trying to make a fast buck, and probably thought we were brand new, but when I handed him our company card and my Realtor card, he seemed alittle nervous, even though I had informed him before that I was a Realtor also.

So, no we did not buy. But we have others we are working on. Thanks for the support.

That’s my saga for the day. I’m sure I’ll have more before the end of the week.

Not to “Bashful” LOL - Posted by Kristy-AZ

Posted by Kristy-AZ on April 15, 2003 at 23:00:08:

Hi JT,

Yep, I blew, mostly because I’ve had a stressful day. Both kids sick, this “uncomfortable” deal and the 3 other deals I am working on. Plus a house I was going to bid on just postponed for 2 days by the beni, so now I’m not sure what’s going on with that house.

I get pretty defensive when someone tells me I’m not experienced at rehabs! People think that just because I am a WOMAN and only 105lbs, that I shouldn’t know anything. Fact is I’ve been around contruction most of my life. So when someone attacks me in that area, they just opened “Pandoras Box” sort of speak.

Really, I’m a pretty easy going person. It takes alot to set me off. And this guy Potash really put “my panites in a wad!” :slight_smile:

Thanks again for your experienced advise. I like to go with my “gut” feelings, and I will either have the ball in my court,“Escrow” and owner out or won’t do the deal.


Thanks Rob - Posted by Kristy-AZ

Posted by Kristy-AZ on April 15, 2003 at 20:30:26:

Like I said, I’ve never dealt with this guy and his approach seemed alittle “fishy”.

Most of our deals are simple and to the point and no need for $15K “up front”. Plus, usually our other investors have the house “Vacant”. This one still has the owner in it and it doesn’t look like he’s planning on moving anytime soon.

I’ll see what this thing looks like tomorrow.

Thanks again.