Real estate investment is no easy business. It’s risky, and there are many experienced real estate investors out there ready to take advantage of those less experienced. As time goes by, and the real estate investment world grows, con artists get more sophisticated.
Here are some typical scams that you need to be aware of if you are looking at getting into the real estate business:
- Loan Modification Scam
This is one of the most common and simple scams out there. However, there are many victims of it. It usually happens to homeowners who are struggling with their mortgages. Some may be facing foreclosure, which is when people struggling to pay their mortgages have their possessions taken away from them. In this the scammer will loan the homeowner the money, which will need to be paid back in small installments. They will demand a fee for this. They may also ask for personal information like your bank details.
To avoid these scams do not involve a third party in your mortgages; deal with the company themselves. To avoid being scammed, never give out your personal information and do not make any upfront payment to anyone offering to help you with your mortgage. You should demand to see identification and confirm that they are associated with your mortgage company.
- Rental Scams
In this scam, the scammer will hid behind the internet. They will take a property advertisement list and post it on their own website. The interested investors who come to purchase the property, will then wire the money to the scammers account instead without knowing.
Scammers may also go to an open house and start to promote their property to interested buyers. They will ask the buyers to pay an advance and fill out an application, which will then be ‘rejected’.
These scammers are easy to identify in most situations. They will demand payment before you sign any legal documents. They may even claim to be out of country. They will also ask for the payment to be wired.
Remember to report these scammers to local Kansas law enforcement.
- Seminar Scams
These scams are a bit more complicated. The scammer, in this case, will actually help the investors. They will provide useful “tips’ to earn money fast, which allows them to garner the investors trust. They will then offer ‘limited’ properties which cost thousands of dollars. Once the investor will purchases it they will realize that the property is flawed.
To avoid these scams, do your research on the property and the ‘expert’ to make sure that everything they are saying is authentic.
So there you have it! Some of the most basic, yet common investment scams, and how to avoid them!
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