Investing money with out of state flippers

[Shane Little]

If im looking to invest with an out of state flipper,what are some good things to know? Ive done some research on a few investors and found one that I think i like,nothings in stone yet.Would it be ok to ask for contact information on other money lenders that they have worked with before.I want to make sure all business was good business.Also anything else I should know or do would be much appreciated.

[Jeremy Brandt]

Shane Little -

I'd be VERY careful investing money with out of state "real estate investors" - there have been many scams and ponzi schemes in this area and it's highly risky!

A few things to consider...

1. If you get sideways with them and need to sue, you'll likely have to sue in THEIR state not yours, causing added expense.

2. If you want to physically check up on them, you'll have to hire someone local or fly out there yourself.

3. You won't be a part of the community there are in - making it more difficult to know their reputation

4. It will be easier for them to deceive you.

If none of that deterred you, then the rules for investing money with an out of state investor are the same as for someone local...

1. Do a background check and check their credit.

2. Do a TON of reference checks. Be very thorough here. Ask the references for references. It's easy to get 2-3 people to lie for you, its really tough to get 10 people to do the same. Home sellers, home buyers, lenders, title company, lawyers, etc. Get a good cross-section of people.

3. The only thing that matters is past performance. Promises count for nothing. Examine the last 10 deals someone has done - and if they ALL come up roses, dig deeper. Nobody bats a thousand in real estate and a stand-up investor should be able to show you all their deals, not just the great ones.

4. Insist on control. How is your investment protected? Are you on the title? Do you have a lien on other assets? What happens if this person decides to skip town - what is your recourse?

5. Absolutely you should ask for all previous lenders - then call them and ask probing questions.

I hope that helps!