Suspect RE investment opportunity need advice please!

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Hi guys,

Would love to get some advice. I'm already suspecting fraud with this deal but don't want to be cynical so would love to get some professional feedback here.

A friend of mine introduced me via phone to a guy he's "working with" in New Jersey on RE deals.

Basically this real estate person is offering a "joint venture" to people with 700+ credit scores to get in on a joint venture on properties in NJ.

I'll try to sum this up as much as possible without leaving out any details.

We'll call this RE guy Fred.

So Fred's strategy is to buy off-market properties in the places such as Newark or Orange, NJ for sub $150k. These are properties that need minimal work such as update kitchens or bathrooms etc.

The reason he goes after these properties is for time value, which allows him to flip the property for let's say $250k making at least $100k + in profit in 4-6 months time.

According to Fred the reason why he gets these off market properties for a good price is because he buys properties in bulk.

Now his corporation works with hard lenders. The hard lenders can supposedly only give him 60% loan on the properties. The other 40% is brought in through a "joint venture" by bringing in someone with a 700+ credit score to take out a line of credit or mortgage on the remaining 40% needed to buy the home.

Side note: There is an option to contribute personal capital as oppose to using your credit to take out a loan.

So what Fred offers is a promissory note to safe guard the deal for someone like me as well as provide some sort of "personal guarantee" to remove his corporate shields from his personal assets.

So according to him he has skin in the game as well. According to Fred turn around time is 4-6 months on these properties and after loans are paid off I would get 40% of the profit.

Also from the loan a good $10k is put into an account that pays the mortgage on auto pay from the first month for 10 months in case the deal takes longer than the anticipated 4-6 months to protect my credit. 

Also according to Fred the hard lenders will only lend money if there is already an exit strategy in place. According to Fred he goes into these deals with exit strategies in place which basically means he has a pool of buyers ready to buy before the property is even purchased by the "joint venture".

If there are any more details I'm forgetting or missing and I remember then I'll add to this thread.

I think this all sounds fishy but would love to get some more constructive feedback by a professional. Thanks everyone!