All Forum Posts by: Aaron H.

Hi all,

I am new to real estate and wanted to learn more about the general process of obtaining homes, investing in properties, etc.

I understand one must get pre-qualified to see what rates are available but I was curious to know how I could potentially leverage my $$ by using the banks and/or taking out private loans. I also have access to 50-80k as startup capital, if necessary.

My goal in real estate is to create residual income as well as invest in newer, developed regions and perhaps have tenants, etc.

Any advice, experiences, etc would be of great help!!

Thanks,

Aaron

Hi all,

I was recently introduced to a real estate investment opportunity by an old friend (who claims to be a gap funder/broker).

He introduced me to a partner of his who claimed he had access to portable mobile home units across the country and in which case I could invest in each rental property for an investment of $10-15k each and receive a residual passive income of approximately $2.5k/month.

The deal would be a completely turn-key investment, as I would own the note on the mobile unit, and I would not have to do any maintenance, etc as a normal landlord would.

Everything sounded great on paper, but here's where a got overly suspicious:

1) The one-page, loosely written contract he provided did not disclose any address or rental property infornation, nor were there any lease/loan terms or agreements set forth.

2) The urgency to close the deal. The seller gave me an ultimatum and if I did not sign the paperwork, I would be missing out on a great deal.

3) The seller wanted me to wire him funds. This was a huge NO -- for obvious reasons.

4) I would have to wait 65 days in order to receive any funds from my investment. This would allow the owner-financer to settle into their new home, according to the seller.

5) Most important: I had a real estate attorney, and a good friend of mine, who is a real estate agent, review the contract--both advised me not to proceed.

In conclusion, this sounded like a very risky deal from the beginning, however, I trusted my friend's judgment and gave him the benefit of the doubt, but it was to no avail as this just sounded too good to be true, and it was.

Better safe than sorry in my opinion. Has anyone else had any encounters with this type of deal in the past? Care to share your experiences?

Aaron 

Hi all,

I was recently introduced to a real estate investment opportunity by an old friend (who claims to be a gap funder/broker). 

He introduced me to a partner of his who claimed he had access to portable mobile home units across the country and in which case I could invest in each rental property for an investment of $10-15k each and receive a residual passive income of approximately $2.5k/month. 

The deal would be a completely turn-key investment, as I would own the note on the mobile unit, and I would not have to do any maintenance, etc as a normal landlord would.

Everything sounded great on paper, but here's where a got overly suspicious:

1) The one-page, loosely written contract he provided did not disclose any address or rental property infornation, nor were there any lease/loan terms or agreements set forth. 

2) The urgency to close the deal. The seller gave me an ultimatum and if I did not sign the paperwork, I would be missing out on a great deal. 

3) The seller wanted me to wire him funds. This was a huge NO -- for obvious reasons. 

4) I would have to wait 65 days in order to receive any funds from my investment. This would allow the owner-financer to settle into their new home, according to the seller.  

5) Most important: I had a real estate attorney, and a good friend of mine, who is a real estate agent, review the contract--both advised me not to proceed. 

In conclusion, this sounded like a very risky deal from the beginning, however, I trusted my friend's judgment and gave him the benefit of the doubt, but it was to no avail as this just sounded too good to be true, and it was. 

Has anyone had any experience with this before? Was I just too overly cautious and missed out on a potentially good deal? 

Better safe than sorry in my opinion... 

Aaron 

@Brent Coombs thanks for your response and participation in this conversation.

I hate to say this, but that is where I'm beginning to form my conclusions. Sounded too good to be true from the beginning and too much of a "get rich quick" scheme.

I guess I just expect more from my friends and would hope they had every good intention when it came to my personal business, especially my finances.

Well, that is a shock but I have reaffirmed my original belief and now with the help of yourself and @Neal Collins I have potentially avoided a landmine.

Thanks so much for your contributions. I may still seek further opinions in other forums, just to learn more about real estate and the process (more so those involving this scenario).

Best of luck to both of you!!

Aaron

I see your point @Neal Collins

Here's what the projection he drafted for me looks like:

Year 1: 

$50k investment. Cost to do business: $5,500 ($1100 for 5 properties). Down $2k-$4k (Or $10k-$20k annually - on 5 properties). Approx $2,500/month. Net $24,500 + Down ($2,500 x 12 mos = $30,000 - $5,500 cost to do business). 

This results in $24,500 + Down ($10-20k) = $34,500 - $44,500 for Year 1.

Years 2-5 show an increase in profit and net earnings, considering I reinvest.

My first thought is: After Year 1, instead of earning profit, I would actually be losing money ($50k investment / $34,500 - $44,500 Net).

I understand the market fluctuates, as do decisions involving buyers, sellers, investors, etc so I assume some risk involved. But tell me - how can this make sense to a real estate guru with years of experience (unlike me)?

Aaron

@Neal Collins Thanks for your response. And forgive me if I didn't emphasize or if I left some information out. He didn't give me too much detail and I am fairly new to this so I don't quite understand the process yet.

The way he described it was I would basically be investing or purchasing liens on rehabs to fund capital for his business. In return, I would be receiving $2,500 a month, plus down payments which would equal $10k-20k a year.

Unless I am not aware of something, it sounds good - on paper. I have asked him to draft me a mutual disclosure agreement form and have an attorney notarize it (which may or may not be possible).

Again, I don't really have any experience dabbling in this type of investment, but from a business perspective, the deal sounds too good to be true. 

Just wanted some thoughts on precautions or legal resources to legitimize this offer.

Aaron

Hello,

I have recently rekindled an old friendship with a friend whom I happened to meet at a local coffee shop one day. We started talking about our careers and he told me that he started a real estate business and was helping investors by pooling their money together to create capital for his business and was rehabbing homes and offering a lower rate to prospective buyers.

This peaked my interest and I told him I had a savings of about $50k that I would like to invest with. He told me I could earn $2,500/month and within 65 days I would have $10-20k from homebuyers making a down payment and their monthly mortgage. I was skeptical at first, as it sounded too good to be true, so I asked him to come up with a proposal so he drafted a presentation and walked me through somewhat of the process.

He told me I would basically be owning liens on the properties (5 to be exact -- at $10k each) and that when each tenant makes their payments it would go directly to me, thus equalling $2,500/month ($500/month x 5 properties).

Now, this still sounds a bit odd to me. I have little to no experience with investing or real estate and although I consider him a good friend that I've known throughout the years, my gut tells me that something still isn't right about this deal.

Please help. Any information or suggestions with this matter would be greatly appreciated!

Aaron

Hello,

I have recently rekindled an old friendship with a friend whom I happened to meet at a local coffee shop one day. We started talking about our careers and he told me that he started a real estate business and was helping investors by pooling their money together to create capital for his business and was rehabbing homes and offering a lower rate to prospective buyers. 

This peaked my interest and I told him I had a savings of about $50k that I would like to invest with. He told me I could earn $2,500/month and within 65 days I would have $10-20k from homebuyers making a down payment and their monthly mortgage. I was skeptical at first, as it sounded too good to be true, so I asked him to come up with a proposal so he drafted a presentation and walked me through somewhat of the process. 

He told me I would basically be owning liens on the properties (5 to be exact -- at $10k each) and that when each tenant makes their payments it would go directly to me, thus equalling $2,500/month ($500/month x 5 properties). 

Now, this still sounds a bit odd to me. I have little to no experience with investing or real estate and although I consider him a good friend that I've known throughout the years, my gut tells me that something still isn't right about this deal. 

Please help. Any information or suggestions with this matter would be greatly appreciated!

Aaron