You need to police your own, crooks take legit business away from you, harm the image of investors, make things harder for you to deal in, authorities paint with a broad brush bringing you in the same scam categories and ultimately you suffer the backlash of their greed or ignorance or both.

You'd have to be dealing drugs on the corner to get into a transaction that carries a perceived greater harm to the public.Slick talkers that convince someone to pay significantly more for a property than it's really worth is stealing by deceit, it's not clever negotiation it's theft of future equity.

Yes Totally agree with Carolina, get in the habit of speaking with motivated sellers.

But I got caught in some interesting stuff.Sure, Bay Area, LA, Sacramento have scary prices like 3 bedroom houses for $1M and rent at 3,000.00 (far from the basic 1%), but I looked over cities like Fresno - the fifth largest in California, with 500k+ habitants and a lot of good looking demographic and economics numbers - and I've found several properties in the 100 ~ 200k range with some close to %1 rental numbers.http://www.trulia.com/real_estate/Fresno-Californi...http://www.zillow.com/fresno-ca/http://www.city-data.com/city/Fresno-California.ht...Fresno is just one city and California is a big state.

I have properties that i am fixing up that have no liens on them, so I figured I would go to the bank and use them as collateral for $300K in loans for some renovation.Dunlap - an unimproved but habitable investment property that should appraise as is at $200K+.

Contractually it's Problematic.Best practice: "Buyer vesting to be determine in escrow"Who's still teaching these bad habits?"

@Andrew Schaefer: I'm not aware of a specific list of things that the typical appraiser would look for on a conventional loan other than the house must be habitable. 

IMO: I would stay away from an ARM, you have to many risks involved that could permanently harm your future RE career.

Since I have no reason to believe that he means me harm, I am wondering how he comes up with his calculations.

CO (If required in your town) and permits, that is basically the town's way of saying that the property isn't condemned and won't be as long as you make the property habitable and bring it up to code.