Real Estate Investment Scams
Let’s face it. As you continue to get more involved with real estate investing and your net worth increases, you will begin to attract more attention from people who will want to “help” you. Investment scams are more sophisticated than before. Gone are the days where scammers pose as your rich uncle from Zimbabwe who is leaving you a $20 million inheritance via countless spam emails. Here are three ways you can spot real estate investment scams and avoid them at all costs!
Do Your Homework
As with most everything this day and age, if you need to know something about someone or research a particular company, hop on the Internet and start digging. On the internet, all of the dirt rises to the top and even small businesses have an online presence. Visit sites such as RipoffReport.com to help find investment scams by searching via keyword to see if any negative reviews have been written about the individual or company touting its services. In a connected world, it only takes a few negative reviews to derail most investment scams and put the public in the know. The beauty of online reviews is that it holds companies of all kinds accountable.
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Say No to the “Get Rich Quick” Investment Scams
Real estate investing advice and tools should provide real value to help you achieve your goals. Some real estate programs, often found on the late night TV infomercials, will promise significant returns, secret information, and a magic pill to get rich beyond your wildest imagination. You know the advertisements. A guy in a three piece suit sits on a Bentley in front of his huge mansion. He proceeds to interview some fresh-faced married couple who make $200,000 a month investing in real estate. It appears that the couple read Mr. Bentley’s book for a week and woke up the next morning a millionaire with the secret tools to be the next Donald Trump.
The truth is, as you all know by now after reading my blogs and doing research of your own, real estate investing is hard work. It takes a lot of time and research. There is no way around it and there are no shortcuts. Now that you know this, remember that there are tools and ideas out there to save a ton of time, help find the best deals, and accelerate your investing success. These tools do not eliminate hard work, dedication, and audacity. Be wary of any infomercial, book, or audio program that claims it is easy to invest and succeed in real estate. These are most likely real estate investment scams and these companies are out to take your money and provide little to no value in return. The $200,000 a month couple was probably legitimate, but the infomercial didn’t tell you about the years of hard work, blood, sweat, and tears that the couple endured in order to get where they are today.
Don’t Fall for Time Scarcity
Some real estate investment scams you come across will be in the form of seminars. These seminars often give you good financial and investing advice, which builds trust, but finish up with an opportunity to invest in a large real estate investment. The red flag is when you have a “limited time” to respond. The time scarcity causes you to impulsively invest without analyzing the deal first. They most likely don’t want you to analyze the deal since it likely provides little to no upside and potentially includes a great risk of never seeing your money again, while lining the instructor’s pockets. It’s true that some deals have to be acted on, but there are hundreds, perhaps thousands of real estate deals in your area every day. No real estate deal is so good that you shouldn’t do your research and due diligence first. Ask the instructor if there is a future investment out there that you can research on your own first. If any seminar leader requires you to act within 24 hours or a few days on a real estate deal, they are a scammer. Never act on an investment opportunity without running the numbers! If the seminar instructor is a true real estate investor, they will respect and support that decision.