People who invest in property and real estate, I need your opinion.......!!!!!!!!!!?

Question

My friend made me a proposition that if I signed this house into my name for $200,000 I would OWN it, and somehow get $20,000 back (can't remember exactly how he said I'd get that back, he was talking fast).... then I could apply the $20,000 to the monthly payments for about a year or so (or rent it out if I wanted to)....... and in the end I'd flip it and sell it in a year to make money........

Has anyone ever heard of this or been successful with this sort of thing????? He says he'd have me sit down with his broker and what not..... being that I'm not AS familiar with that sort of market as some people I want to know if what he's doing is legal and if it has the potential to actually MAKE money. (He's got a lot of crap to show for his last flip.... a boat, two cars, a new house, a bike... etc.....)

Answer 1

Not that this is happening to you....

But this sounds almost like a "Straw Buyer" situation. Run a search on that term to find out what I mean.

Or, it could just mean the Broker is planning on splitting some of his commission with you. Although, on a 200k house, that would mean MORE than 10% in commissions being paid to allow the Broker makes some money on the split. So that sounds unlikely.

Answer 2

IMO this sounds like a standard real estate scam but it could be legit.

It could be.....
You are going to buy a house (possibly from him) it will be grossly overpriced. He would then split the profit with you (your 20K, he will probably make 40K)

By using "his" broker, they will find an appraiser willing to overvalue the property.

His Broker will make a profit, he will make a profit, and you will be stuck with a loan for more than the value of the property. When you try to sell, you will upside down on the mortgage and eventually could find yourself in foreclosure.

On the other hand, this could be a "double flip"
He could have found a great deal on a house, he will buy it (or assign the contract to you for profit ) Then you will split the profits with you (20K). This is legal, but it teetering on the edge depending upon how its done. If the price is right you still bought the house for a deal and can sell it later for profit.

Either way, treat it like you are buying any other house, the sales price should not exceed the value. If its truly a deal, it should be less.

Answer 3

This sounds fishy. Of course, he has explained to you HOW you will simply "sign this house into your name" absent a mortgage to cover the purchase?

What he is talking about doing is probably federal lender fraud. The game goes like this. You pay $200K for the house and come up with a fictitious appraisal for $220K so that you can get a mortgage for $220K. Since you have REALLY only paid $200K for the property, you have $20K left over with which to make payments for a year.

What this yokel (and I DO mean yokel) is missing is that, at the end of that first year, you are still going to owe that mortgage of $220K minus a few bucks paid off on the principal. What will you do if the house isn't worth $220K at the end of that first year ? This dufus is counting on that piece of property appreciating 10% in value in one year. He's out of his mind, given the current real estate market.

Run away from this one as fast as you can.

Answer 4

tell him to put it in writing. when it comes to money (especially in real estate) ALWAYS get it in writing. have him specifically outline the plan for making the money, and do the research to find out the legitimacy of it. Alot of people make money off of other people that are hoping to make money. Be wary, but it can work. It sounds like he wants you to finance this with a 10% seller carryback. It can be done. You need to do the research on the property and find out if it will be worth what they are telling you after rehab and renovation (typical of house flipping).

Answer 5

believe nothing what you hear,
1/2 of what you see!
If you place the deal in true letter form so I can make some heads or tails of the deal/scam/investment; I'll review and tell you what Not to do, not What to do....that's your decision!

Answer 6

Tell him you'd like your attorney to look over his Offer to Purchase. Without a title search, you don't even know if he OWNS the property, yet, you'd be giving him $20,000.

Sometimes your friends are the ones to be most careful around.

Answer 7

You say this "friend" was talking so fast you didn't understand him. Maybe this was his way. I would shy away from anyone talking so fast I couldn't understand them, sorry, I'd say run.