How to Discern a Home-Flipping Scam From the Real Thing
Thursday, August 24, 2017, 6:00 AM | Leave Comment
Both the world of investments and the real estate markets have had a black eye in recent memory.
Real estate can be a very lucrative and engaging way to make money, but if you’re just getting started you have a target painted on your back.
According to Amherst Legacy, the most fraud-ridden markets are in Florida and New York, but Southern California is rapidly joining the party.
If you are making residential or commercial real estate part of your portfolio, it’s important to cultivate your instincts to avoid getting ripped off.
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Home-Flipping Scams
Scams concerning home-flipping are not rare. According to Dave Ramsey, the industry is saturated with “get rich quick” schemes.
Flipping is a legitimate methodology for making money in real estate, but it requires special attention to markets, buying deals, and careful financial management.
Most scams present themselves as training kits to help you learn these skills to be successful, but provide little to know actionable information.
There are many clues along the way, however, that can alert anyone to this type of scheme.
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Scam Tip-Offs
One of the biggest red flags for fraudulent house-flipping operations is when a home is purchased and sold very quickly at a value that is artificially inflated.
Fraudulent appraisals may happen, tricking people into believing that changes were made to the home. This is where you must follow your gut instincts.
Get your appraisals done by a professional, not some guy your genius brother-in-law recommends.
If you’re not seeing any return on your investment or the situation seems very untrustworthy from the start, it is best to look elsewhere.
The language of a scammer will already seem very sketchy, and it is important to look out for very specific language that all scammers fall back on.
Another big red flag in identifying a scam is the purposeful obscuring of information.
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Push For Transparency
Doing research on the businesses or individuals you are dealing with is very important.
The Internet can be a very useful tool for this. The Better Business Bureau website could be helpful in identifying potential scammers and checking their scores could save you from big losses or problems in the future.
If they have low scores or no scores at all, then it is a good idea to stay clear.
However, if they have good scores it is important to remain hesitant but you are most likely safe to do business with them.
People who are not upfront are dangerous no matter what field you are doing business in and for both people who flip houses and those who invest in real estate, transparency is key.
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Stay Observant
Keeping on your toes and being observant is the only surefire way to be made aware of the red flags involving a get rich quick house-flipping scheme.
Knowing these clues can be a great way to protect yourself and your investments and can help you build a strong foundation for the future.
