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WARNING — this is the BLACK HOLE of Real Estate Profits | Episode 3

It’s going to sound like science fiction, but it’s real-life real estate Horror!  You’re about to learn the tiny oversight that can make the profit on your latest real estate deal – and the property itself – literally vanish into oblivion without a trace.  I’m Carole Ellis.  I’ll tell you exactly where this is happening RIGHT NOW in Episode 3.

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Imagine how you would feel if a real estate EXPERT gave you information that directly led to the loss of thousands or even TENS OF THOUSANDS of dollars of your hard-earned investment money. You’d be crushed, just like a certain Florida buyer who was DELIBERATELY MISLED by the couple who sold her a “bargain home” and accidentally misled by a certain professional who plays a role in just about every single real estate transaction. Today, I’ll tell you all about this homeowner’s horror story and then we’ll discuss exactly how YOU as an investor can protect yourself from similar disasters.

Before we get to the real DIRT, though, I have to take 30 seconds to mention a DIRTY TRICK Facebook is getting ready to play on real estate investors everywhere who use the social media site to get attention for their properties. You’ve probably longed for a “dislike” button yourself from time to time, but do you really want people being able to post that your pics make them angry as easily as they can give it a thumbs up? Get all the details on how to leverage this to your ADVANTAGE instead of letting Facebook’s latest “great idea” send your listings straight into oblivion in our News and Networking section at REI.Today.

Now, to the dirt (literally):

When a certain Tennessee couple whose case is still in litigation sold their home to a young woman named Kelly, they offered her a great deal. In fact, as a savvy, money-conscious individual, Kelly really couldn’t say no to the opportunity to buy what she believed to be a great discounted property. After an inspection and a relatively quick closing, Kelly moved into the home with her family while the Tennessee couple headed for, well, Tennessee. And that’s when the trouble started…

First, door frames seemed a little askew, but you won’t believe what happened next. A huge crack appeared right in the middle of the living room, and the house began to literally sink into the ground! “We couldn’t stay in the house,” Kelly told a local news station, adding that she had to move out while her house fell victim to (you may have guessed it already) a serious SINKHOLE that threatened to engulf the entire property.

So what was Kelly to do? Well, after a little digging, it turned out that the deal she got from those Tennessee sellers was anything but a deal – they’d actually taken the loss on the house after REPORTING THE SINKHOLE TO THEIR INSURANCE COMPANY then cashing the check rather than making repairs. No wonder they were in a hurry to move! If Kelly’s inspector had caught the problem, she’d have been fine, but since they didn’t, now, Kelly is embroiled in a huge legal battle to get her original payment back and, in the meantime, has none of the money and nowhere to live. It’s a lousy situation, and it happens more often than you’d think, especially to real estate investors who tend to be EASY TARGETS for this type of thing because you’re used to dealing with motivated sellers and homes in various states of disrepair.

So what should you do to avoid literally sinking your own investment money right into a huge black hole in the ground? Take these three important tips to heart:

  1. Inspect the house yourself. Not an inspector? That’s okay. Look for danger signals like windows and doors that will not close, small cracks around windows and doors or along walls, and separated pavement in the driveway other than the seams of the concrete.
  2. Consider the local environment! For starters, there is an area of FLORIDA called SINKHOLE ALLEY. Should you buy here? Well sure, people live there, but you should certainly be very careful! In addition, you should look around the property for signs of ground instability. Did you know that leaning fence posts, circles of dead or dying grass and vegetation, and collapsed banks and fallen trees along drainage ditches are all signs that a sinkhole COULD be forming on the property? Most people don’t, and those are not places that every inspector will even look.
  3. Check the local news. Sinkholes make headlines, even when they’re not a big deal. So check out the area in which you’re considering doing a deal. If there have been several sinkholes recently, you can be pretty sure there will be more. Be extra-diligent to make sure your deal doesn’t fall into one.

So in a nutshell: Sinkholes are hard to spot, and they’re like BLACK HOLES FOR REAL ESTATE INVESTOR’S MONEY. It’s your job (no matter what you’d like to believe about your home inspector) to make sure that your money remains above ground, making more money! So don’t end up in Kelly’s situation. Keep your eyes open for this literal pitfall in your investing career, and take advantage of this picture library in our REIToday vault to identify just what types of little signs of sinkholes your inspector might be missing. How do you get access to these, quite frankly, shocking pictures? Easy! Go to our special REI Roday vault and download them! If you’re not already a member of the REITODAY Vault, text 33444 or visit REI.Today/vault  RIGHT NOW to get immediate access to these shocking and valuable pictures. Do it now, though, because these images are only available for a limited time.

When you text REITODAY to 33444, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country!  Just text the word REITODAY with no spaces or periods to 33444 or visit REI.Today/vault right now for your free membership.

Thanks for listening in.  Be sure to listen in to Episode #4, where you’ll learn about a simple picture that is currently launching DOZENS of real estate deals and how you can get your hands on it for your own business.  It’s crazy stuff and it’s available right now on iTunes, Stitcher and at REI.Today, so get it right away!

REI Nation – always remember this:  Your best investment is YOUR OWN EDUCATION!

About the Author

Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.

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(2) comments

Darryl last year

Yes that article is all about due diligence and being wary of deals that are “too good to be true” When your antenna goes up and you get that gut feeling you better trust it and step back. The sellers are for sure scam artists and I bet the buyer will recover in court but not before spending a huge amount of time and energy on the back end of this deal.

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Kesha Raw last year

Thanks for sharing this info

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