Investors’ “SNEAKY TRICKS” Land Them in Serious Legal Hot Water

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Three real estate investors who may have been following common, “sneaky” real estate advice now find themselves in seriously hot water, having been indicted last week for their involvement in a house-flipping scheme that involved mail fraud and conspiracy on multiple levels. The three men are accused of making more than 40 offers on HUD homes in cities and towns in Illinois and Indiana, placing “for sale” signs outside the homes before the purchases had occurred, and lying about their ability to fund the purchases by producing forged letters purportedly from private venture capital businesses stating that the individuals had lines of credit up to $500,000.

That wasn’t the end of it, either. Once the investors made their offers, they filed false liens on the homes to prevent them from being sold to other buyers, and they let the contracts expire on the homes. The moves not only were fraudulent, but they also cost the real estate investing community serious points when it comes to maintaining a good reputation. Nearly everything the men did is a twisted version of some good advice from an actual real estate investing expert, from obtaining lines of credit and providing proof-of-funds (you need real ones, folks!) to putting signs in the yard before they actually made the purchase (many experts say get a sign in there right away, though not before you actually own the home).

The men have only been indicted, so they are presumed innocent and we do not know what type of punishments they might face if convicted.

Lesson Learned:

Be quick on your feet, but don’t cheat!

Point to Ponder:

Have you ever done something you thought was sneaky but legal and learned otherwise?

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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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