Four Signs Your Real Estate Investment is a Fraud
Getting involved in real estate can be a lucrative and rewarding experience. Whether you’re a licensed professional, property flipper, novice, or somewhere in between, effective real estate dealings can be financially life-altering.
If you are in the market to buy a new property, there are countless resources available to help you in your search. Just like any industry, there are certain red flags you should be aware of before deciding to invest your time and money. Real estate scams can be financially devastating, it’s important to be able to recognize the signs that your real estate investment may be a fraud.
The accomplished real estate investment fraud attorneys at Colling Gilbert Wright & Carter have extensive experience in a wide variety of complex investment matters. If you’ve been the victim of a real estate scam, our lawyers are standing by and ready to help.
Below are four signs that your real estate investment trust may be fraudulent.
1. Unrealistic, Guaranteed Returns
Although real estate is generally a sound investment, there are no guarantees about what your return will be. If the person running your real estate investment trust offers you a guaranteed return, that’s a sign something is likely awry.
According to the National Association of Real Estate Investment Trusts (NAREIT), the current trailing 25-year annualized total return for private commercial real estate properties is 10.9%. That is a solid return, but it won’t make you a millionaire overnight.
No financial investment is “risk free” and a high rate of return means greater risk. Words like “guarantee,” “limited offer,” “high return,” or “as safe as a C.D.” may be a red flag.
2. Immediate Demands for Financial Information
Some brokers will demand a great deal of financial information very early in the process of selling a property. Beware of these requests. While financial data will eventually be needed, many scammers try to hoard this information for identity theft purposes.
Do your research. Licensed realtors should have reviews online that indicate the quality and ethics of their services. Furthermore, you can confirm that the agent is a member of a professional organization by confirming their membership in a professional organization. There are 52 local realtor associations, or boards, in Florida. Check to make sure yours is on the list.
3. Lack of Property or Neighborhood Information
If you’re buying a building with good tenants and everything seems perfect, look into how the neighborhood might be evolving. Some unethical brokers will sell a property because they know a local government will build something unattractive or unpleasant in the neighborhood, thus reducing the value of the property you’re purchasing.
Investing in a property is an investment in the future. It’s crucial to understand what that future may look like. You don’t want to buy a property only to discover construction for a new highway is planned for its backyard. If you’re unfamiliar with the area, educate yourself about the past, present, and future of the neighborhood. Search the internet for news on the location, and talk to a few potential neighbors, even the local city councilor, before you buy.
4. Real Estate Seminars that Claim to Share “Secret” Methods
Some self-proclaimed real estate gurus make a living charging outrageous fees to teach people how to make lots of money in real estate. Some charge as much as $50,000 to join their groups and attend their seminars. They convince unwitting investors to pay these huge sums by claiming to have a secret method that works for anyone.
These types of statements should trigger immediate red flags. Why would a multi-millionaire need to charge $50,000 to share a secret? These seminars almost always offer pep-talks instead of actual lessons. They describe typical gimmicks like “low or no money down” investment strategies. Indeed, there are such methods, but none that are suitable for new investors, even if they are “trained” by the guru.
The solution? Don’t waste your time or money on gurus. Instead, join a national association, such as the National Real Estate Investors Association (REIA), that is focused on helping real estate investors learn the industry legitimately.
Call Our Orlando Real Estate Investment Trust Fraud Attorneys Today
If you have been the victim of real estate fraud, or other alternative investment fraud, you deserve compensation for your losses. Real estate matters are often very complex, and it can be difficult to win your case. It is important to work with an experienced real estate fraud lawyer who has the knowledge, skill, and resources, necessary in these complicated cases.
Colling Gilbert Wright & Carter has extensive experience in a wide range of real estate cases. We are here to help you get the justice you deserve.
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Call (407) 712-7300 today for a free consultation with an experienced real estate fraud attorney in Florida. We serve clients across the state, including Orlando, Tampa, Miami, and nearby areas.