Is this reasonable, or a red flag?

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Forum -> Working Women

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amother

Dodgerblue

Wed, Jan 25 2017, 5:47 pm

I am looking for an investment property that my husband and I can renovate and flip, and hopefully make a profit. It's obviously hard to find that property that is undervalued to make it worth it, but not so extremely damaged that is beyond our scope. We've been working with the real estate agent that helped us buy our house (that we live in), but I get the feeling that this is really beyond her--once something shows up in MLS, it's not likely to be such a metziah.

I found an agent who claims he will do more active searching for such a property, before it is ever listed. He seems in person to know his stuff and reasonably trustworthy. If we go with him, we'd need to sign an agreement to not buy property through anyone else, which makes sense.

After we met, I emailed him to ask him if he could give us any references, people who bought investment properties with him before. I really want to feel secure that he will both actually land us a property but even more importantly, not lead us astray into a bad deal.

He wrote back, saying:

"Hello X
Sorry for the delayed response.
To answer your question, we don't ask our Investors to be references to the Investor Program because they are full time workers or enjoying family and servicing reference calls is a disruption. We do, however, ask our investors to share the experience with other potential investors they know, so other investors will have first-hand information about the program. With that said, none of our potential investors entering the program will be calling you or you husband asking questions about the program because your contact information will always remain private and not shared with any outside entities or individuals.
This is one of our in-house privacy policies.
Thanks,
X"

On the one hand, okay... I see how that makes sense, that he does not want to impose on his clients. On the other hand... can't I get a reference for almost anyone else I hire? Also, is it really such an imposition? I've served as a reference for babysitters for example and I never minded.

What do you think?

How can I know that he is trustworthy?

Wed, Jan 25 2017, 5:50 pm

I wouldn't do it.

imasinger

Wed, Jan 25 2017, 5:56 pm

Me either.

mfb

Wed, Jan 25 2017, 5:59 pm

Doesn't sound right, most companies can give references!

challahchallah

Wed, Jan 25 2017, 6:02 pm

Definitely a red flag.

33055

Wed, Jan 25 2017, 8:08 pm

"If we go with him, we need to sign an agreement not to buy property with anyone else."

And this makes sense to you? That is a bigger red flag. You can agree not to buy property that he SHOWS you through anyone else, but to become his exclusive customer is crazy.

That is the only thing that makes sense. What if you hear of something completely on your own?

rachel6543

Wed, Jan 25 2017, 8:57 pm

I think this could definitely be a red flag. I would be very very very cautious using this person. How did you even find out about this person? I would be wary of someone who can't provide references or other valid documentation showing they are qualified and reliable.

Does this person have a LinkedIn account? If so, see if you have mutual contacts and maybe you can find out details that way.

Is there anything on Yelp or the BBB about this person or his company? See if you can find reviews.

I would also check out this person's credentials. Can you check his license on the state website?

Have you just googled this person's name? Maybe there is a news article or other info you can find.

I would proceed with extreme caution and not sign any agreement until you can validate credentials and reliability.

Do you have a friend who is a lawyer? Maybe you can ask them if the agreement this person wants you to sign is normal industry practice or even legal?

Do you have any other friends/contacts in the real estate industry? See if you can ask them if they have heard of this person and is he legit or a scammer.

amother

Emerald

Wed, Jan 25 2017, 9:05 pm

Do
Not
Do
This

Sounds too good to true, probably is.

Also - you are trying to make a quick buck by flipping a property. You want to buy something that is under valued. IOW you want to "rip off" the vendor. (and possibly the second purchaser as well).

This guy is also trying to make a quick buck

Be honest in business and very very fair. Then there is more chance your business partners will be fair as well.

Remember where your parnassa REALLY comes from.

amother

Crimson

Wed, Jan 25 2017, 10:52 pm

I just asked Torah if I should buy a property and I was told no! So ask.

amother

cornflower

Thu, Jan 26 2017, 9:06 am

amother, flipping is not ripping people off or being unfair. Its risking money on a house that no one wants, putting in a lot more money and selling it to someone who wants to buy a house in perfect condition and is willing to pay for that. For the record, flippers lose money all the time.

OP - actually his request that you only buy from him is fair since you are a small investor He doesn't want to work on finding you a property and then find out that you are buying from a different agent. Its not like you are a big investor that can buy every good deal he finds. You can only buy one. You should ask around, it might be standard in this field
The references thing also makes sense. Do you want him to use you as a reference later on. I wouldn't want to share with other people that I invest in real estate.

But, together it all sounds shady. Tread carefully, its not such a simple business.

33055

Thu, Jan 26 2017, 9:12 am

amother wrote:

No one owns buyers.

amother

Beige

Thu, Jan 26 2017, 9:22 am

Don't sign anything that gives him the exclusive.

I looked at a home yesterday to buy that a frum guy bought to flip. Its in an area that I'm sure will take off and already has lots of frum families moving in (I think both sides were already frum).
He is already listing the home for 100,000 less than he originally did.
He still has the home at 100,000 more then he spent. But he has had it for 2 years. Its 11,000\year taxes + morgage payments and the interest. He made some minor updates to the house but nothing major.
There are so many issues with the house and location, if he finds the right buyer soon he'll make his money, otherwise I think in the end he'll break out even or lose. There are no guarantees, and this is a hot market, there are reasons homes in those markets are sold below value - even if messed up.

Good luck to you, you are smart to go into this with your eyes wide open.

FranticFrummie

Thu, Jan 26 2017, 10:28 am

amother wrote:

OP, have you ever flipped a house before? There is SO much you need to take into consideration, and the learning curve can be steep, heartbreaking, and expensive. I'm not saying don't do it, I am saying that you need to listen to people who have done this before, and learn from their mistakes. I could tell you stories that would curl your toenails! shock

amother

Emerald

Thu, Jan 26 2017, 4:10 pm

amother wrote:

amother, flipping is not ripping people off or being unfair. ..........

Maybe not. But trying to find something that is "undervalued to make it worth it", and paying below market price for it, is.

choco1

Fri, Jan 27 2017, 3:01 am

no its not. foreclosures for example are under market value and perfectly okay to buy fix up and resell or if someone has to sell in a hurry. if you get a good bargain why is that ripping anyone off

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