Im having a situation right know where I need to decide what I wanna do with my life...Im 21 years old im a chef and love the restaurant business but im passionate about buying and selling..I really want to become a invester I met this guy well years ago who I trust and I always new he flips houses just never got involved with it...Basically over the past 6 months we have been discussing, and he owns houses right know some are occupied with tenants some are not which he is looking to flip...He deals with all pre-foreclosures...He decided in a way in which he can make more money because no one can buy 5 properties a month in there own name, he finds people with good credit over 750, and he buys the house with their consent and all their signatures for buying the house..He collects half, now also keep in mind that he puts up all initial cost, so there is no money out of that person pocket..So in my case im 21 years old have good credit and been talking to this guy for months about buyign a house..we have a house where it is appraised at $600k, and we are getting it at $490..At the closing I get a lump of cash and at the selling time i get a lump of cash all which I would split 50/50 with him because he put up all the cost...At 21 years old as a stepping stone putting anywhere from 25k-35k in my pocket is pretty good, and I think its a good way to get into this business by having a mentor, but I wanted to see what you experts have to say about this....Legit or scam artist?

Go do a little research and try to understand the difference between "appraised value" and "market value". Also look around the internet and get a clear understanding of the definition of an "appraisal".

Then, ask him to show you a copy of the appraisal report.

Realtyeyes

Well I trust this ugy and I already spoke with loan offericers about getting the loan...We are not going to sell it at 600k cause the market is not that good right know...We would sell it with at least 25k equity still in the house...Other then that would you say thats a good stepping stone for a younge 21 year old looking to get into the real estate investing business?

Let me give you a piece of advice that will save you from bankruptcy: Don't be a motivated buyer!

I hope you can afford to pay $3,000 a month on a vacant house because with your name on the mortgage guess who's responsible for those payments if the house doesn't sell.

As realtyeyes pointed out, appraisals are often worthless, especially in a declining market. You need to find out what the house could actually sell for and then you need to buy it 50% below that.

Could be risky! First let’s analyze all of the cons okay?

You've only known this guy for a few months

It's your credit on the line

Do you even have proof that this property is appraised for 600? Meaning this an immediate amount of equity in this property?

Where are you located at? In most circumstances the RE market is going through a correction/adjustment phase, meaning, just because it's being sold as is for 490 and the supposedly 600 appraisal doesn't mean jack sh!t, it's not the same as selling price. So do yourself the favor and conduct your due diligence, assuming that you haven't already.

Instead of being the one duped, become like Dick Tracy and investigate your situation. Although it sounds great on paper right now, future repercussions may be totally opposite. Just like with anything in life, if your prepared and viewed it from every possible angle then you'll not only have all the bases covered but you can actually come out ahead.


Did you know that saving your credit essentially will take you 5-10 or more years, to get back to where you're currently at in moment?

I stand corrected but this is the way I see it, some” investor" know it all, finds a young naive kid, Hey you wanna make some money, Here I'll take care of everything, pay your mortgage etc etc. Just sign on the dotted line and you'll get half of the stakes. Being 21, WOW.... lots of money where do I sign?... Do be offended but that's the cliff version story of what I've heard before, of course a little different and circumstantial.

But hey you have to realize that you may be in it for the long haul. I'd say that if theres that substantial amount of money to be made I'd ask for at least 50k off the bat, without waiting for the traditional 1-5 years turnaround till you get you share. By that time worst case scenario is that, the guy just cashed in on his RE commission miscellaneous fee etc is nowhere to be seen. Kind of defeats the purpose of being a made or somewhat made man at 21 doesn't it? Instead of living the American dream of home ownership... you'll have to wait until your rapport with the lenders has redeemed itself.

Either way, it's great that you've got your guard up and have somewhat of a defense fortress up, seems as if you have a fighting chance to slug it out her early in the begining. Just don't forget this" investor dude" is more experienced and slick when trying to capture his prey so be WARY be very "wary!

Once again, if you have a contract stating that he too is responsible where he can at least be added to title so that it's not only you but his butt on the line as well then maybe just maybe it could be worth it, not of course until you've figured out that you come out ahead as well as having an exit strategy available.

My 02. Cents

weary means tired.

you mean leery. which is suspicious. or WARY which means cautious.

sorry, I couldn't resist. I see a lot of people confuse them and it just...begs me to fix it. lol

Be very wary and leery or you will end up weary with your debt! LOL

Here are the problems...

1. You are on the hook for the mortgage. Unless you have an extra $5,000+ to drop on the PITI while you flip the home this will not work for you. Make a mistake and you're going bankrupt.

2. The spread is fairly small... a good flipper is going to buy around 60c on the dollar tops... your buying at 80c. All of your equity is gone in a year once you figure in transfer costs.

3. Want to get in the business... find a home you can get for no money down under $150,000.

Whats stopping someone that busy from buying more than 5 properties a month? Sounds like an excuse to lure in the bait.

if it sounds to good to be true. jsut like merkaba said. how can he need someone to spot him if he is raking it in?

i would not go for it, to much risk for my blood i fold!

Sounds like a classic scam. He can't buy more than five houses a month so he needs some sucker to sign on the dotted line. Why can't he buy more than five houses a month and what does he need from you other than your good credit? I think you could kiss your good credit goodbye.

Okay changed it already, so I suck at spelling geze luiz, btw why'd you change your avatar Mrs. Lisa?

Cause, Miss Jane really looked like an unDead person - so pale. I sent her out to get some sun and some color.

thx for changing it. guess I'm in a persnickety mood. lol. sorry...

I understand what all you guys are saying...However I have known this guy for years not months...We just been talking about the real estate for 6 months...This guy does not have a license and is basically a investor, he knows many realtors,and every house he bought sold..Im located in the New York area...My boss actually is how i met this guy and he made in 2 1/2 years $275k with this guy no money down....He is not on any deed or title, but we have a contract between us that he will pay the mortgage for how ever long it takes to sell..We are each getting about 12k at closing the mortgage is going to be a little less then $3200...So whether this guy as you guys said could screw me I can cover months of the payment and just sell it at the price that will break me even, for a quick sale..I forgot to add, this house is a 2 family 6 bedrooms house thats split...and there are 2 sections 8 in there paying the mortgage, so the house is self effifient..He keeps telling me I should keep this house long term, but I just want to make quick cash and flip it so he said ok...

Agree with majority of posts here. My husband rehabs homes for a living and he would NEVER have somebody else's name on the deed. Find out what's stopping him from putting his name on the title and why he is looking for a dead weight (no offence) parnter? Do your own homework, don't just take his word for it even if you've known him for a few years. Find out how much similar properties sold for in the area. How much will you have to put into the house? Closing costs, etc. Is it worth it? The best properties to flip are cheap. Don't know where you are, but we don't look at anything over 150K, sell them for roughly 250-300K based on property.

Im located in New York, he puts up all money for closing cost, nothing is needed to be done with the house, its a pre-foreclosed house......it had 1 section 8, and the other owner couldnt pay rent for the house...We just recently got another section 8 thats going to move in once we go to closing, so the house is going to be self sufficent.