Is This Legitimate ?
I recently saw an ad on Craigs List . "Earn $$$ Utilizing Your Excellent Credit" I responded . A company called American Equities ( not real name )
got back to me saying how their company uses the great credit ratings of others in order to do real estate deals and then ,, after these closings take place , the person whose credit was use is compensated a % of the sale . I recived a details contract etc . before I lug it all off to an attorney I just wanted to post it here to see if anyone here can shed some light on what this is all about ? Can anyone just confirm this as a scam for a fact right off ? Please advise. Thanks .
MrInvestor,
You have about the same chance of making money this way as you have of winning the Nigerian Lottery.
John $Cash$Locke
[addsig]
John I thouhgt that was the idea of Subject to investing...
Well that just shows how much you know John ,
I have already recieved over $ 38,000,000.00 into my PO Box from the fine folks in Nigeria
MrInvestor.
With the exchange rate on those Nigerian dollars if you add another $1.00 US, you should be able to buy a cup of coffee.
However, if you let someone else use your credit, you could wind up with a tin cup, looking for a donation of $1.00 to help you buy that cup of coffee.
John $Cash$ Locke
[addsig]
Michael,
Talk about tough, the number of languages currently estimated and cataloged in Nigeria is 521.
When I do my presentation to purchase Subject To over there, truthfully sometimes it is a bit difficult. to get it exact.
However, when I mention my Uncle Sam just died and left me 580 billion dollars and I need to purchase properties outside the US with the money, which is the only way I can get it out of the US, they understand perfectly.
John $Cash$ Locke
[addsig]
Frankly using a credit partner is a common practice, but in my experience it is generally with someone you know and trust. I would not allow someone I did not know use my credit for anything, let alone a high value item like a real estate deal.
A real red flag to me would be the statement that you will be compensated at closing. Usually it takes a bit of time even for a flip, and a quick flip is less possible than ever in this market. The deals I have seen have involved purchase, rehab, and then either sell or rent and wait for appreciation- in any case six months or more is a reasonable minimum to recover your money.
Chris
Also, since they are using your credit rating, you are going to be liable for the loan. Talk about risky!
No reputable company would have any need whatsoever to use a scheme like this.
A straw buyer is something different, although this may be what the company looking for credit has in mind. With a "straw buyer", a scammer purchases a cheap property, then sells it to the straw buyer for far more, often with the help of a compliant appraiser. The scammer and the straw buyer (and sometimes the appraiser) split the profit, and no payments are ever made on the purchase loan- "straw" because the buyer is not really intending to buy the property.
The bank is left holding the bag, the scammers use their profit to do it again, legitimate investors have a harder time getting loans, and ypochris gets another dirt cheap REO to add to his portfolio.
In contrast, a credit partner signs or co-signs a loan for a legitimate purchase, in exchange for a portion of the profits generated by renting or selling the property. This is a perfectly legitimate and legal business arrangement that I have used on half of my properties. When your credit becomes overextended through too many properties or a high debt to income ratio, bringing in a partner with high income and low debt can have great benefits for both parties.
Chris
I have read a couple of these offers. The latest one is a construction and five year builder lease back.
As I recall the deal, the credit partner obtains construction to permanent financing to build a high end home. At the end of construction, the builder leases the property for up to five years and his rental payment covers the loan payment.
During the lease, the builder may use the home as a model or sell it to a retail buyer. If sold, the builder splits the profit 50/50. If not sold by the end of the lease term, you have to start making the payments on your property.
It would seem to be a good deal for the builder regardless of whether the property eventually sells. The investor comes out ahead only if the property is sold.