Scammers run in all circles.

Being heavily active on this blog, some real estate clubs, and a few other investment sites I often get private messages from people. I actually LOVE this kind of interaction. If I can get to know you on a personal level and somehow further your career then that is my way of giving back. With that being said…. Let’s talk about this individual who we’ll call “Steve”.

Steve sent me a message claiming that he is a buyer for a hedge fund. With this supposed fund, he was needing to purchase 100 homes a month. It’s not uncommon for a hedge fund to buy large quantities of property in a short amount of time. Steve asked if I had any rentals for sale in a particular area. I actually had 2 that I had been contemplating selling. So I replied with the asking price and addresses for both homes. He liked the equity that was on the table with my properties and so he made me offers on both of them. Which I accepted.

Here is where it gets weird. I told him to send me his purchase and sale agreement which he did. When I got the document, there were some red flags and contradictions. Check out my post on contingencies! He had a cash offer but a financing contingency. You can’t have it both ways! He had partner approval. You can’t sign a contract without that prior. On top of all of that he had no earnest money deposit, things spelled incorrectly, and the contract had the wrong address. One error or two I will give some grace. However this many just is a huge red flag.

I told Steve I had some questions about the contract and asked for a call. On the phone he admitted he really couldn’t afford to close on my properties. He wasn’t buying for a hedge fund and simply “knew some people he was going to check with.” While I don’t mind wholesaling (I do it myself) there is a proper way to do it. “Steve” was wholesaling like a cowboy!

Unlike some people, I have no issues with wholesalers. However if someone wants to wholesale one of my properties I give them an option contingency. They pay me a non-refundable flat fee which gives them the express option to terminate the contract at any time for any reason. The purchase price is cash, there is no inspection, and no need to deceive. If the wholesaler can’t find a buyer, they terminate the contract and I keep the fee. The benefit is they got a shot at making money and I made a few hundred dollars and didn’t waste my time.

Steve, however, could not come up with the $250.00 option fee for either property. If you need to buy 100 homes a month, you should be able to come up with $500! He tried telling me that he didn’t agree to it. I had in writing where he said the contracts were great. He then tried telling me that his attorney looked them over and explained what they meant. I think we all know by his first “contracts” he sent over that he wasn’t using an attorney.

Final thought: Steve was being deceptive. Steve’s profile on the website he contacted me off of stated that he was new, looking for advice, and trying to “hustle”. Don’t publicly post that you need hand holding if you’re claiming that you buy thousands of homes a year.