Recently I have completed several appraisals for different clients that had one thing in common: first time house flippers that had obtained their information from an online seminar.
On the surface there may not seem to be anything wrong with education seminars or webinars. One of the house flippers (I’ll call them “investors”) got me the name of one of the websites and it screamed SCAM!
Essentially it was a “landing page” the kind you seem to find in just about any pyramid scheme style scam model. The page had minimal information with a testimonial that looked like it was written by a 12-year-old, and a picture of man sailing in a fancy looking yacht. The page had an English or Spanish button, so I’m guessing that it was also targeting unsuspecting Spanish speaking investors. Besides those minimal details on the page, there were no contact names or phone numbers or even emails. The about page was blank. You only had two choices: leave the page or enter your email to move forward.
Needless to say, I didn’t bother going any further, but I think you probably get the idea. This website probably promised a “get rich quick” scheme, a list of hard money lenders (probably owned or co-owned by the scammer), and some very basic information. In any event, all three of the investors I spoke with had taken that course or a similar one and had found a property to flip. One investor was told they did not need to get permits to gut a house, expand the back with an addition, add a second floor, or convert it to a triplex. The city got wind of it weeks before I even saw the property and RED TAGGED it (meaning all work had to stop immediately), and had made the investor convert it back to a single-family house to its legal use at THEIR COST.
The investor said they lost a lot of money and probably would not break even and likely owed more money now than when they started. This was the same story I got from another investor that made an addition for a primary bathroom. Fortunately, that investor obtained permits through the contractor he used, but still, the process had drained his bank account. This investor had said the first contractor simply stopped working and weeks went by before he could find another one. There were some commonalities in these investors: *** None of the investors had any prior real estate or construction experience. *** None of them had taken a prior real estate investor course. *** All three of them believed they could ignore local city codes and permits. *** All three of them were immigrants and had depleted life savings to try to flip a property using materials and workmanship more suitable for an owner-occupied property. So if you are wanting to flip houses I suggest that you tread carefully when taking an online course, check with local city on permits and property repair requirements (including additions), find a licensed and ethical contractor to work with, and contact a local Realtor or Appraiser that can provide additional guidance in terms of market conditions, values, and even recommend legit lenders to work with. There is no fast track to get rich in real estate. Watching a YouTube video about house flipping that directs you to a we landing page to enter your email and sign up for an online course is a clear warning of a scam.
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