Is this “Bird Dog Real Estate Investor” a scam?
Posted by | Posted in Buy My Home Fast - Questions & Answers | Posted on 16-06-2010-05-2008
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Question by celebrity1981: Is this “Bird Dog Real Estate Investor” a scam?
I have soso credit, I want a house too. I figure “Rent to Own” would help me out. On Craigslist.org, I found an advertisement about “Rent to Own” in my area. Larry Harris, the Wholesaler/ Investor texted me a listing of homes, I picked one and he gave me a tour of the house inside and out. The house has potential. He told me it’ll take 2 months to fix, my rent could be 650 monthly but I have to put down K first. I know alot of businesses that are legit and ask for money down first but is that how it works. Is he suppose to licensed for this kind of thing? After talking to my cousin who’s an IRS employee, she thinks he’s a fake, she said according to her research, he’s not licensed. Larrt told me he (they) are investors not agents. Investors aren’t licensed agents, the construction lender requires verification of this prior to he & I closing on aquisition…. whatever that means! I really want this house but I worked DAMN hard to save up that kind of money. I’m a 27yr. old single mother to a fatherless 6yr. old boy and I’m trying to move and do the right thing for my son, and that’s having a house, like I always dreamed of.
Before I had a business license to do what I do, I was legit, so I’m trying not to be harsh. I know Craigslist.org has a reputation but I’m really hoping that it doesn’t spoil everything. There are many innocent people looking to do, sell, buy, search for things on Craigslist.org, even I posted things on that website and I’m no scam-artist!
This is Larry Harris: http://www.gobignetwork.com/profiles/Larry-Harris3.aspx
Best answer:
Answer by joscasta
Trust me, its a scam. If its not available for you to take right away, then run away.. run far far away. Trust me, these rent to own sounds good, but you are better off by seeing if you qualify for an FHA loan, to buy a house with. Honestly, he is trying to get your money. Why is he listing/showing it when it its not rentable/showable quality? That is the first thing you look for.
Keep hunting somewhere else.
Know better? Leave your own answer in the comments!
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It may be legit. I’m a real estate investor (as well as a Realtor), and I’ve been involved in similar legitimate deals. On the other hand, it could be a scam.
First, let’s get a few things out the way. Your cousin knows absolutely nothing. Doesn’t mean she’s wrong; just means she knows nothing. Second, Craigslist has nothing to do with it. A lot of legitimate companies advertise on Craigslist. So do some scammers.
The $6,000 you’re being asked for is a non-refundable option fee. It’s not a down payment. You don’t get it back if you decide not to buy, or if you’re unable to buy. However, the $6,000 will be credited to your purchase price if you exercise your option. That’s how it usually works. So there’s a risk on your part.
No, he doesn’t have to be licensed. Very likely, he has negotiated a lease and an option with the owner of the property. (In rare cases, the investor actually purchases the property, then lease-options it.) For example, his agreement with the owner may be to pay $400 a month in rent with a purchase price of $40,000. He then offers it to you for $650 a month with a purchase price of $50,000. That’s completely legitimate. He’s leasing the property, then subleasing to you–no license required. And he’s offering to assign his option to you for whatever the spread is between the two purchase prices. Again, no license needed.
I’m not sure what you mean by the construction lender (the one to fund the repairs?), and I don’t know what verification is required. I’m sure Larry can produce a quote from a contractor for the repairs. That quote may or may not be accurate.
See a good real estate lawyer. Don’t go to one who automatically says lease-options are bad. They’re not. But you need a lot of things in the agreement to protect your interests. For example, what happens if, when you’re ready to buy, the house doesn’t appraise for the agreed-upon purchase price? For example, how do you find out whether the owner of the property is having financial difficulties and might be foreclosed upon? There are good solutions to these and many other issues. (I’ve written an item on my blog that has more details; see http://realestatesolutions3d.wordpress.com/ )
And ask Larry for references. Ask for the names of his lawyer and accountant. Also ask for the names of a couple of other people he’s done lease-options for.
Finally, again, it’s not necessarily a scam. I’ve done legitimate deals structured very much like Larry’s. But you absolutely need to be protected going into this.
Hope that helps.