Posted by Lance on August 24, 2008 at 16:13:17:
Recently I have seen a number of solicitations for deals where a property is being purchased "off the tape" by an investment group (I do not know what this means)or "off the tax rolls" (are these abandoned properties?).
The properties appear to be in inner cities or urban blue collar areas.
The sponsor of the deals are either buying the properties or have an option to buy and are looking for investors to carry the paper (marked up by the investment group). As near as I can tell, they pay about 6-15k per property in a bulk purchase of some kind and then try and fund the property with a markup to the "investor" who will carry the note and who marks up the property to the "buyer" to somewhere between 430k and $50k.
A sign is placed in front of the property "for sale, $500 down, $500 per month and the property is sold on a land contract to a local person who is working and has been a renter. The claim is made that if the "buyer" does not perform, they can quickly and easily be forced out of the property by a quit claim and the process starts over again with a new "buyer". Properties are either sold "as is" or "in habitable condition".
The investor escrows good funds with the investment group and is told that they are on a list and as the properties become available they must choose to buy within a few hours of being called on an opportunity.
The investment group promises very high returns on the initial investment, monthly cash flow and the possibility of selling the note once it is seasoned for a nice profit on the intial investment, since the home is sold to a buyer for about double what the investor puts up for the note.
The investment groups presenting the opportunity will manage the properties for a fee.
What do you think of this? Are these types of notes saleable and if so, how long do they need to be seasoned and how much would they need to be discounted in order to sell? They opportunity is sold as a great investment in a self directed IRA.
What alternatives would you suggest for someone with less than $50k to invest?
Thank You
- High Risk PAPER.... Michael Morrongiello 21:07:57 08/24/08 (0)