Real Estate Investing

Craigslist, a legitimate online classifieds site, can be a great place to find landlords, tenants, pre-foreclosure deals, investment property, roommates, vacation rentals or simply a really great home. This blog has recommended the site many a time. However, there are vultures lurking, ready to pounce on the innocent and trusting, and vigilance is required.

In 2005, Craigslist CEO Jim Buckmaster told MSNBC that fraudulent postings made up only one-tenth of one percent of the site’s overall listings. The site has a very well-established method for users to “flag” posts for removal if they are posted in the wrong area or posted too often, etc. (signs of fraudulent activity). Furthermore, Buckmaster said the company was considering charging landlords to post property rental ads on the New York message boards, in the hopes of discouraging fraudulent real estate postings in the area where such activity apparently posed the biggest problem in 2005.

Not sure if they actually implemented such a policy, but it sounds like a reasonable one to implement nationwide because three years later, the problem persists. KGET 17, a Bakersfield, California news station, reported yesterday that a local woman was prey for an online real estate scam artist. As it turns out, the property photos and description that were so appealing to Tiffany Llamas were actually ripped verbatim from a listing handled by a legitimate realtor — the same one who happened to be working to help find Llamas a home. According to the KGET web site:

“The return email read: ‘I and my wife came over to the U.K. for missionary work, so I hope you will promise us that you will take care of our house.’ Llamas said, ‘That’s great but I still want to see the house first, and when he told me send $2,400 via Western Union and then he would, you know, send the keys to me.’”

Llamas didn’t fall for it, but such predators persist on a variety of Internet networking sites hoping that someone will fall for it. Apparently, tenants aren’t the only ones being preyed upon either. This is undoubtedly occurring in the property resale market as well. The Real Real Estate in Connecticut blog points out what can happen to landlords and (in the comments section) what can happen to those seeking roommates on Craigslist.

The blog points out some red flags to beware of with Internet dealings. It may sound biased, but the following qualities are true in the vast majority of cases:
-Poor English, i.e. broken sentences, misspellings and bad grammar.
-Asking questions about details you already gave in the advertisement.
-No direct contact information.
-The writer is overseas. Many of the scams are from people claiming to be in other countries.
-Very often, these people represent themselves as high-income individuals, like doctors, lawyers or professors.

Again, Craigslist itself is not bad, but the way it works has the potential to introduce a lot of people to a lot of scam artists. Never, ever give anybody cash, check, bank account information, etc. without having first met with them and thoroughly checking out the situation. Follow your gut instinct, and above all else, the old rule applies — if it sounds too good to be true, it probably is!

The escalating rate of home foreclosures is turning more homeowners into renters, but it’s also turning more renters out of their homes. One aspect of the foreclosures crisis addressed recently by USA Today is renter eviction because the landlord defaulted on the home loan. Many of these unfortunate renters recently went through the foreclosure process themselves, so this is doubly traumatic.

Rental units are at an all-time premium now, because demand is high and so are rental rates. So one can imagine how immensely difficult it must be to have the hard-won rental property yanked out from under foot. About 18 percent of foreclosures started in 2007 involved “non-owner-occupied homes,” USA Today reports, citing a Mortgage Bankers Association study.

Maryland Real Estate Blog points out that renters who have signed a lease-purchase agreement with higher deposits are in an even worse position than the typical renter.

“They are in the unenviable position ‘between a rock and a hard place’ — with a lease in place that requires them to stay and continue making payments to the landlord; unable to move to another property without losing their substantial security deposits.”

Although renters obviously aren’t accustomed to doing background checks on the landlord, some limited form of that may be a necessary thing nowadays. Checking whether the loan on the rental property is in default can save a lot of trouble and heartache down the road.

There are thousands of realtors quitting across the country as home prices have declined by record proportions. The average agent, age 51, has suffered a $2,000 annual pay cut. There was a rush of new realtors riding the wave of success during the peak time. Now, however, a sort of “weeding out” is occurring — the ambitious yet inexperienced hopefuls from the die-hard dedicated veterans.

Some are leaving to pursue new or old careers. Some are retiring. Some are sticking with it and changing up the modus operandi, perhaps focusing on foreclosure deals instead. Despite the current skittishness of many real estate agents, the National Association of Realtors reports that its membership grew to 1.35 million this year, according to The Christian Science Monitor. Rather than indicating an increase in legitimate real estate agents, the growing membership could possibly be caused by “unaffiliated agents scrambling for clout in a tough market,” the Science Monitor reports.

And skittishness is not such a bad thing. After all, you’ve got to look out for number one and maybe those who are getting out now instead of weathering the storm have got the right idea. Not everyone can succeed — some have got to give in. Perhaps the best quote on the matter comes from the Austin Real Estate blog, regarding the so-called “light at the end of the tunnel.”

“Remember when you see a light at the end of the tunnel, sometimes it’s a train coming to run you over.”

How true, indeed.