Real Estate Investing Scams – 10 Tips To Safeguard Your Money In Partnerships

Real estate partnerships- have you ever been involved in one? They can be a good vehicle in certain situations but they can ruin you too if you fall for a real estate investing scam. Take these tips and use them and hold on to your money.

Successful real estate investors protect themselves from potential scams. Just because someone speaks in the language of real estate does not mean he or she has good intentions with your money. When I first started investing I had two men approach me about partnering in some real estate deals. They showed me comps with all of the sales data, estimated repairs etc. and because they painted such a great picture and seemed to be very knowledgeable about real estate I fell in the trap that cost me over $30,000 US Dollars. You don’t have to make the same mistakes. Now you can follow 10 simple steps that will limit your risks while you invest.

1. Take counsel from a professional investor group.

In the wild the animals that survive are the ones that stick together. We should apply that same principle. But make sure that the investor group is honest and willing to give counsel when ever you feel something seems questionable or too good to be true. You want to look for a network that does not just sell you deals, they should be investing in the deals with you. Now that is putting your money where your mouth is.

2. Know your partners.

Never partner without knowing your partner. If you are considering partnering with a person that appears to be a pro make sure to have your attorney look him up to make sure he is clean. Your success will always be influenced by the people you surround your self with. If the people you partner with are successful and trustworthy you will grow. If your partners are scam artists you will be perceived to be just like one of them.

3. Have an attorney on you power team.

Make sure your own attorney represents you in every partnership and property investment. Having legal paperwork done right will keep you out of trouble and protect your interests if you need to go to court. Trust me when I say that the cost of working with an attorney is far cheaper than an ugly lawsuit because you did not do things according to the law.

4. Secure your money.

Keep any deposits for an investment in an escrow agent account until you move forward with the project because you will be able to retrieve your money if things go south.

5. Do your own due diligence

Obtain comparable sales and market research from your own sources when you are not sure the areas value. Drive by if necessary. This would also be a good time to speak with your mentors regarding the project you are considering. If your numbers work then take action.

6. Be insured at all times.

When investing in real estate title insurance is meant to protect you from any surprises. When purchasing apartments or any commercial property also ensure that you have umbrella coverage. Trust me when I say that you only need one deal to go south to pay for two lifetimes of insurance policies.

7. Use the right contingencies.

When investing, you should incorporate contingencies to protect yourself. This is when that attorney can work wonders. Give yourself plenty of room to walk from the deal if something goes wrong. The last thing you want is to get stuck with a deal that will ruin you and you can’t get out of that agreement. Addendums are your friend!

8. Use money sources you can trust.

You can build these relationships before you start investing. The key is making sure that they have a strong reputation by others. Ask for referrals and when you find the one that you can trust use them regularly. You can also ask your mentors and they can referee you to the people they do business with.

9. Stay in control of your investments.

Successful investors are not afraid to stand up for their interest when things seem to shift. A balanced portfolio strategy will make it easier for you to spot when something does not fit your plan. Your contract addendums will help tremendously. No one, even a “partner” should control YOUR investments.

10. Keep relationships alive.

When you pull off an investment with someone that was trustworthy continue doing business with them. Make sure to preserve those productive relationships. You don’t know how important it is to have a strong team in the market place until you are standing all alone when you fall in a trap.

I hope these tips will empower you to invest smart. Don’t allow the dangers of life to keep you from pursuing your vision. So minimize your risks and move forward. And like my mentor says “May God hold you in the palm of His hands.”