“I just went to a real estate seminar about investing in XXX XXX Duplexes. They build beautiful new duplexes in various cities for you to buy. Did you go to the seminar? It seemed interesting and I wanted to get your opinion. Is this a scam or an opportunity?”
***ANSWER:
I did not, but I read brochures that sound like they’re from the firm you’re asking about. Frankly, I was troubled by what appeared to me to be numerous inaccuracies, omissions, and misleading information.
Among my long, long, LONG list of concerns were their “pro forma” (projected) numbers for income and expenses.
They painted a pretty picture of positive cash flow but failed to include standard things on any pro forma: vacancy, legal fees, repairs, landscaping, “miscellaneous”, and more. And I found no disclosure that they used a low-start-rate negative amortization loan or that the payment would quickly shoot up.
So I called the firm to inquire and listened as their saleslady tap-danced around my concerns:
I asked why they showed zero vacancy and she said, “These figures are general and don’t apply to any specific property.” Ridiculous! Using that reasoning they could say ANYTHING.
When I challenged her, she finally said a 2-3% vacancy rate was typical for this type of property. I told her 2-3% was unrealistically low for ANY type of property and asked her where that stat came from, but she didn’t know.
When I asked why they didn’t at least show her (bogus) 2-3% figure, she again said the figures “didn’t apply to any specific property.”
This was the way she answered all my questions. So my advice is to be VERY careful…and I’d personally look elsewhere to invest.
For legal reasons, I must tell you my comments are not fact, but just my opinion–based on 21 years experience & 3,000+ real estate transactions. It is possible all their information and projections are 100% accurate and honest. (Hopefully that disclaimer satisfies my attorney!)
