Beware Some Of Those “Sweet Real Estate Deals” Here’s Why – John Schaub

Lots of books on real estate investing talk about checking out property on the internet and buying by “remote control”.

So if you’re doing that without actually seeing the property “live”, you could get yourself in a big mess, despite the cheap price. Years of “easy mortgage money” prompted lots of fraud.

Here’s how some of those “$50,000″ houses are now selling for “$5,000″… from real estate expert John Schaub (see his website at www.JohnSchaub.com).

There was a lot of mortgage fraud in the intercity areas of many big cities like Atlanta. They would take a house worth $5000 and sell it for $50,000 to a friend who would get a loan based on the $50,000. That did not make the house worth $50,000 but the tax assessor would pick up the new “value” off the recorded deed. Other properties were sold with owner financing at terrifically inflated prices, then the loans (first mortgages on single family houses – how could you go wrong) were sold to investors. I’ve long advised never to buy a loan unless you are willing to go see the property. Many of these houses have negative value. It would cost more to tear the house down than the lot is worth.