In my effort to continue to work on myself and expand my knowledge I ended up at a real estate investment meeting and now I am questioning everything. I have a friend that tells me I am overly optimistic about the intelligence of people but now I am really starting to believe it, because most of the people in this room viewed ownership as a negative and I find that insane.
Humans are herd animals. Think about when someone insults someone by calling them a sheep and then talks about being a lion. Lions and sheep have a lot more in common than simple metaphors. Humans are herd animals. We listen to the wisdom of crowds even when we think they’re wrong and it is why gaslighting is so effective.
This caused me to spend the last two days looking into what I am starting to believe is a ponzi scheme wrapped inside of a shell game on top of a pyramid. It is a little wild that anyone thinks this is the good idea. The pitch is buy a distressed property in a bad neighborhood for a dirt cheap price and then immediately sell it in a contract for deed sale for double to an unqualified buyer. In the immortal words of Homer Simpson, “Extended warranty. How could I lose?”
The downside risk of this structure is immense and at the end of the day you own a piece of paper that says someone else has the future rights to the property you bought. This method takes all the future value of speculation, buying cheap properties in currently distressed areas, throws it in the trash and hands you back massive legal exposure.
There is also the fact that this is pitched as a way to get into real estate investing with no money. That is a red flag in and of itself. It is perfectly possible to get into real estate with no or low money. House hacking, seller financing, land flipping are all low to no cost entry points that can end up starting someone on an investing journey, but this method is like a three day old dead fish wrapped in red flags and stored in a space heater. It has bad bad news written all over it.
David Huzzard Writes 