A friend of mine who has been hanging around my real estate talk and what I’ve done from an investment standpoint caught the bug. He is now looking for investment opportunities and was connected with a local investor/agent who a colleague has worked with in the past. My friend and I went to look at this property which was a bit out of the way and overpriced for the market. My friend is new to real estate was asking a lot of questions and the agent/investor happily answered his questions.
This gentleman seemed nice enough and knowledgeable initially until my friend asked about living vs. renting and how the different loans worked. The agent said “off the record” and proceeded to advise my friend that he could commit mortgage fraud to get better financing terms. What that agent did is so wrong it is insane. He suggested “off the record” that my friend should consider committing a felony in the State of Florida in order to get better financing terms because “a lot of other investors do it.”
Up to that point, he seemed like a decent agent and had experience in our area as an investor. He had provided some really good insights into other areas of real estate and was clearly well versed but the moment he decided to go “off the record” is the moment he lost any respect. As a newer Real Estate investor I hear horror stories from other investors about shady characters who stole money from them or grossly mismanaged deals. Real estate professionals are often times portrayed as sleazy and it’s a shame, but I saw first hand an example.
Now I understand why real estate investors get a bad wrap because of individuals like him that cause others harm. My friend isn’t working with this agent any further and had the instance progressed further a formal report would have been in order. I’m all for leveraging the rules to your advantage such as utilizing LLCs to limit liability or 1031 exchanges to defer taxes. The difference is those instruments are legal and are put in place for a reason. Telling someone to commit fraud who is in their early twenties is just plain wrong.
A word of advice is to be careful with whom you do business because not everyone is in it for the right reasons.