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Tags: Accumulating Wealth, Amount Of Money, Beaty, Buying A Property, College Education, Dilemma, Dollar Deal, Estate Deals, Estate Goals, Forward Progress, Hundred Thousand, Overnight Success, Proposal, Real Estate Agent, Real Estate Investing, Real Estate Investments, Realistic Goal, Retirement, Slow Pace, Smart Investor
Here’s the story. An investor- we’ll call him “Bill”- was preparing to close on an investment property. He received a copy of the final loan documents via fax, and took the opportunity to look them over so he would be prepared to sign them at closing the following day.
Bill was surprised to find that the loan application contained some glaring inaccuracies, including a gross overstatement of his income and a property usage declaration stating the property would be used as his second residence. In fact, Bill had clearly informed the mortgage broker he had no intention of ever living in the home.
Bill was in a bad position. He was committed to closing on the property the next day, or he faced over $100 per day in penalties. Yet he knew that signing the application with the false statements was an act of fraud. What to do? What would you do?
The answer to that question is at the heart of a growing split in the ranks of real estate investors, and I believe it reflects a similar split in our society as a whole.
Many would look at Bill’s situation and claim, ‘It’s not his fault- he didn’t tell the lie, the broker did! Look at what he stands to lose if he doesn’t close. Besides, he committed to close on that house- he can’t back out now. He should just go ahead and sign the documents. It will work out alright in the end, especially since he’s just going to flip or refinance the property within a year anyway.”
The other side of the argument states, “Signing those documents is clearly loan fraud, and quite simply lying on Bill’s part. Even though the original deceit wasn’t his, once he signs his name he knowingly becomes a party to it, and the loan would be funded under false pretenses. Even though it may cost him money, and possible the deal, Bill should refuse to sign and try to work it out some other way.”
There is no middle ground here, and if you plan to invest over the long term you WILL face some similar dilemma. The question is not IF but WHEN. Now, not when you are in the heat of the moment, is the right time to decide how you will respond.
Simply stated, what kind of person are you? The kind for whom ethics are relative to the situation you are in, and how much pressure you’re under? Or, are you a person who knows right from wrong and is prepared to do the right thing no matter the consequences?
The more of us who choose to be the second kind of person, who choose right every time, the better will be our industry and, by extension, our society and our world.
The answer to the question in the title? When is lying just being creative? Never. Lying is always just plain lying.
Crush The Biggest Obstacle to Your Success in Real Estate… or Anything Else! Download my FREE report here!
Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text.? 2007 by Tom Dunn. Website: http://www.dealfiles.com e-mail: tom@dealfiles.com
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Tags: Ahead, Argument States, Creative, Deceit, Dilemma, Ethics, False Pretenses, False Statements, Glaring Inaccuracies, Heart, Intention, Investing, Investment Property, Investor, Loan Application, Loan Documents, Loan Fraud, Mortgage Broker, Overstatement, Real Estate Investors
Here’s the story. An investor- we’ll call him “Bill”- was preparing to close on an investment property. He received a copy of the final loan documents via fax, and took the opportunity to look them over so he would be prepared to sign them at closing the following day.
Bill was surprised to find that the loan application contained some glaring inaccuracies, including a gross overstatement of his income and a property usage declaration stating the property would be used as his second residence. In fact, Bill had clearly informed the mortgage broker he had no intention of ever living in the home.
Bill was in a bad position. He was committed to closing on the property the next day, or he faced over $100 per day in penalties. Yet he knew that signing the application with the false statements was an act of fraud. What to do? What would you do?
The answer to that question is at the heart of a growing split in the ranks of real estate investors, and I believe it reflects a similar split in our society as a whole.
Many would look at Bill’s situation and claim, ‘It’s not his fault- he didn’t tell the lie, the broker did! Look at what he stands to lose if he doesn’t close. Besides, he committed to close on that house- he can’t back out now. He should just go ahead and sign the documents. It will work out alright in the end, especially since he’s just going to flip or refinance the property within a year anyway.”
The other side of the argument states, “Signing those documents is clearly loan fraud, and quite simply lying on Bill’s part. Even though the original deceit wasn’t his, once he signs his name he knowingly becomes a party to it, and the loan would be funded under false pretenses. Even though it may cost him money, and possible the deal, Bill should refuse to sign and try to work it out some other way.”
There is no middle ground here, and if you plan to invest over the long term you WILL face some similar dilemma. The question is not IF but WHEN. Now, not when you are in the heat of the moment, is the right time to decide how you will respond.
Simply stated, what kind of person are you? The kind for whom ethics are relative to the situation you are in, and how much pressure you’re under? Or, are you a person who knows right from wrong and is prepared to do the right thing no matter the consequences?
The more of us who choose to be the second kind of person, who choose right every time, the better will be our industry and, by extension, our society and our world.
The answer to the question in the title? When is lying just being creative? Never. Lying is always just plain lying.
Crush The Biggest Obstacle to Your Success in Real Estate… or Anything Else! Download my FREE report here!
Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text.? 2007 by Tom Dunn. Website: http://www.dealfiles.com e-mail: tom@dealfiles.com
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Tags: Ahead, Argument States, Creative, Deceit, Dilemma, Ethics, False Pretenses, False Statements, Glaring Inaccuracies, Heart, Intention, Investing, Investment Property, Investor, Loan Application, Loan Documents, Loan Fraud, Mortgage Broker, Overstatement, Real Estate Investors
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Real Estate Investing : Simple Mistakes The Population Makes
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Submitted By: Tom Beaty  |
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People involved with real estate investing often wonder which came first, the deal or the plan. New investors frequently make the mistake of buying a property before they know what they plan on doing with it. The dilemma starts here. Investing in this manner is completely backwards and will force you into a corner. The correct way of doing things is formulating a proposal before finding an appropriate house to fit in your scheme.
Planning comes naturally to most people. College education and retirement are just two examples of the future circumstances that we plan for. It is only natural for us to plan for real estate deals as well. A rookie investor may get in over his head and forget to forge a plan. You have to elect what you will do in the real estate market. How will you sell the houses you want to pay for? Having a proposal is very beneficial.
Overnight success simply does not occur in real estate. People often envision closing a million dollar deal in order to retire. The reality of the matter is that real estate investing is a gradual process for accumulating wealth. Traveling at a slow pace will gradually help you reach your goal. Although you will make a decent amount of money, overnight success is not a realistic goal.
A veteran investor can average between sixty and one hundred thousand per year with good real estate investments. This income will occur with a steady forward progress while assuming that not everything will go as planned. You must remain practical with your real estate goals.
You cannot do everything alone. There are key people who play crucial roles for you to succeed at real estate investing. The smart investor will be assisted by a team of specialists. You will need a reliable real estate agent who will help you analyze the properties. In order to make sure the house is worth the investment you will need an appraiser and a contractor or an inspector. You positively must have an attorney to make sure there will be no hidden surprises popping up during the deal.
There is no approach that encompasses all situations you will encounter in the business. You must prepare a few different approaches. Sometimes people have to resell a home urgently after buying it. The housing market can be unpredictable and change rapidly. If the window for you to make a profit passes because you can’t get your investment completed for the market, you still have the option of renting. Even this market can become void or stall. If you are in this position and you have no choice but to get rid of the property, you could offer a lease option or perhaps a land contract. If all else fails you may have to sell to another investor to cut your losses. When the time comes to bail, a smart investor doesn’t hesitate.
A rookie investor doesn’t have to make these common mistakes. He can avoid them by doing a little research and planning. Don’t elect what real estate to invest in until you understand the business. Purchase one of the many available books and research some of the approaches used by the pros. Find out where the free seminars are and learn the proper way to invest. In order to avoid these common mistakes, you must be sure to make smart decisions in your real estate investing.
Article Tags: estate, investor, make
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Tags: Accumulating Wealth, Amount Of Money, Beaty, Buying A Property, College Education, Dilemma, Dollar Deal, Estate Deals, Estate Goals, Forward Progress, Hundred Thousand, Overnight Success, Proposal, Real Estate Agent, Real Estate Investing, Real Estate Investments, Realistic Goal, Retirement, Slow Pace, Smart Investor
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