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Tricked in Real Estate Investing

Let’s face it – real estate investing on the whole is not the easiest thing in the world. And it can really be downright intricate and difficult at times and there are many ways that people can get tricked into making an investment that maybe they shouldn’t make.

So how can we make sure that we don’t make stupid real estate investments? How can we make sure that we aren’t the ones being tricked into making an investment that is stupid and unprofitable? Actually it’s easier than you may think and that’s what I’m going to talk about in this article today.

So here are some things that should send up a warning flag in your mind. If you see these things then you should definitely investigate further and potentially walk away. Of course not all of these things will mean that somebody is trying to trick you, it may just be a bad investment… either way you should spend some time to get to the bottom of it before you make any sort of decision.

The first thing to look at is low operating expenses. Sometimes sellers operate buildings themselves to get out of paying management fees. This lowers their operating expenses but if you purchase yourself, chances are that you’ll need to start paying management fees making this a nice little gray area that many people try to exploit.

Next look at property taxes. If somebody tells you that they’re paying property taxes that seem incredibly low, they may just be lying. You’d be amazed how often people just outright lie about things like this. You should always go straight to the county offices and look up the tax records that are public knowledge so that you can see before hand exactly how much property tax you can expect to pay in any given year. You can also discover if the current owner has not paid property taxes for the previous year or two.

Many times if the previous owner hasn’t paid, you will be liable for those property taxes so be on the lookout for that!

Energy efficiency is another thing to look for. Many times sellers claim that their building is energy efficient when in fact it’s not. Check with a local utility company to figure out the actual energy costs of the building and then check with the regulatory commissions to see whether or not the local utility companies are scheduled to increase their rates anytime soon.

So there you have several ways that people try to trick you in real estate investing. Armed with this knowledge you should be able to fend them off without too much trouble. Remember, knowledge is power and the more you know about an investment, the less the chances are that someone will trick you and take advantage of you.