Consumer Crackdown: FTC warns buyers to beware of real estate investment promises
Investor says she lost thousands on house renovation deal
InvestigateTV - The rehabilitation and resale of homes is booming across the country and is often advertised as potential big business for investors. Buyer beware though, the Federal Trade Commission warns people are taking advantage of investors with promises of huge returns, some even promising to quadruple your money.
Joy Oberholtzer has been in the real estate game since 2014, investing in dozens of properties.
“I’m familiar with babysitting tenants, yes, all of those lovely things,” said Oberholtzer.
However, Oberholtzer was caught off guard after she said she invested $20,000 in a Virginia home. The residence was supposed to be converted into transitional housing for homeless veterans, but it never panned out. She said the organizer claimed investors would have made about a $10,000 profit. Instead, Oberholtzer said she lost thousands.
“It was a little disconcerting,” said Oberholtzer.
Oberholtzer ended up getting about half of her money back, but she’s still trying to get help from the State of Virginia. The State Corporation Commission said it’s investigating her case, and according to documents, at least two other investors are fighting the organizer in court. Our national investigative team reached out multiple times to the investment organizer’s attorney, but he didn’t respond for comment. Oberholtzer said she wants to warn future investors.
“Do your due diligence properly. Don’t just believe that somebody has credibility,” said Oberholtzer.
Real estate attorney Richard Chess has spent four decades fighting cases like Oberholtzer’s. He said they are not usually what they claim.
“Trust, but you have to verify,” said Chess. “If you’re at the point where you’re getting an attorney, you’ve already lost.”
According to the Federal Trade Commission, real estate and investment scams lure you in with promises or guarantees of a financial windfall. They have the following tips to avoid becoming a victim.
Watch out for someone who:
- Says you can earn big money fast, regardless of your experience or training.
- Promises their deal is a “sure thing”, that the investment will give you security for years to come or that you’ll be coached to success each step of the way.
- Claims the program worked for other participants including the organizer.
The FTC also warned that before you spend any money, research the offer, consider the risk, and verify the claim yourself. If you suspect an investment scam, report it to the Federal Trade Commission at reportfraud.ftc.gov.
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