Real Estate Scams Targeting Latinx Community

Speaker 1 0:00

There's always going to be scammers out there that screw people out of their money , and real estate investing is no different . There are so many scams out there and , unfortunately , the Latinx community is at very high risk for these scams . Hola , welcome to the Money Cheese man podcast . I am your host , violeta , a first generation Mexican immigrant . I am a real estate investor and business owner . But let me tell you , just like other first gens , I was not taught much about personal finance , and I mean , needless to say , I was well-perdida . I was so lost and I struggled a lot in my personal finance journey , and that's why I created the Money Cheese man podcast , where each week , I bring you the Cheese man on how to manage and grow your money and other money talks to help you to kick ass with your finances . All right , so let's get into this week's Money Cheese man . Today . Let's talk about scams . There's always going to be scammers out there that screw people out of their money , and real estate investing is no different . There's so many scams out there and , unfortunately , the Latinx community is at very high risk for these scams , because we usually don't know the process and we don't have someone to guide us through it , and especially if you have DACA or you're undocumented . They see you as a target because you know how are you going to report them , are you going to get your money back . You know you are just an easy target , unfortunately . And this episode was actually inspired by my friend , cece , the realtor , who had to , you know , let a client know that he basically got scammed and unfortunately it happens a lot , and I did link her TikTok covering the story . So make sure you check it out and you know she also has good tips as well . It is linked in the description of this episode , but I was also inspired by my most recent dealings with buying land for myself and then I was helping my parents purchase their land that is next to mine , and you know the whole process was very stressful for my mom and for myself because you know I had to guide her through the whole process and you know she was terrified of getting scammed and you know , actually there was many times where she wanted to kind of like back out and I had to , you know , calm her down and walk her through the whole process Because , again , you know , our community is not , you know , they don't know how the process works and you know , her fear was for good reason , because there are so many scams out there , and so in this episode I want to talk about , like the type of scams that are out there , the red flags to look out for and how you can protect yourself to , you know , prevent scams from targeting you and , you know , for you losing your money .

Speaker 1 3:29

So real estate you know , buying properties or selling properties is a complicated process and there's so many steps to it , which allows scammers to take advantage of someone at every level or every stage of the real estate transaction , and there's so many types of scams . So you know what kind of scams are there ? Well , one of them is phantom listings and this is basically , you know , scammers . They create a fake property listing and they put like pictures and descriptions and all that , and they do it so they could , you know , lure buyers . You know , ask for like fees , upfront fees , and you know various different ways that they try to get you to send money to them with land or with vacant properties . That's a very high target for them , because there's these vacant lots , vacant land , vacant properties that you know the owners are just like letting sit there and not really tracking them . So what these scammers do is . You know a lot of this information of these properties is public record and so it's easy for a scammer to get all the information that they need so that they can pose as the owner and actually try to sell the property . You know , like in quotation marks they sell the property . They even go as far as hiring a real estate agent in which they will have them list the property for sale and they will often mark these properties , you know , below market value . So that way , you know , it attracts lots of buyers really quickly and it promotes a very quick sale . And so that's how they scam a lot of these buyers out of their money and they will go through with the sale and with these vacant lots and especially with land , and the buyer usually doesn't even find out until they go , try to file with the county and that's when everything comes out that it's basically it was a scam . They've been scammed

Real Estate Red Flags and Scams

Speaker 1 5:58

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Speaker 1 5:58

Another way that you can get scammed is if you are a seller , that is going through like a hardship . You're going to get , you know , phone calls of people trying to buy your property in their property , but they are trying to get you to sign over the deed to that property , promising to help you out , especially in a pre foreclosure . Those are really high targeted people because they'll go in and say , hey , you know what , I can get this property out of your hair so that way you don't have a foreclosure on your credit report and all that stuff , and they have fees that they charge you or they just get you to sign over the property and then you get scammed out of the property . Now , of course , there's always going to be email phishing , which basically email phishing is when scammers send these fake emails that have these weird links and they're going to pose as real estate agents or title companies or your escrow company or as the seller or the buyer , and the goal is to have you click on that link and thinking that you're sending the money to the right place and it's actually just collecting your financial information for them to rob you .

Speaker 1 7:26

Another thing is lying about the property . Especially , there's a lot of real estate agents , a lot of sellers out there that just lie about the property that they are selling . So they will legit sometimes have an actual property , but the property is not what you're expecting , what you're being told that you're getting , and you know if you go like on TikTok , you can . There's a hashtag that is called I think it's like Houston Thevenos or something like that , and it's basically exposing a company that has been targeting the Hispanic community , especially those that have DACA or just undocumented or just the Hispanic community in general that are out there looking for land so they can build their dream home . Because you know , that's a thing that's coming up , that people want to buy land , including me , that I just purchased some and , you know , want to build my home there . But the problem is that our community is very at risk because we don't know what all goes into purchasing land , like making sure that it's zoned correctly , that you're not in a flood zone , that the soil is correct , that you're going to be able to bring in electricity and water and that the land itself is able to support an actual building for you to build your home and that it's not going to shift around or whatever . And that's what's been happening with the Houston Thevenos is that this company has been selling these properties , these land , to the Hispanic community and they can't use it . It's unusable land . They can't get the permits , they can't build because the ground shifts or they're in a flood zone and it's just horrible . And they're selling these lots to these people to where you charge them a high interest amount , you charge them a high down payment and you charge them a high sales price and you know they basically sell them a shitty ass land and they can't do anything and they've been scammed out of that money .

Speaker 1 9:55

So let's talk about what red flags to look for when you are out there looking for either land or a house or a property . So number one is you know , is it too good to be true ? You know you want to do your due diligence in the market that you are trying to go into . Like if you're seeing like houses that are similar to yours and in the same condition and they're selling for like 150K and you're getting this one for 80K , you know that's kind of a red flag . Like okay , why is this being sold so low ? They price properties , undervalue to attract buyers . Another red flag is that in the listing or when you're trying to contact the seller , like there's limited contact information , like there's barely any information and they want to communicate mostly through email or through other digital means , like they don't want to get on the phone . You know , during this time they're trying to pressure you to act quickly , to hurry up and buy hey , you better get this $80,000 house before it's gone because , you know , have this property , everybody wants this property , you know .

Speaker 1 11:10

Another red flag is that they're not gonna give you access to the property . They're gonna say , you know , I don't have time , there's so many , you know people that are interested . Here's a video or here's , you know , pictures . I can't take you out to see the property , for whatever reason . Another red flag is that they are , you know , not providing documentation or incomplete documentation that looks kind of wonky , like the property maybe you're asking for . Hey , I want to see . You know , like bills , you know , because I'm interested in , you know , I've asked that before to kind of get an idea like , okay , how much can I expect to pay for electricity , for water ? You know , just for budgeting purposes on my part , I want to know , you know , like the history of the tax records , because I want to kind of expect how much of taxes I'm going to pay . So if they're not providing that documentation or being hesitant about it , or you know , you notice that when they give you a tax record it doesn't match the property or doesn't match the name that they say .

Speaker 1 12:18

Another thing is that scammers are going to try to get you to send the money in Unusual ways they might ask for , like gift cards or crypto currencies or wire transfers . Although wire transfers is a common way to do real estate transactions , it's the method that it is associated with scammers , unfortunately . So you do want to be making sure that you are Double-checking who you're sending the money to . The thing with wire transfers is that it's so hard to trace and Once that money is sent through the wire transfer , there's no way that you're going to get that money back . You're just that money is gone .

Speaker 1 13:04

Another way that you know they can get you is through upfront fees , and actually that is , you know , kind of the way that they got the client of CC , the realtor that I was talking about , in her tick tock . That's how they got him like he was interested in a property . He thought that they were starting the process and they told him that he needed to put I don't know some so many because of some fees a fee for this , a fee for that or whatever right . So he's thinking he's putting money towards , you know , purchasing that property , but he did this before like a contract or anything , and then unfortunately , you know she had to tell him , like you know what , you basically got scammed because you're not getting that money back . There's no documentation saying why you sent that money or to who or whatever , and you don't even know that property exists . So , unfortunately , that person got scammed .

Speaker 1 14:03

Now there are fees throughout the real estate transaction process , but they are scattered throughout Different stages and they are going to be after you are under contract . You have some documentation that you are purchasing a property . Another thing to watch out for is that you are not sending to third parties that are not involved in the process . So you are going to have third parties , like you're gonna have a third party escrow , you're gonna have a title company if they are not part of the process and they're having you send money to a third person that is nowhere in the contract or whatever . That is definitely a red flag . And lastly , again , because they are trying not to you know , be known who they are , they're hiding their identity . They are not going to want to sign in person . So whenever it's closing time , you have to sign these documents . They are going to want to do it , you know , remotely and they're gonna want to send their own notary that they trust .

Real Estate Investing and Avoiding Scams

Speaker 1 15:12

Are you interested in real estate investing but feel that you don't have the resources ? You don't even know where to start , or you're just intimidated by it because it sounds complicated . Well , that used to be me . When I first started , I was overwhelmed , I didn't have a clue what I was doing and I ended up making some costly mistakes . This is why I created my real estate investing for beginners course , which is a six week self pace course that will walk you through understanding what real estate investing is and the many different ways that you can invest in real estate . I'm also going to walk you through how you can fund your investment , how to find and analyze properties and how you can manage properties , and creating your five year investing plan so you can start real estate investing . Not to mention , this course includes a updated rental property calculator checklist and several other tools to help you in your real estate investing journey . So if this interests you , check out the link in the show notes or email me for more info .

Speaker 1 16:31

So how do you protect yourself ? You know you want to verify the seller , you want to verify the property and you want to work with professionals like real estate agents and attorneys and , like title companies , use traceable methods of payments and , you know , verify where you're sending your money to and just being cautious before proceeding with that transaction . Let's talk about how the process looks like . Through your real estate agent or yourself , you go to the seller and say you know what , hey , I am interested in this property , this is what I want to offer you , and then the seller is going to , if they agree to it , they're going to sign that document agreeing to the offer that you stated and you're going to go into your first fee . So that first fee that you are going to pay is called the earnest money , and earnest money is basically a deposit that you , you know , put into a third party escrow account and it is there and it basically shows the seller that , hey , I am , you know , serious about buying this property . Now , earnest money is usually about 1% is of the purchase price and it can be refundable depending on the terms that are in your contract . So maybe you say , hey , depending on what the property inspector finds , you might be able to back out of that contract and get your earnest money back , but usually it's non-refundable because it is their fee of holding that property for you to purchase . This earnest fee does go towards your closing costs , so if you do go through with it , it gets put towards that .

Speaker 1 18:31

Now , after that , you go into your under contract , then you go to the next fees , which is the appraisal , and this is to verify that the property is going to be worth what you're going to pay to do an appraisal . And then you also will pay for the property inspector and that's going to be directly to that property inspector . After you get the appraisal back and the property inspection , then you can renegotiate with the seller to come down on the price or whatever it may be repairs . And then , if you all agree and then you all move forward , then the contract goes to a title company and the title company is a third party that researches the property . They check that if it has any liens , make sure that everything matches . Now , if the title company decides you know what , all right , everything looks good , everything matches , the deed restrictions looks good . Then they're going to give you the green light to move ahead with closing and they're going to issue out title insurance . So that is in case something comes up that they may have missed . So you'll be the green light . Then you will send your down payment and other closing costs and then , after the contracts are signed , they see they get the contract and they will disperse the funds to like the seller or the buyer or whoever is entitled to any money . They send that money out and then your real estate transaction is complete .

Speaker 1 20:07

What can you do to avoid getting scammed throughout this whole process ? Number one is just when you're looking at a property , you get basic information on both the property itself and the seller . After that you want to verify the property ownership and the property's history . All the information is public record and so you could go to the local county records office and say they have it online and sometimes you have to call them for the information . Another thing is you want to research the seller . So , for example , when I was looking at this land property , I was definitely you know , it was my first time buying land , so I was definitely hesitant . I want to get scammed . So I looked up the company , I looked up that person , I researched , I made sure I saw reviews and other properties that they sold and asked for references and you know , just checking for red flags that we talked about earlier .

Speaker 1 21:05

Another way is to work with real estate professionals . So your real estate agent , having a real estate attorney , a title company , all of that , you know , working with those types of people that have experience in what you are trying to do , because they're going to know what to look for . If you're looking for investment property , you know , find a real estate agent that works with investment properties and knows the area and the market . You also want to review your contracts and your agreements . Make sure that there's nothing fishy that they snuck in there that might screw you towards the end where you get scammed out of money or they're able to back out things that might put you in jeopardy .

Speaker 1 21:50

You also want to use a third party escrow company . Again , escrow companies are just the third party that holds the funds for you and once everybody signs , they get a contract and then they send the money out , depending on the contract . So this prevents from either party of taking advantage and running off with that money . Finally , you know , get yourself a title company . They will do most of this for you Search up liens , search up deed restrictions , make sure that they go back and verify that this property was , you know , passed to the next owner and to the next owner legally and to make sure that nothing comes up and that there's nothing weird about this property that's going to give you issues later on . They will also give you again title insurance , which will protect you in case something does come up that they may have missed .

Speaker 1 22:52

So those are my tips on how to avoid getting scammed when you are buying real estate . Educate your family and friends , you know , share this with them to help prevent our community from you know , being targets , because unfortunately , we are at a high risk due to the nature of you know , our communities , that most of us are first gen . We're figuring shit out , we're figuring our stuff out and learning about all of this and we don't have many people to guide us , so we fall into some of these scams . But other than that , I will see you in the next episode , bye . Thank you so much for listening . If you enjoyed this episode , please rate and share so others may find this podcast . If you'd like to be a guest on the show , you can email me at infomoneychismecom and don't forget to follow me on all my social medias that are listed below . Hasta la próxima , bye .