You’ve Seen Them Before

Have you ever been reading through a product pitch and seen somebody flashing a check written to their company or themselves with $143,000 ?  Maybe even “only” $53,000 ?  I have and nowadays it makes me wonder.  I’m sure some of these are legitimately showing true “profits” from a deal.  However, I would bet (though I’m not a gambling man) that most of these are bogus and not true profit checks.

How Can That Be ?

Well, it’s pretty simple.  Suppose that somebody borrows $55,000 from a friend to do a deal.  They bought a house for $25,000, put $45,000 into it (they ran over budget on their repairs) and sell it for $80K.  After closing costs, etc, the seller probably REALLY only realized a gain of a few thousand dollars…if that.  (They also had utilities, taxes, interest payments, etc) But keeping the math simple:

$80,000 – $25,000 – $45,000 – Agent Commission and Closing Costs = A Few Thousand Dollars.

However, at closing, perhaps this “loan” from their friend was unsecured.  Or possibly instead of a friend, it was 3 credit cards they had, or a line of credit on another property.  Suppose in the end, the seller walks out of closing with a check for $72, 126.00.  They then take pictures of this check and show anyone how they can do the same and make tons amoutn of cash. 

Truth Exposed

In actuality, after paying off their loans and underlying debt, they’ve only made $2,126.00.  Yet, it appears, and you are led to believe that they made $72,126.00.  Ridiculous right ?  Nobody would ever do that.  Don’t think for a second it doesn’t happen.  They may also word the photo and accompanying paragraphs in a way that maybe they aren’t directly lying, but they are giving the perception…and that is not right.

Can you make $72,000 on a deal ?

Yes.  Absolutely.  However, I just want to caution you that sometimes, everything is not as it appears.  Just make sure they are presenting all the facts and know that you are buying whatever is being sold from a credible source.

Another Example ?

Sure.  I have some large lines of credits on free and clear properties.  Why can’t I go to the bank and have issued some cashier’s checks back to my company name for $72,126.00 and make it appear to be legit.  Look at these checks!  They are real!  You can do it too!  :)

Then I simply put the money back into my accounts against the lines of credit that were just borrowed from.  Would somebody pay somebody else money to allow them to get these photos taken ?  Probably. 

So, buyer beware when you see guru flashing big checks.  Yes, sometimes they are probably legit.  Othertimes, I believe, due to their wording, that they are misleading you down a bad, unethical path.

Brandon Yeager

Filed under: "B"randomness

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