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7 Key Mistakes Beginner Real Estate Investors Make

After investing in real estate for the last 15+ years I’ve had my share of mistakes. Luckily they’ve only been small because I always had a plan and I always had more than one exit strategy. I’ve always invested for the long term so watching the latest fix and flip craze leave so many people, my friends, in dire straits has been extremely painful. At one point, as the market was going up, one of my mentors – someone I really looked up to told me I was being too conservative and was missing out on an opportunity of a lifetime. Recently I come to find out that all I missed out on is purchasing one of his ‘flips’ in a pre-foreclosure short sale.

Here’s a list of mistakes most beginner (and experienced) investors often make.

Speculate – Most new investors follow the herd, listen to the media and buy with the hope the property will appreciate. This is as much of a gamble as hand picking stocks or going to the Casino. Buy below market properties that cash flow.

Buy at Market Value – Beginners almost always buy property straight off the MLS for market value. You can find deals in any market and there are always distressed properties. Cherry pick from distressed properties at 70% or less of market value. These still can be found on the MLS but it takes a lot of searching and a good agent’s assistance.

Fall in love with a deal and get your emotions involved – Many beginners are guilty of this one. Their first few deals they spend minimal time finding a deal. As soon as a prospect is located, they fall in love and do anything to get that property. Emotions drive the decision, instead of making an informed business decision. I look at hundreds of properties before I find a keeper. Filter out the duds and cherry pick only the best deals.

Put too much down or too much of your own money – Real estate is an OPM or Other People’s Money industry. You should minimize how much of your own money is in a deal. And always make sure you have plenty of reserves to handle any not so pleasant surprises.

Only have one exit strategy – To minimize risk, it is imperative to have multiple exit strategies. If you cannot flip a property you can quickly end up upside down, behind in payments and lose the property and your credit. Instead, buy below market properties that cash flow. That way you can sell retail, wholesale, lease option, seller finance, refinance, even rent and hold.

Buy in Warzones – In today’s market you can find huge discounts in many areas with the glut of foreclosures. Do your due diligence. Buying a property for 20K worth 80K sounds like a slam dunk, but not if the property is vandalized multiple times during repairs, surrounded by 20 other foreclosed properties and there is next to zero interest from renters or buyers due to the location in or near a warzone. Make sure there is strong demand from renters and/or ownership in the area.

Do not consult an expert or build a team – Many people are do-it-yourselfers and cannot fathom the idea of another person giving them advice or handling tasks. Real estate can be very passive if you build a solid team and many experts are more than willing to give you advice that could significantly impact your success and experience as a beginner.

Many gurus make real estate investing sound so easy.

News flash, it is not.

Many beginners make one, if not all the above mistakes and this can lead to a miserable investing experience. Whether you are a beginner or an expert, it is always a great idea to get as many expert opinions as you can, they will make you aware of many potential mistakes and red flags. Play the numbers game and cherry pick from as many prospects that meet your criteria as possible. Always do extremely thorough due diligence and have multiple exit strategies. And finally, happy and profitable investing.

For more information about this or any other article please reach out to us at Blog@TierOneRE.com or call our office at 801-486-6200.

Top do-it-yourself home improvements

One question that we Realtors get asked regularly by folks who are listing their homes for sale is what do-it-yourself home improvements would be most beneficial in selling their home.

HomeGain just released the results of their annual survey, Home Sale Maximizer.  This survey covers the top do-it-yourself home improvements as recommended by Realtors, and the expected monetary return on investment.  After reading the survey results I have to say that based on my personal experience I would have to agree.

According to the HomeGain survey, the top five home improvements that Realtors recommend to home sellers based on cost and return on investment (from highest to lowest ROI) are:

  1. Cleaning and de-cluttering ($200 cost / $1,700 price increase / 872% ROI)
    2. Home staging ($300 cost / $1,780 price increase / 586% ROI)
    3. Lightening and brightening ($230 cost / $1,300 price increase / 572% ROI)
    4. Landscaping ($320 cost / $1,500 price increase / 473% ROI)
    5. Repairing plumbing ($385 cost / $1,250 price increase / 327% ROI)

‘Many Realtors agree, especially in a buyer’s market, that sellers who make these recommended home improvements often get their homes sold faster and at higher prices,’ stated Louis Cammarosano, General Manager at HomeGain.

Rounding out the top 12, the list of low cost, do-it-yourself home improvements includes: updating electrical, replacing or shampooing carpets, painting interior walls, repairing damaged floors, updating kitchen, painting outside of home, and updating bathroom’s.

The home improvement projects with the highest price increases to a home’s resale value are updating the kitchen ($1,200 cost / $2,850 price increase), followed by painting the outside of the home ($900 cost / $1,815 price increase) and home staging ($300 cost / $1,780 price increase).

I offer all my clients a complimentary evaluation of their home and what things they can do to increase their odds of selling in the least amount of time and for the most money.  I also can offer a list of good, professional stagers and home organizers.  Some sellers are very receptive, and some are not.

Keep in mind that we Realtors are showing and touring hundreds, if not thousands, of homes each year.  We understand the condition of your competition.  We’ve seen firsthand the homes that have sold as well as the homes that are languishing on the market.  Many times it is the simple things on the list above that make all the difference.

For more information about this or any other article please reach out to us at Blog@TierOneRE.com or call our office at 801-486-6200.

Do You Tithe Thyself

How much money do you give to charity?
How much of your hard earned cash do you give your church?
How much of your income do you give others?  Others, you feel, need it more than you.

Don’t get me wrong. There is a need for donations. Donations build churches, schools, orphanages and other ‘things’ critical to our society – our human growth.  But my question still stands. Do you tithe thyself?

I was recently asked if I would go on an African trip to help with charity work. A noble cause for sure. One, I shouldn’t even need to think about. But I decided very quickly there are a few things I need to get straight before I could even consider such a wonderful, giving task.

I’m getting off track. My question is how much money do you save for yourself out of your earnings? I’m talking about savings. Let me guess. $0. Zilch, Nothing? I’m sure you give either to your church, or charity. I’m sure you even give the guy on the corner once in a while. But how much have you saved for yourself and your family?

Why do so many people give 10% of their income to their church but don’t have one penny saved to cover an emergency medical procedure – possibly even to save their own lives? Will their church step in? Will the charity they’ve donated to suddenly appear at their door with a cure? Will the man on the corner volunteer a needed organ? Sadly, in most cases, the answer is no.

I sound harsh, and in some cases a church, the state, or an organization will step in to help. ARE YOU REALLY GOING TO TAKE THAT RISK?

So why don’t you save? It seems to me like saving is out of style. Is it the negative connotation of being greedy, materialistic and selfish? But why?

Just imagine if you were to put away just 10% of everything you earned. Every tip, poker pot, gift, and paycheck. Imagine how much money and security you and your family would have right now.

Security? Now Andy. What does that have to do with being greedy, materialistic and selfish? I ask you: wouldn’t you sleep better at night knowing that your children will be able to attend any college, or live, work, or play in any country in the world. They would be free to make their own decisions. Not have them made for them. Your family would have the best medical care available – in the world! You could and would create a great legacy for generations to come. And you would give more to charity than you could ever dream. You doubt me?

The power of money can be mind blowing. Take a look at this example: Would you take a job for a month (just 31 days) beginning with a wage of just a penny a day and doubling it if you just showed up the next day? It will be difficult work. You will get messy and stinky and you’ll want to die after the second day. You have 3 seconds to decide… 3… 2… 1… buzzzzz. What did you decide? Let’s play it out.

The second day you’d be earning 2 cents, on the third, 4 cents, on the fourth, 8 cents and so on. It takes almost half the month just to get to minimum wage, and by the following day you’d almost be earning a living.
By day twenty-one, you’d be earning over $10,000 per day, and would probably be growing quite enamored with the job. On day twenty-five, you would earn enough to buy a decent home, and with your previous twenty-four days’ earnings, you could furnish it and buy sports cars to fill the double garage, as well as a modest summer home.
On day twenty-eight, you’d earn more than the average wage-earner would over his whole working life, and by day thirty, you’d be earning the equivalent of a state lottery’s winnings. On the final day (day 31), you’d be earning almost eleven million dollars, and would have earned a grand total for the month of $21, 474, 836.47!!!

Not bad for a job that started at a penny a day. The job was tough, you got messy and stinky, but I don’t think you would care at this point.
At first saving 10% a paycheck might be painful. But you would manage. You would adjust your spending habits, but soon enough you wouldn’t even notice it missing. But missing it isn’t. It’s growing!

If you are to take just $100.00 every month, put it in the bank where it will earn an average of say 10%.  With the power of compounding interest the value would grow to $1320. Not very much you say. Stay with me.

The average median income in Utah was $53,693 in 2008. If you don’t make that much the point is the same. If you were to save just 10% of your income every month the amount of savings after just one year would be over $5900.

After that one-year you take the $5900 and (while still saving 10%) start to pay down your highest interest rate credit cards. With the average Utahan owing over $8000 in credit card debt you could have that paid off in a year and a half – even faster if you were to take that 10% monthly tithe and start paying it down in the first month!

At 21% + interest charged monthly on credit cards the savings alone is enormous. Now after the first year you have already paid off your credit card debt and continued to save.  Even at the $100 a month, the savings will be substantial. What if you are lucky enough to not have any credit card debt? Then you take the next highest interest debt and start paying that down. Methodically paying down until quite possibly in just a few short years you’ll find yourself to be debt free. The effect on your credit score will also be amazing. (This leads to a later discussion about how your credit score can really effect your life)

This is not rocket science. All it takes is just a little discipline. It will come natural – like brushing your teeth. And if you don’t brush your teeth naturally – well you have bigger problems than I can help with.

Now, what do you do in year two? You do it all again. By paying down credit card debt you’re actually keeping more of your money. I just gave you a raise. It’s funny, you could read about all these money making secret formulas in long drawn out boring books, you could spend thousands of dollars going to seminars. I just gave you the secret for free. I am a realtor. I work for money. You owe me. Just kidding.

Let’s keep going.

After you have quickly paid off all of your debt, now have a credit score in the upper 700’s, and have made saving a natural part of your financial discipline, you start to learn. Learn about money. It’s not scary. I just gave you a simple secret that eludes millions of people and relegates them into eternal poverty. Could you imagine what doors will open when you really learn how to use the power of money?

Say you were to find yourself debt free. Now you can use all the money you make to grow your fortune.  Let’s see, you have $53000 a year with no debt. Sounds like a good problem to have.

I started out asking three questions about giving to churches, charities or others. After you have paid off all your debt and ensured your family’s future, how much do you think you could then tithe? I’ll bet the answer is more than you originally did. In fact, you could give more in charitable contributions in a single year than you would have in an entire lifetime. That is the power of Tithe Thyself.

Does saving still sound difficult? Is it really greedy, materialistic and selfish? Then do it. Start today.

I’ll be going to Africa soon I hope. But for right now, I need to ensure my family’s security.  I’m working toward that goal and hope you are as well.

In this blog I briefly covered quite a few principles. Over the next few weeks we’ll expand on them and hopefully answer any questions. Feel free to send me an email at blog@tieronere.com with any comments.

Investing In Real Estate

Most real estate investors are aware of the terrific positive cash flow opportunities with cash-on-cash returns in double digits on single family homes. Yet many have chosen not to invest out of fear that the value of their investment property will fall. How founded is that fear? Consider what the numbers tell us.

Take the example a $60,000 1100 square foot, 3 bedroom 1 bath house in Salt Lake City, Utah, already renovated with a tenant paying $700 per month. With a 20% down payment, and allowing for mortgage payments (PITI), property management, maintenance and vacancy, the property will still return well over 10% per year (over 15% if the tenant stays in place and takes good care of the property.) That is clearly a great return on investment. But how much downside is there? Will the $60,000 house materially drop in value?

Prices will not fall if there is adequate demand for housing. Consider that if the foregoing tenant were to purchase that same house with 5% down with an FHA loan at a 5.5% interest rate, his total monthly payment (PITI) would be about $436, about 38% less than the $700 he pays in rent. Plus, his savings would be even greater because his interest payments and property taxes are tax-deductible. So it is compelling for the tenant to buy instead of rent. When we hear of pent-up demand for purchasing homes, this is one of the main reasons why.

So why doesn’t he buy? He sure wants to. It boils down to making the down payment and qualifying for the loan. Generally, the greater challenge is the latter. With the mortgage default rate so high, lenders have greatly tightened their standards, so it is harder for prospective homeowners to qualify for loans. However, the Obama administration has unveiled a number of initiatives to address this problem and enable people to once again purchase homes, such as a 10% tax credit (up to $8,000) for first-time home buyers in 2009. As these initiatives take root and more people can qualify for loans, housing sales will increase significantly, as there is huge pent-up demand. This, in turn, will stabilize prices, and will likely cause prices to begin rising.

Properties today have such strong positive cash flow that they effectively mitigate the downside risk in further slippage in home price. Also, while prices have fallen throughout the United States, in some areas of the country prices have fallen only slightly, such as in Mississippi, as these areas never had a speculative housing bubble like the East and West coasts did. So there is less downside risk in these markets, generally in the center part of the nation. With the pent-up demand for housing soon to be unleashed and compelling cash flow returns, there has never been a better time to invest in real estate.

For more information about this or any other article please reach out to us at Blog@TierOneRE.com or call our office at 801-486-6200.

Americans See Homes as a Great Investment, but Wary to Buy

If everything tells you the time to buy is now, then … maybe you should do something about that?

So you have a little money saved, and you’re wondering how to invest it. Should you buy stocks? Bonds? And what about those commercials about gold I keep seeing on TV?

Actually, if you ask most Americans, there’s just one answer: According to Gallup, we believe real estate is the No. 1 “best long-term investment” you can make.

Survey Says …

Conducting a nationwide poll of 1,015 adults earlier this year, Gallup found that 31 percent of respondents choose real estate as their favored investment. Real estate beats out stocks (25 percent), gold (19 percent), bank savings (15 percent) and bonds (just 6 percent) in popularity. What’s more, 2015 was the third year in a row that Americans polled by Gallup chose real estate as their favorite investment, and the fourth year in which Gallup’s poll showed real estate rising in popularity relative to other potential investments.

(In contrast, gold, bonds and savings accounts have all been generally declining in popularity. Other than real estate, stocks is the only category of investment that’s been gaining.)

Not only is real estate the most popular long-term investment, generally. It’s also preferred as an investment vehicle within just about every demographic breakdown Gallup examined. Men prefer to invest in real estate, as do women. Men 18-49 prefer real estate, and so do women over 50. The poor (people with income under $30,000 a year) like it; and the middle class, too.

In fact, only two demographic categories prefer stocks over real estate — millennials ages 18 to 34, and rich folks earning $75,000 or more a year. And even among these two groups, real estate is the second favorite investment.

Do What We Say, Not What We Do

And yet, Americans seem increasingly leery of taking their own advice. According to a separate poll published just days after the first one, Gallup found that even as more and more Americans agree that real estate is the best investment, fewer and fewer are willing to ante up and make that investment. This second poll finds that the number of Americans agreeing that now is a “good” time to buy a house has dropped 5 percentage points in the past year, to 69 from 74 percent.

So why are Americans reluctant to take their own advice, and invest in real estate?

There may be a couple of factors at play. On one hand, Gallup observes, home sales have been perceived as “lackluster” in the early months of 2015. Between March and April, for example, the National Association of Realtors reported a 3.3 percent drop in sales of existing homes in the U.S. On the other hand, NAR’s chief economist attributes slowing sales to “lagging supply relative to demand and the upward pressure it’s putting on prices” (emphasis added).

Indeed, Bankrate.com (RATE) points out that median sales prices in April were up 8.9 percent year over year. Those higher prices may have scared off some buyers between March and April. Higher prices may also explain why investors, despite broadly agreeing that real estate is a good investment, are reluctant to ante up for the chance at earning a profit.

That’s a reluctance they might want to try to overcome, though.

Do What You Know You Should Do

Consider: According to Gallup’s more recent poll, most Americans (59 percent) expect home prices to keep on rising over the next 12 months. This belief is even stronger in the South and West regions, where 61 percent and 76 percent of Americans, respectively, foresee continued rising home values. If they’re right, it would make sense for them to buy before prices rise — whether they’re buying a home to own, or buying in hopes of selling for a profit.

Yet commenting on these figures, Gallup hypothesizes, “Those widespread expectations of higher prices may explain why fewer Westerners,” for example, “believe now is a good time to buy a home.”

However, if you truly believe that prices are going to rise — as 76 percent of people in the West believe — then you should want to buy before they do rise. Yet only 64 percent of these folks think that’s a good idea.

The case for buying real estate only gets stronger when you consider that interest rates, which are still at historically low levels, appear to be heading higher. According to data from Freddie Mac, 30-year mortgage rates have already jumped nearly half a percentage point off their February lows of 3.59 percent, and averaged 4.04 percent in the second week of June. That’s a big jump, but still leaves rates lower than what they were a year ago (4.17 percent), close to where they were two years ago (3.98 percent), and significantly cheaper than what a 30-year fixed mortgage cost in mid-June 2010 — 4.75 percent.

When you add up the three factors: More Americans choosing real estate as the best investment, widespread agreement that real estate prices are heading higher, similar agreement that interest rates are also going higher — and demonstrable proof in the numbers that the last two beliefs have been correct so far — it makes sense for anyone interested in buying a home to do so sooner rather than later.

For more information about this or any other article please reach out to us at Blog@TierOneRE.com or call our office at 801-486-6200.

Salt Lake City’s rental market among nation’s best for investors

Salt Lake City once again ranks among the best U.S. cities for investing in rental properties.

All Property Management, a trade group for those who own and manage apartments and single-family rental homes, says Utah’s capital is the sixth best urban market for rental investments among Western cities.

And it rates as the ninth best market in the nation, the group says in its Rental Ranking Report reflecting the first three months of 2015.

As it did in 2013, when Salt Lake City placed high on its list, Seattle-based All Property Management credits the city’s healthy yearly job growth — which the group puts at 2.75 percent — and historically low vacancy rates for rentals, pegged at 5.2 percent.

Other metrics include property-appreciation rates and the average number of days it takes to lease a vacant rental.

The trade group also says Utah’s relatively low property tax rates and annual homeowners insurance premiums let rental owners keep more of what they earn from their properties than investors in other parts of the country.

The study says Western states in general rank better for returns on rental investing than other regions, accounting for seven of the list’s 10 best U.S. rental markets. Among other Western cities with high returns are Seattle, Portland, San Francisco, San Jose and Denver.

Salt Lake City’s ranking is part of a well-documented surge in rental markets here and across the U.S., driven by demographic trends including a large generation of young, frequently cash-strapped adults choosing for now to rent instead of buy.

With homeownership rates approaching their lowest levels in a generation and rents rising, All Property Management says, “it’s a wonderful time to own rental housing.”

That news won’t surprise investors in Utah’s rapidly expanding stock of apartments as new complexes rise across the Salt Lake Valley and surrounding counties. But if you’re a renter or looking for an apartment, some of the trends might give you pause.

With vacancy rates down, average monthly apartment rents jumped 4.9 percent in Salt Lake County in 2013 and 2014, ending last year at $892 per unit. That’s according to a January 2015 report from Equimark, a Salt Lake City firm that tracks multifamily residential real estate along the Wasatch Front. More recent numbers, circulated by the commercial real estate firm Berkadia, put average rents in the wider metropolitan area at $933 a month as of March.

Tony Semerad, The Salt Lake Tribune

How much do Real Estate Agents really make?

When you hear that a Realtor is a ‘Multi-Million Dollar Producer’ – do you automatically assume they’ve banked multiple millions of dollars?

How much money would you guess an agent takes home after closing 1 million dollars worth of sales?

a.)     one MILLION dollars (Said in Dr. Evil’s voice.)

b.)     $100,000

c.)      $1,000

d.)     somewhere in-between ‘b’ and ‘c’, but much closer to ‘c’

If you guessed ‘d,’ somewhere between $1,000 and $100,000, but much closer to $1,000 – YOU’RE RIGHT!

The amount of money that an agent makes on any given sale can vary widely from company to company, and even from agent to agent.  Some companies charge agents various fees for having desk space, a phone line, etc.  Some companies charge agents to print flyers or make copies.  In general, the more services the real estate company provides for the agent, the more money that company will take out of the commission check.  Then, within each company, there can be a wide spread of commission splits between the various agents.  Typically, agents that sell more real estate are rewarded with higher splits.

Here’s a very generic commission breakdown:

Assuming a $100,000 sale price on a home that was listed at 6% commission…

Commission is often, but not always, split equally between the seller’s agent (the listing agent) and the buyer’s agent (the selling agent).  -You’re not confused already are you???

An equal split of the 6% commission would mean that each real estate company (the company that the buyer’s agent works for AND the company that the seller’s agent works for) would get a check for $3,000.  And, yes – this can sometimes be the same company.  The breakdown works basically the same if both Realtors happen to work for the same company.

When the agents leave the closing table with ‘their’ $3,000 check in hand (made out to their company); they take it back to their office to be further distributed.  If the company is part of a franchise, like Coldwell Banker, for example – then the franchise will typically take a cut of the check.  Let’s just use a generic 5%.  With 5% of the $3,000 going to the corporate office to cover the costs of national advertising, company websites, etc. that leaves $2,850 to be split between the agent and the office in which the agent hangs their license.

Let’s assume, the agent has earned (or paid into) a 60% split with their company.  (Many agents would be splitting that money equally with their office; many would be receiving a little larger cut.)  So if the agent is on a 60% split with their office, the office would earn $1,140 from that $100,000 sale.  That $1,140 to the local office would be applied toward the costs associated with print advertising, internet advertising, office utilities, marketing material, supplies, real estate signs, secretaries, receptionists, etc.

And the remaining $1,710 would go to the agent.  That has to cover our own marketing materials, our car, gas to drive buyers around, time researching properties, time showing properties, time negotiating contract terms, time attending/coordinating inspections, time negotiating repairs, time spent reviewing closing documents, time doing the final walk-thru, attending closing, and the cost of the closing gifts we usually buy clients to thank them for working with us.

There are typically 30-45 days between writing an offer and going to closing.  And, there can be any amount of time spent showing/marketing properties before getting something under contract… Sometimes it takes one day, sometimes it takes YEARS…but if you guessed that it’s usually somewhere between one day and YEARS – you’re right again!

So – if for each $100,000 sale; our hypothetical agent makes $1,710 – and it would take ten $100,000 sales to equal 1 million dollars of property sold…

…then that hardworking agent would make (pre-tax and before deductions) $17,100 in earning his/her ‘Million Dollar Agent’ name badge.  (For completeness sake, most companies will charge the agent for the new, upgraded name tag.)

(That’s just one hypothetical example.  Often, higher property prices will translate into lower commission rates…  And, for what it’s worth – it’s usually the lower priced homes that wind up being the most labor intensive transactions…)

So next time you buy or sell a home you now know what that agent is really working for. And if you have been reading my blogs you know that using an agent in a transaction will always net you more money in a shorter amount of time then if you sold it on your own. Period.

Beware of Scams and Other Internet Fraud

The following is an article By Diane Tuman posted on Zillow that really gets to the heart of an issue we’ve witnessed right here in Utah. There’s stories across the country of people being scammed by for Sale or Rent posts. Of course the article focuses on Zillow but we’ve seen it on KSL.com, Craigslist and others. We all should take note, be aware, and pass along to our unsuspecting friends and neighbors.

Beware of Scams and Other Internet Fraud
Scams are a reality of shopping online and offline. Zillow strives to provide a safe online community, but you should always be wary of giving personal information, financial information, or payments of any kind to people you don’t know personally.

Important: If you find a fraudulent listing on Zillow, please report it by clicking “Report Listing” and selecting “Listing seems to be fraudulent or illegal.” on the listing page in question.
Red Flags for Scams
Requests to wire funds via MoneyGram or Western Union
Most scams involve a request to wire funds. Do not wire funds to anyone you haven’t met personally. Scammers create convincing reasons why they need to deal remotely. Likewise, do not accept wire funds that you did not initiate.

Long-distance landlords
Most scams come from users in foreign countries who claim to be interested in purchasing or renting out a home. Be wary of claims from people who are contacting you from abroad because they are missionaries, U.N. workers, or in the military.

Requests for verification codes
If you are asked to provide a code sent to your cell phone via text or phone call, this is a scam.

Requests for personal or financial information
Do not provide your bank account number or Social Security Number to unknown sources. First verify it is a trusted source and then only provide this information sparingly.

Individuals claiming an affiliation with Zillow
Zillow acts only as a source of information and is not involved in any transactions between buyers and sellers, renters and landlords, or borrowers and lenders. Any such offers are fraudulent activity.

Using Zillow for money exchanges
Zillow does not handle money exchanges or escrow between buyers and sellers or tenants and landlords.

Typos and sob stories
Emails filled with spelling and grammatical errors are usually a sign of fraud. British spelling such as “favour” instead of “favor” is also a sign of a rental scam. Messages involving stories of family or financial issues, or of agents who charge too high a premium are usually fraud.
Report Scams and Fraud
If you find a fraudulent listing on Zillow, please return to the listing page and click “Report Listing” and select “Listing seems to be fraudulent or illegal.”

If you believe you have been scammed, report the incident to the FTC. If you sent money via Western Union or MoneyGram, report the incident immediately: if the recipient hasn’t collected the money yet, the wire transfer company can reverse the transfer.

When reporting scams, include as much as possible of the following: the name and address of the sender, the send location, the date and amount of the transfer, the transfer fee, the date and actual location of the receipt, the name of the receiver, any information recorded regarding the receiver’s identification, the reference number for the transfer, and the details of the nature of the issue.
Examples of Scams
Below are examples of fraudulent emails received by Zillow users.
“I’m out of the country and need you to wire me the deposit.”
How the scam works: You find a great rental (it’s usually too good to be true), but the landlord is located out of state or out of the country. They’ll rent it to you and mail you the keys if you just send a deposit.

Tip: Don’t wire money to anyone you haven’t met in person. If it looks like a great deal and is too good to be true, it’s likely a scam. You will lose your money, and the place you were looking at isn’t really even on the market.

Example email:
Hello,

Thanks for your email and interest in renting my house.
Property is available for move in at the moment for $1250 for the month rent and $1200 for the security deposit (Refundable After Lease period, As long as there are no damages on property after inspection). For immediate move in you would be required to make a total payment of $2450 but if you are not moving in Immediately, you would be required to make a down payment of $1200 for the security deposit Non- negotiable, to hold property till desired move in date.

Unfortunately, I would not be present in person to show you the property due to my recent job transfer to London, UK, and I do not have a local representative to show the house due to my transfer so if you are interested in renting the property and willing to work with me despite my absence then I would email the necessary papers for the lease to you, for necessary endorsement.

I also want to tell you that the neighborhood is secured and the people staying there are good.

Details of the house is below;

Rent: $1250.
Security Deposit: $1200
3 Bedrooms, 1.75 Bathroom.
Single-Family Home.
Location: Kirkland WA 98033.
Street Address: 12721 Northeast 101st Place.
Pets Allowed: Cats and Dogs.
Size: 1,800 sqft.
Home available for immediate move in.

This is a charming home in Kirkland.
Lovely move in ready 3 bedroom, 1.75 bath, rambler, located on quiet cul-de-sac. Approx. 1800 sq ft., built in 1989. Bright and airy interior that has been beautifully updated and well-maintained.
Exterior Sun Blockers roll-shutters for max insulation & security.
Other features include security system, built-in vacuum system and skylights. High quality throughout. Neutral colors. Master suite with private bath and two walk in closets. Spacious kitchen with tons of oak cabinets and all appliances (refrig, range, microwave). Very light and open, Washer and dryer included. 2-car attached garage with opener.
Yard service included and home is pet friendly!

Regards.
Mark A Ross.
3212579029

“I overpaid you with my money order. Please send some back.”
How the scam works: A renter or buyer agrees to wire you money for a deposit, but accidentally sends too much. They ask you to wire back the over-payment and you must “act now.” You send the “overpayment” back and their check fails to clear the bank. Now, the money you sent is gone forever.

Tip: Don’t wire money to anyone you haven’t met in person.

Example email exchange:

“Thanks for the speedy response, I am really excited that the house is in good condition, and i really love the pictures of the house i have seen so far, i would not mind to see more pictures of the home, i would like to know if i would have any repairs what so ever.

I work with the United nations development program (UNDP).I have been working there for 5 years.

I am married with no kid. I and my Wife actually got married last year. My Full name is PXXXX AXXXX kXXXX and my Wife’s name is MXXXX DXXXX kXXXX. she is a school teacher, I am 39 years old and my wife is 35.Our current house address is 3XXXXXXXXXXXXX, EXXXXX Edinburgh Scotland.

I have never bought a property abroad before, this would be my first, and i am not working alongside any agents, I also want to know how soon you are willing to move out of the house. I and my wife are looking to relocate as soon as we have found a home we like, I would also like to know your final price for this property. please kindly get back to me asap.”

This is the follow-up from a Zillow user:

“I just wanted to let FSBO sellers know that I listed my house on Zillow a few weeks ago, and I received an email from a man in Scotland wanting to buy my house. He sent me (3) $1,000.00 money grams, one of which was a deposit to hold the house. He sent an Urgent email yesterday stating that his company (United Nations) sent us $2,000.00 by mistake to send it back to him. He wanted new money orders from my bank. I emailed him back telling him that I checked with money gram and I was told they could not find any information to verify them. I haven’t heard back from him, nor do I expect to.”

“Please wire me a deposit. Zillow will guarantee your money!”
How the scam works: You’re asked to wire money, and told that Zillow (or some other authoritative-sounding organization) will guarantee the money and protect you. No such guarantee exists.

Tip: Zillow is not involved in transactions between buyers/sellers, renters/landlords, or borrowers/lenders. If you wire money based on communication that “Zillow will guarantee it,” you will become a victim of a scam and it’s unlikely you will get your money back. Remember: Zillow is NOT involved in transactions.

Example email:

Thanks for taking the time to look at my property.

My name is Julia, I’m 55 years old, I’m a retired engineer and I’m the owner of this condo (total 900sqf. 1 Bedroom apartment, 1 bath fully accessorized). I lived in this beautiful condo for over 5 years and loved every day of it. The condo is fully furnished with all necessary amenities (exactly like in the pics), has a very large bedroom with spacious inbuilt wardrobe , living room with dining area, 1 bathroom, dishwasher, washing machine and clothes dryer. The condo come with two parking spots, a storage unit where you can deposit my furniture (if you don’t like it and you want use your furniture). Pets allowed. Four months ago I moved to Bismarck, North Dakota at my sons place to take care of my 2 years old nephew. I really want to find a good and responsible tenant for it, and I hope that you can send me some personal information about yourself.

The monthly rent for the apartment is US $700. I want to receive first month’s advance $700 refundable deposit ($1400 TOTAL).

I am looking for someone to rent anywhere from 3 months to 5 years. Everything is included (water, electricity, Internet, cable, parking, air conditioning, fireplace, dishwasher, garbage) and I want to receive the money monthly in my bank account. You can move in the condo in the same day when you receive the keys. The only problem is that I`m the only person who has the keys and I have nobody in the area that could show you the condo (my son and nephew are my only family). In order to check & see if you like it (I’m sure that you’ll love it), you need to receive the keys and the contract by postal service (USPS 2 Days Delivery). Obviously we need a way to complete this deal in a safe and fast way for both of us and the solution is provided by a company called Zillow ( www.Zillow.com I am already registered with them since 5 years ago i purchased the apartment from their website) which will handle the payment and delivery of the Keys. They have a Tenant Deposit Protection, here you can see here how Zillow.com Payment Services work (i got from one of their email-letters). They have a program that protects the tenants deposit and makes sure that the tenant is fully satisfied with the condo before I receive the money. In conclusion, the money will be deposited and locked in their custody until you will be able to view & accept the condo.
If you want to know more about how this deal can work please get back to me ASAP and I will send you the step by step procedure. Let me know if you are interested because I really need to take care of this matter by the end of the next week. Please don’t forget also to send some information about you and the people with who you will be living with.

Thank you,
Julia.
“I have a lot of money and need your help moving it out of the country.”
How the scam works: Someone very official or important-sounding needs your help moving money, and they promise you a large bonus in return. If you reply, they ask for relatively small sums to move the process along (fees, verification checks, etc).

Tip: Beware long-distance inquiries, requests to wire funds, or requests for personal information.

Example email:

“Dear Linda,
I have received the information concerning your house, the price is $239,750.Am very confident dealing with you. I am willing and capable to buy the property, but i want to trust you with this confidential proposal.
Before i continue, let me introduce myself to you, I am Captain IXXXX HXXXX the commander of the Special N.A.T.O coalition force with the United Nation troops in Iraq, on war against terrorism. My country is Germany.
I have now in my possession the sum of USD 6.5 million which was recovered from one of our raids on terrorists camps here in Iraq, because they keep most of their money at home for evil activities which they normally get through illegal deals on crude oil.

Based on the suffering we undergo here some of us do meet such luck. It happened that in our last raid last week we raided one of the terrorist strong base here in Iraq, though some of the men in my unit lost their lives in the fierce attacks, and we recovered this huge sum of money. This box of money have been deposited with the RED CROSS OFFICE here in Baghdad informing them that contacts are been made for its safe keeping and to make contacts for its proper use . As the team leader it is under my power to approve whoever comes forth for this money.

So i need someone i can deal with on trust and that is why i contacted you. so If you accept, I will put you forward as the beneficiary/owner of the funds and then move the money to you in Europe first. As a military personnel i cannot parade such an amount or carry it to my country so i need to present someone as the beneficiary. I just need your acceptance and all is done. I have a 100% authentic means of transferring the money through diplomatic courier service to you in Europe where arrangements will be made to proceed to your country America.

Once i confirm your interest to my proposal. And your positive reply i will proceed to register your name as the beneficiary.

If you are interested, then let me know so i can proceed to register the consignment in your name as time is very important to me. I am doing this on trust, you should understand that as a trained military expert I will always be carefully in my dealings so everything is intact. This money is my life and i am willing to give you 30% of the total sum when the money is delivered to you. I wait for your response so we can proceed immediately. In less than 7days the money should be in your safe custody.

The only telephone access we have is radio message which is for our general use and is being monitored, therefore all communication will be via email till we finish our assignment here and fly straight to your country to meet you. Thank God that the new President Elect, Barrack Obama whose keen interest is to call us back home soon.”

Regards
Capt.IXXXX HXXXX”
“I want to buy your property. Please send sensitive information.”
How the scam works: Someone contacts you remotely and proposes to buy or rent your property. They may ask for personal information that can be used to steal your identity or rob your bank account.

Tip: Beware long-distance inquiries or requests for personal information.

Example email:

“I am interested in purchasing the property on 17 LXXXX Rd, CXXX HXXXX VXXXX CO XXXXX. Although the price is much “$4,000,000″. But i will convince my client regarding the property is a Single Family Residential. I know he must like it. I will like to view the copy of the contract of sale. As you are the real owner for this property. I will like to view the contract of sale. So it can be checked for any irregularities. Once the contract is okay and has been given the thumbs up by my client. I can then contact you and make an offer according to your request or Advise. I look forward hearing from you

Sincerely, Mr. CXXXX KXXXX BXXXX
7XXXX TXXXX bldg. 1-XX-XX HXXXX-IXXXX, TXXXX-XX ,
Tokyo Japan.”

By Diane Tuman

Should I use a Property Manager?

Finding the right property manager is vital to preserving the property’s value and maximizing income.

Property markets are growing and there are no shortages on tenants. A professional property managements company does more than just collect rent for you.

To manage your property, minimize vacancies and maximize returns requires a few things. Like

  • Industry specific skills like marketing the property properly.
  • Setting the rent at the correct price for quick leasing.
  • Checking potential tenant’s references so you only get reliable tenants.
  • Drawing a fair and comprehensive lease that protects you as the landlord.
  • Keeping up with the ever changing tenancy legislation

The right property manager can make all the difference. They will get your property rented quickly and even advise you on the maintenance issues that arise. Tier One believes that making small non-urgent repairs, doing maintenance and keeping the property in top condition is the key to keeping your investment sound and your tenants long term.

Licensed with the Utah Division of Real Estate