Unfortunately I received a rash of phone calls in the last two months involving real estate scams in Detroit. This types of scams exist in every market, however, it does seem to be more prevalent in Detroit than others.
I’m not going to name theses companies so please don’t ask. I am going to give you some good tips on doing due diligence on the company you are thinking of working with.
The first is the most basic. Do a google search on the owner of the company and the actually company. In all cases where someone contacted me with their story and scam, this revealed that there were many people upset with multiple links. One or two bad comments don’t mean much in a market like Detroit where it is difficult to invest correctly but when you see more than a few, that is a reflection on how they do business, not a one or two time occurrence.
The second requires you to have some social media accounts and knowledge. Check them out on facebook, linkedin, twitter, and youtube. Those are the big four. Read through their posts and tweets and follow and add them as friends. I find this is a good way to see what kind of person you are about to work with.
The third requires some money. You can pay to do a background search on them and their company. Remember that no one is a saint (myself included) but if they have a criminal background or financial problems, it will show up here. This usually cost about $45 to do.
Finally, ask for some references, get cell phone, office phone, office address, home address, etc from them before you work with them. Most bad guys will not want to give you so many ways to find them. Then verify all of this information on public records or on the background search you performed.
Take a breath and keep your expectations in line. There are several decent companies (and unfortunately more than a few unsavory ones) working in the Metro Detroit area and we are not perfect. I make mistakes all of the time. Detroit is a difficult market to invest so sometimes things don’t run like clockwork.
In the last year I had to fire a long time partner in property management. This caused many problems with rent collection etc. What you are looking for is someone who will communicate with you honestly and work hard to solve the inevitable problems that arise and make them right.
When investors call me, I don’t promise the world or pretend that it is easy. There are many good reasons not to invest in Detroit and quite frankly, Detroit is not for every investor. If someone is painting you a picture of perfection or it sounds to good to be true, it probably is.
The Detroit Market Expert