When you’re buying an investment property, your risk of getting scammed is about even money. There may be things you’re not told. The seller may be offloading an underperforming millstone and giving it to you. There may be a lot of costs involved in making the property viable.
One single scam can destroy investors to the point of bankruptcy. You need to carry out risk management and be well within the formal legal boundaries to protect yourself.
Don’t believe these sales pitches:
Anything called “bargain”. What, has the seller suddenly taken a vow of poverty? Unlikely, isn’t it?
Premium location- The market decides what’s a premium location, and in the current market, locations are moving targets.
Great revenue potential- A garbage dump would have great revenue potential if it wasn’t a garbage dump.
Forced sale- The owner is selling what’s supposed to be a good property. Why is a forced sale happening at all?
Bottom line- Nothing but facts have any real relevance to property investments. Get expert advice and keep the scammers at arm’s length. Make no commitments until you’ve got the real picture.
Source: http://www.howstuffworks.com/personal-finance/financial-planning/investment-scams2.htm
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