Real estate scams and Ponzi schemes have been around for centuries, but with the advent of the internet, social media, and digital banking, more and more scams and schemes have been popping up. You might think that only the uneducated or ill-informed fall prey to these monetary predators, but you’d be wrong. Just recently, two of our expert guests, James Dainard and Jamil Damji, were ripped off in Ponzi schemes that the federal government intervened in. Thankfully, James pulled out his principal earlier on, realizing what was happening. But Jamil was blindsided, leaving him with a seven-figure loss.

Both James and Jamil were brave enough to share their stories, and more importantly, the entire On the Market panel have come together to break down how NOT to get scammed on your next investment. Kathy Fettke, a syndicator herself, describes EXACTLY what to look for when passively investing in a deal and why inexperienced operators have become the norm in 2023. Next, Henry Washington shares what you MUST do to ensure a contractor doesn’t run off with your money and how to pace a project, so you aren’t left with an empty bank account and half-done home renovation.

Then, we’ll switch gears as Jamil gives actionable steps to ensure your wholesaler brings you a real deal. Finally, James highlights which lenders you should or shouldn’t use and how inexperienced investors are getting strapped with loans that could liquefy their deals all at once. To finish the episode, James and Jamil give the nitty-gritty details of the Ponzi schemes they fell victim to and how even experienced investors can be taken advantage of.

In This Episode We Cover

Losing a million dollars on one investment and the telltale signs of a Ponzi scheme

How to vet your syndicator/operator and why track record means EVERYTHING

Paying your contractor in stages and the reason Henry will NEVER pay for a project all at once

The documents you NEED to confirm when buying a deal from a real estate wholesaler

“Backyard lenders” and why flippers/BRRRRers should consider taking loans that are close to home

The “affinity fraud” Ponzi scheme and why you should NEVER invest based on faith

A $650M movie rights scam and how James noticed the red flags before any other investor did

And So Much More!

Links from the Show

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On The Market

Join the Future of Real Estate Investing with Fundrise

Connect with Other Investors in the “On The Market” Forums

Subscribe to The “On The Market” YouTube Channel

Dave’s BiggerPockets Profile

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Henry's BiggerPockets Profile

Henry's Instagram

Jamil's BiggerPockets Profile

Jamil's Instagram

Kathy's BiggerPockets Profile

Kathy's Instagram

James' BiggerPockets Profile

James' Instagram

10 Glaring Red Flags That Indicate Your “Great Deal” May Be a Costly Scam

Watch the “American Greed” Episode on The Movie Rights Scheme

Check the full show notes here: https://www.biggerpockets.com/blog/on-the-market-93

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93: Ponzi Schemes, Property Fraud, and How to NOT Fall for a Real Estate Scam 01:05:01 Share

On The Market

Shownotes Transcript

93: Ponzi Schemes, Property Fraud, and How to NOT Fall for a Real Estate Scam