At age 35, "Roger Buckley" was ready to settle down to raise a family and get serious about financial planning for the future. His career was on track with a CPA firm. He made good money, drove a new car, lived in a nice home he had purchased, and had paid off the last of a student loan and other college-related debts. But he wanted more.
Work colleagues steered him to a Web site that was seeking investors with good credit who wanted to enter into the lucrative real estate market. The site's promoters promised investors that if they purchased up to 10 investment properties with no money down they would receive back $20,000 back for each property. The investor's entire contribution was solely used to qualify for the loans, the site said. And by using the mortgage broker listed on the site, the investor would receive a discount on the closing costs. After closing, a predesignated property management company would handle all aspects of property ownership: finding the tenants, collecting rents, making the mortgage payments, and forwarding the monthly profit to the investor.
Buckley thought, "What do I have to lose? I can use this extra passive income to finally buy my fiancÈe that engagement ring she's always wanted and plan a lavish wedding to her expectations! Besides, three of my colleagues just purchased properties through this company and now they're rolling in the dough. Sign me up!"