Real estate investment schemes are among the greatest potential threats to investors this year. These investments often claim secret or exclusive ways to get rich quick, and offer loans or other suggestions to help you to finance your investment (remortgaging your home, for example).
As with any investment, if you are approached about an investment opportunity in real estate, it is important to look carefully and understand what is being offered. Are you buying property, or are you investing in a security?
If real estate is bought for a set price and ownership is on a set date, that is likely a real estate transaction and you have bought the property. If the seller continues to own the property and only sells an interest, then it might be a security.
Some homeowners, particularly seniors, may be attracted to reverse mortgages, to fund real estate or other investing. While these are a legitimate lending option, the resulting lump sum home equity payment makes users an attractive target for unscrupulous salespeople, who may attempt to direct this money into worthless or unsuitable investment products.
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