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By Willard
Michlin
The phone range and Peter was on the other end of the line. "Willard, I have a
friend of mine that has a real estate problem." I said, "Send him over." Two
hours later, Jerry sat in front of me terribly upset. Three years earlier, he
had been talked into buying a 4 unit building in partnership with Smooth
Talker, a knowledgeable, smooth talking real estate salesman. Smooth Talker
offered to find the property, arrange the financing, manage the building and
even put up the down payment. Jerry was told that all he had to do was use
his perfect credit to qualify for the loan and then sit back, wait seven
years and the money would come rolling in.
Smooth Talker also promised that the two of them would do more deals and Jerry
would make over $100,000. What Jerry did not know and he would not figure out
until 3 years later was that Smooth Talker had no intention of splitting
anything and Jerry could kiss his perfect credit goodbye. 3 years ago, Smooth
Talker had Jerry and two other buyers, buy three buildings, located on one
street. The buildings cost $150,000 each. Smooth Talker put up $1,500 down
payment for each property, while at the same time, telling the buyers that he
was putting in $12,000.00 for each. There was an unexplained difference of
$10,500 each.
Smooth Talker also collected a $9,000 Real Estate commission on each. Smooth
Talker also agreed to take the building in as-is condition, with no
inspections and without requiring the seller to make any repairs. There were,
unknown to Jerry $10,000 worth of air-conditioning as well as other work.
Smooth Talker had those other two buyers borrow from the Federal Government a
remodeling loan of $48,000 to make the needed repairs. When those other two
buyers each got their loans, Smooth Talker took all the money and said he
spent it on Jerry`s building. Let me clarify that. Smooth Talker stole the
money from the other two investors, telling them he used it on Jerry`s
building. That is still stealing. My research later showed that he did almost
no repairs to any of the buildings, and what little repairs he did have done,
were not even paid for.
Smooth Talker cheated the poor workers out of their pay. No one could ever
understand what he was doing. He even collected rent, pocketing any cash.
When the buyers wanted an accounting. Smooth Talker wouldn`t even supply it.
When I came on the scene and demanded, as a matter of law, an accounting of
what was received and spent. Smooth Talker didn`t have any proof of what
happen to all the money.
Jerry wanted out of the partnership but Smooth Talker didn`t want the building
sold; but he did want to make sure he got his due, if it was. He gave me a
statement showing that he had put in $34,000 (which was not true) into the
building and wanted that before any split of profits. This would of left
Jerry receiving $5,000 and Smooth Talker making $46,400 on the whole deal.
To avoid being in this kind of a situation, I advice the following, before
doing any sort of real estate deal; a) Evaluate your risk. What is your
downside? Have a real estate expert study the deal. b) Set up operating and
reporting guidelines with your partners. Put everything in clear English. c)
Have everything reviewed by an attorney or an accountant. d) Choose your
people partners with care.
Willard Michlin is an Investor, Business Broker, California Real Estate
Broker, Accountant, Financial Distress Consultant, Well known Public speaker
and Administrative/Business Consultant. He can be contacted at his Ventura,
California office by calling 805-529-9854 or by e-mail at kismetrei@earthlink.
net See other article by Willard at http://www.kismetgroup.com (http://www.
kismetgroup.com)
kismetrei@earthlink.net (mailto:kismetrei@earthlink.net)
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