Recognizing the red flags

[imnontrad]

In addition to high return, pressure to buy "before others find out" or "limited time offer" will cause me to run. And generally, the pricier the "free meal", the higher their commission.
But having said that, I have been monitoring one business that buys mobile home parks and has an above average return.

I also go look at their LinkedIn profile. If there are gaps in their resume, then I pass.

 

[Dtail]

Grabbing leftovers at a cafeteria tray return is a time honored way of traveling cheaply.

We were fairly soused at the time; doing it while sober mmmmm.....

 

[candrew]

Grabbing leftovers at a cafeteria tray return is a time honored way of traveling cheaply.

"Gutter Gourmet"

https://www.theguardian.com/environ...-spent-a-month-eating-other-peoples-leftovers

"I have been living high on the hog, and it hasn’t cost me a penny – because I have been dining out on the half-eaten fast food and takeaways thoughtfully abandoned by my fellow Britons on pavements and park benches and tube platforms all over the city. Sometimes they even leave them in bins.

I have seen the disgust on the faces of passers-by as I ferret out a few slices of margherita (my favourite, by the way, and so much better garnished with a dusting of cigarette ash) from a pizza box wedged in a bin slot, and proceed to wedge a gooey slice into the slot on my face."

Yes, @PB4uski, the recycling of dryer sheets pales in comparison.

 

[morriss003]

Hello-

I'm a new member to the site. I happened across Early Retirement.org the other day when a friend who frequently invests in my real estate company asked my opinion on a company that was guaranteeing 18% returns, an obvious red flag. As I searched the entity making the claims I came across a thread from this site where most all the contributors to the subject were right on point- as a return that high is unlikely sustainable and certainly can't be guaranteed. I am proud of the fact that I have over the last 25 years produced well above average returns that are collateralized by real estate in the economically sound central Iowa market. It was encouraging to come across a site where the members recognize the difference between realistic and unrealistic claims. Which leads me to the question-what besides pie in the sky returns coupled with implying a guarantee throws your radar up? I always scrutinize the core collateral and durability of an asset. Glad to be a member- thanks!

The biggest red flag when I owned my business was, "You can trust me. I'm a Christian." I lost money every time this was said, always after I had delivered product.

 

[CaptTom]

But having said that, I have been monitoring one business that buys mobile home parks and has an above average return.

I think I've heard of that business. Some TV talking head or news organization did an expose on it or something.

Most mobile home parks used to be privately owned, and the owner often lived on site. As they get bought out by corporations, the rents are raised and many long-time residents are squeezed out. What used to provide a steady, comfortable income for a Mom-and-Pop owner now has to provide an ever-increasing revenue stream to demand a "growth" stock price.

I don't usually get preachy, and I'm all for free market economics. But this is just plain predatory. I don't think I could bring myself to participate.

Also, it may not be sustainable. My guess is there's a limit to how much you can squeeze out of that market.

 

[Jeffman52]

Agree. A few weeks ago got a congratulatory letter from some outfit, complimenting me on my sizeable assets. And offered to manage it for me.

The fine parchment paper the stuff was written on was useful for starting a fire in my camp stove.

I get those all too often. It must be a lucrative business to send that in the fancy folder on the nice fancy paper. I figure if I'm doing so well they wanted to congratulate me, then why do I want to pay them to start managing it for me.

 

[OldShooter]

I get those all too often. It must be a lucrative business to send that in the fancy folder on the nice fancy paper. I figure if I'm doing so well they wanted to congratulate me, then why do I want to pay them to start managing it for me.

One time I called the guy who was inviting me to dinner and asked, "Why me?" and explaining that I was not a prospect. He said that they send them to specific zip codes. I think the general theory is this:

​

 

[Souschef]

I think I've heard of that business. Some TV talking head or news organization did an expose on it or something.

Most mobile home parks used to be privately owned, and the owner often lived on site. As they get bought out by corporations, the rents are raised and many long-time residents are squeezed out. What used to provide a steady, comfortable income for a Mom-and-Pop owner now has to provide an ever-increasing revenue stream to demand a "growth" stock price.

I don't usually get preachy, and I'm all for free market economics. But this is just plain predatory. I don't think I could bring myself to participate.

Also, it may not be sustainable. My guess is there's a limit to how much you can squeeze out of that market.

Fortunately, California has recognized the problem of low cost housing. The state has set up a plan where the tenants of the park can buy out the owners through low interest loans. Also many communities have enacted rent control to prevent predatory increases.

 

[braumeister]

One time I called the guy who was inviting me to dinner and asked, "Why me?" and explaining that I was not a prospect. He said that they send them to specific zip codes.

A couple of decades ago, we lived in the second most upscale ZIP in the city. Pretty close to the edge of it, but we had those magic five digits. The array of upmarket mail order catalogs we got every week was nothing short of astounding.

 

[Walt34]

A couple of decades ago, we lived in the second most upscale ZIP in the city. Pretty close to the edge of it, but we had those magic five digits. The array of upmarket mail order catalogs we got every week was nothing short of astounding.

I noticed the same thing during that two-year period when I owned an airplane. Never mind that it was a 20-year-old Piper Tri-Pacer that had a market value of about the same as a medium priced new car. But their "market analysis" indicated that airplane owner = rich dude.

Little did they know that on at least a couple of occasions I ate one hot dog for dinner instead of two so the package would last until the next payday.

 

[RenoJay]

Hello-

I'm a new member to the site. I happened across Early Retirement.org the other day when a friend who frequently invests in my real estate company asked my opinion on a company that was guaranteeing 18% returns, an obvious red flag. As I searched the entity making the claims I came across a thread from this site where most all the contributors to the subject were right on point- as a return that high is unlikely sustainable and certainly can't be guaranteed. I am proud of the fact that I have over the last 25 years produced well above average returns that are collateralized by real estate in the economically sound central Iowa market. It was encouraging to come across a site where the members recognize the difference between realistic and unrealistic claims. Which leads me to the question-what besides pie in the sky returns coupled with implying a guarantee throws your radar up? I always scrutinize the core collateral and durability of an asset. Glad to be a member- thanks!

I'm pretty sure I've heard lots of radio commercials for the firm you're describing. They start with "If you're not earning 18 - 21%, you're losing!" I once did some research on that company. Apparently they renovate buildings on the east coast, and sell off units, and require their investors to put a small down payment (like $10k) and get a loan in the investor's name to buy the rest of the condo. And I believe the 18% "return" is the leveraged return on the $10k down payment. So if I put down $10k, take out a loan (for which I'm fully liable) for $300k, and earn $1,800 profit in a year, then I've earned my 18% return. Definitely not a risk I'd take.

 

[jazz4cash]

I’ve heard those ads on Bloomberg Radio and wondered how they work. Credible but clearly exaggerated and may or may not reflect the level of risk involved.