The 4 Most Common Real Estate Bookkeeping Scams You Need to Know!

The real estate sector thrives on trust and transparency. But unfortunately, sometimes, the numbers can be manipulated. This is where real estate bookkeeping scams come in. To safeguard your investments and ensure you're getting the best value for your money, it's crucial to be aware of these scams and learn how to avoid them.

1. Phantom Repair Charges

Phantom repair charges refer to fake or inflated bills for property maintenance and repair work. Unscrupulous property managers might collude with contractors to inflate repair costs and then pocket the difference.

How to Avoid:

Investigate any sudden spikes in repair costs. Insist on receiving detailed invoices for all work carried out. Consider hiring independent inspectors to validate the work. Maintain open lines of communication with your property manager and regularly audit your accounts.

2. Property Flipping Scam

In a property flipping scam, a property is bought and quickly resold for a much higher price. The catch is that the inflated price is usually the result of a fraudulent appraisal rather than any substantial improvements to the property.

How to Avoid:

Perform due diligence on any property you plan to invest in. Make sure the appraisal is conducted by an impartial third party. Be suspicious of deals that seem too good to be true. Ensure the property's price aligns with the market trends in the area.

3. Equity Skimming

Equity skimming involves the scammer using the equity from a property for their own benefit, instead of paying the mortgage. They might rent out the property and pocket the income without informing the lender.

How to Avoid:

If you're investing in a property, make sure you're named as the mortgagee on the property deed. Regularly review your mortgage statements and ensure payments are being made. If you're renting, ensure your rent payments are being used to pay the mortgage.

4. The Double Escrow Scam

In a double escrow scam, the scammer buys a property and then immediately resells it, often on the same day. The catch is that the second buyer (usually an accomplice) pays a significantly higher price. The scam is completed when the scammer borrows against the inflated value.

How to Avoid:

Be wary of any deals that seem too quick or where the price appears inflated. Insist on using your own trusted escrow company. Be sure to obtain a title insurance policy from a reputable provider.

To safeguard yourself from these and other real estate bookkeeping scams, always keep an eye out for red flags and follow the mantra of "Trust but Verify". Work with trusted professionals and never hesitate to ask questions or seek clarification. Remember, your hard-earned money is worth protecting, and the first step to doing that is being well-informed and vigilant.

Conclusion

The real estate industry is a landscape filled with opportunities, but not without its pitfalls. Being forewarned is forearmed, and knowing about these prevalent bookkeeping scams will enable you to navigate your investments wisely. A robust partnership, like the one you can forge with Olive Branch Bookkeeping, Inc, can serve as a significant support in this journey. Their trusted expertise and meticulous attention to detail help to safeguard your real estate investments and shield you from potential scams.

It's time you took control of your financial future with confidence. Let's secure your investments and safeguard your hard-earned money against potential scams. Make the smart choice today and entrust your bookkeeping needs to a trusted partner like Olive Branch Bookkeeping, Inc. Get in touch now and experience first-hand how their professional services can provide you with the peace of mind you need in your real estate journey. Your financial future is worth it. Let's ensure it's well protected, together.

Disclaimer : Olive Branch Bookkeeping, Inc is a Bookkeeping firm and not a tax professional, though we do partner with many tax professionals, we always advise you to seek legal tax advice.