Is ‘flipping’ property a good investment?

For as little as US$100 a company called F4P tells investors they could get a share of the profits made from buying and selling well-priced properties in the United States, where transfer costs are low and there’s no short supply of distressed sellers.

Empoyees  of F4P have ‘guarantees’ that investments pay at least 50 percent in six months.

Sounds too good to be true?

An attendee at a F4P presentation recently, says it left him feeling uncomfortable.

The presentation deals with how one can make money by referring other people to the scheme. There are a lot of commissions being paid to several parties on new money entering the scheme. The performance of the investment would have to be really outstanding in order to give the investor a return, plus pay commissions to all the hangers-on.

“They show images of expensive cars and big houses, and ask, ‘Isn’t this the kind of lifestyle you would like to have?’, but are vague on the details of the scheme. I asked how it had performed as a whole, because your return is from all the properties purchased,” he said.

With high returns go come high risk.

Deposits are being taken by unqualified financial advisers that flaunt a website with no telephone number.

An authority on investing in property, says a legitimate pooled investment would never include a referral commission structure that rewards individual investors for introducing new investors, or a network that offers lifestyle benefits to members for growing a network, as F4P does.

Apparently, the company restores and sells houses fast in a market where eager buyers are also a dime a dozen. This quick buying and selling of property for profit is called “flipping” in the real estate business.

To share in the profits, you pay a once-off joining fee of $249, and $50 a year thereafter, but to sweeten the deal, the company that is offering it, Flipping4Profit (F4P), will reward you – in dollars – for every person you get to become a member of the scheme.

F4P is actively recruiting members in South Africa, but experts in property and financial planning have serious concerns.