In my in-box today* from the UK-based property spruiker hawking Memphis distressed real estate … a chance to buy mortgage bonds … at 40% discount! Oh boy!

I wonder if this is how they offer “amazing finance packages” (no-questions-asked??) to the offshore suckers … sorry, investors buying up Memphis distressed real estate … um, er, ‘bargains’?

Wow! A 40% discount! (Puh-leeze) I love that last line: 'You won't find these investments anywhere else.' (Investments. Yeah, right. Oh dear.)

The more I read about these offers the more I think Neil Jenman is probably right:


A deadly trap for Aussie investors.
by Neil Jenman

Here’s a confident prediction: Hundreds (probably thousands) of Australian investors are going to lose millions of dollars in the American property market.

Right now, it seems to be all the rage, the latest fad. Buy real estate in the United States. It’s easy. Prices for American homes are so low and our dollar is so high that an investment in ‘the home of the brave and the land of the free’ seems like a really good idea.

Unfortunately, it’s not a good idea. For the average mum-and-dad Australian investor, buying real estate in America is a very bad idea. Never mind what the Aussie spruikers tell you, never mind how good it sounds, it really is too good to be true. …

Why would you think they are looking offshore for ‘investors’ to fund mortgage bonds at a 40% discount? Can’t they sell them in the USA at that bargain price?

Could that ‘discount’ indicate something about the reliability of the so-called valuations (appraisals) of the properties for sale breathlessly proffered in the promotional materials? e.g. “Buy at 60% or 70% of valuation — that’s a very very ordinary deal”. Look …

An example of a local spruiker's supposed 'very very ordinary deal'. Note the projected 'Purchase Price' of $50k as a proportion of the 'Valuation' of $80k = 63%. Wonderful. (But hang on, what effect could a bunch of sales at that discount have on values?)

Hmm. And then consider the issues enforcing mortgage defaults, for instance — from another country.

Good grief. It may not be a scam, but my antennae are twitching.

* I have never requested information from these spruikers by the way. I do not know how they got my address to SPAM me this way … but it’s an interesting coincidence.
– P