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Scams

Unreal Real Estate

Ads that promise big gains with no money down are back on the air.

As the real estate market stabilizes, it brings opportunities for investors -- and for scam artists pouncing on the headlines. When claims such as "no money down," "risk-free" and "guaranteed return" start to sound like opportunity knocking, take a good look through the peephole. Most often, the pitches are selling seminars and educational materials or a service that provides leads on potential (but elusive) deals. "Unfortunately, a lot of people are just selling a dream," says Tom Zeeb, president of the Capital Area Real Estate Investment Association, a trade group in Washington, D.C. "The real secret is that real estate investing is a lot of hard work."

To capitalize on the real estate rebound, you'll need cash reserves, considerable sweat equity and the patience to wait longer than you expect to realize a profit. Beware of "no money down" offers that refer to "wholesale" deals between investors. These are complex, multistep arrangements that require expertise and rarely net more than a few thousand dollars. A local real estate investment club may provide networking opportunities and generate leads on properties or deals. Such clubs invite experts to speak, whose bona fides you can check with the local real estate community. Find local groups at www.nationalreia.com.