New home-selling scam targets greedy people
This is a relatively old scam, but now it primarily targets middle-aged and elderly people. The pitch is simple: they claim the property comes with an existing lease, sold tenanted, so you can immediately start earning rental income. After purchase, the entire property is handed over to the sales company for full management. They promise you a guaranteed return of several percentage points on the rental yield.
During economic upcycles, this just shifts costs around—the sales company essentially becomes a landlord holding undervalued properties (they can't absorb too many units themselves, and without a solid portfolio, scaling the rental business is hard). But in downturns, buyers suffer devastating losses. Few people carefully scrutinize the breach-of-contract clauses when signing. Typically, the penalty for default is only around 0.05%—barely covering the profit from one such deal. Many retirees hear promises of 8% or 10% returns, then visualize handing over several hundred thousand dollars for a property that supposedly pays them thousands in monthly rent—like buying a pension that keeps generating income. That's when they get hooked. After they swipe their cards, the scammers pay nothing, claiming settlement will happen at year-end. By December, you're lucky to receive a few hundred bucks as "liquidated damages," because the contract is legally binding, explicitly written, and clearly assigns equal responsibility to both parties.
In the end, buyers lose hundreds of thousands of dollars and hand over their property to someone else to profit from.