Ethics in Real Estate Investing

To become a successful investor, it is important to follow an ethical code. Ethics are a set of rules that governs a person or a group’s conduct. The fact is that some practices of real estate investors fit into unethical categories without their realization. Listed below are some unethical practices followed:

Hiking the property value and keeping lenders in the dark
It has become very common these days for mortgage brokers to hike the property value above its real value while helping people take risky loans. The lenders who are not locals of that area offer 80% loans for these properties. This has resulted in loans being made on properties with no equity to homeowners who do not have the credit to support such a mortgage.

Buyer Beware
Another common thing that can be witnessed today is the “wholesaling” of property that is based on a falsely hiked value of the property. This changes the entire logic behind wholesaling. In the good old days, wholesalers would leave a huge portion of profit in the deal for buyers. Nowadays, they sell property at huge prices where buyers are not able to make any money from the deal. These kinds of wholesalers target the new and inexperienced investors.

Landlord Ethics
Though problems between neighbors are common, it cannot be ignored by their landlord. They do have an obligation to the neighborhood where the property is bought. Property owners should take a serious look at how their tenants are, in terms of not only paying deposits and rent but also screening them for good neighborly behavior before they lease the property out to them.