Holding companies that pay 5% interest to you per month

I am looking to buy a home here to move into so we can get our kids into better schools. I have found what appears to be a discounted deal and I am in negotiations to get it under contract. I ran into an old friend who just did his first real estate investment deal where he bought a house on the cheap, took out the equity using a gift program, and then turned the $$ over to a “holding company” that is backed by real estate and hard money loans. They pay him back 5% on the $150,000 he put into their fund and he uses that $7500 per month to cover his house mtg and escrow with $1500/month in positive cash flow on his owner occupied property. He has just bought a rental property that wil brng in over $4000/month positive cash flow in an area that usually sees negative to break even cash flows. He is highly recommending I do this.

Anyone ever heard of this type of company? Is this something that is out there already that is hosing investors? My suspicion is that he will get paid back say $100,000 then they will inform him that the investment went bad. Any one had experience with this?

Yeah…right. Except one thing – 5% interest on $150K is only $625 a month. If he’s getting 5% per month, then he’s getting paid 60% interest and I find that a bit hard to believe…

Hastedt Life Rule #5 - “If it smells bad, don’t eat it!”


Hastedt Life Rule #5 - “If it smells bad, don’t eat it!”

Does that mean you don’t eat balut, haggis, or Middle Eastern goat eyeballs?

You got it…add liver and onions…

Atleast liver and onions are relatively cooked! You probably wouldn’t do well on that Fear Factor show.

Actually, liver doesn’t taste all that bad (I’ve had beef, deer, caribou, moose, and bear) – it just smells like crap…I can eat a little of it.

Can you say Ponzi scheme!

I’ve never had any of those types of liver. Google images aren’t doing it any favors, and it won’t be on my menu anytime soon. Rabbit, snake, squirrel, monkey, and an assortment of insects would be the extent of my liver eating. Of course, I couldn’t recognize one organ from another, just the bladder and gallbladder.

You SF guys’ll eat anything…


I guess you’re not partial to menudo, either. Best cure for a hangover, though (so they say).

I figured if anyone would know of a legitimate example of this it would show up on a forum like this. It sounds like everyone thinks this is bogus just like my gut said.

Thanks for the feedback everyone.

"It sounds like everyone thinks this is bogus just like my gut said. "

Was that no pun intended? lol

Yeah, load of crap, but I wasn’t thinking that when I wrote it. Pretty funny.

Well there’s also more exotic fare such as turtles, scorpions, etc.

I’m told in China, if it moves, they eat it.

Anyway, agree it’s a scam. It’s using a pretty good delivery method, it’s being promoted by someone you know which tends to make the scam more believable. Most people who wouldn’t fall for an ordinary scam will more likely believe someone else they know who has fallen into the scam and then becomes and unwitting promoter of the scam to all his friends.

Check out this article:

Good article. thanks!