SAN ANTONIO - Buying a home isn't like it used to be. Lending rules for banks are tighter, which means getting financing is much tougher. So when you see a sign that promises a home for much lower than the regular asking price, you can't help but wonder if the offer is legit.
News 4 WOAI Trouble Shooter Mireya Villarreal went undercover to get you the Inside Story.
No matter what side of town you live on, there's a good chance you've seen those advertising signs on the side of the road offering an $89,000 home for $45,000. In San Antonio there are at least two companies behind these ads, New Western Acquisitions and Networth Realty.
Their sales pitches are nearly identical. Their objective is to get you to call, get you to come in and eventually sell you on something more than just a house.
So, we called the number on two of these signs to see if the advertised property is even available. Both agents told News 4 WOAI’s Mireya Villarreal the home listed on their sign isn't available. But if she came into their offices they could show her something near these price ranges.
So she went undercover at both Networth Realty and New Western Acquisitions, with the intent of figuring out if there was any truth to the signs posted around town.
"Dumpy homes is our forte. I'm not Keller Williams or Remax. I'm not racing out to get the fancy listing up in Stone Oak. That's not what we do,” Nathan Cron explained during our first meeting.
Nathan Cron is the General Manager for New Western Acquisitions and his business is found downtown off Broadway downtown.
"How I get my clientele is those signs you called me off of and word of mouth advertising. That's it,” Adam Asrar told us in a separate meeting.
Adam Asrar is a salesperson for Networth Realty off 410 and Blanco. The homes both of these guys are offering are not move in ready. These are foreclosures, VA properties or auction homes needing a lot of work.
While meeting at his office, Nathan breaks down exactly what his company does, "So, we're a one-stop-shop. We locate distressed properties for investors. We'll help with the financing portion of it if need be. We'll put you in touch with local vendors that can help you with the rehab. And we'll consult you on the exit strategy so we can do it again."
Adam’s pitch is very similar, "We find the properties. We get the funding if you need the funding for the property. We can provide you the crews if you need the crews to fix the property. And we can prepare you an exit strategy for the property."
So, they'd set you up to flip the house. But you'll still need money for the rehab. And both Adam and Nathan know just where to find it.
"The only alternative to a cash investor would be somebody that wants to utilize hard money,” Nathan told us.
“It's technically a loan. But technically it's also private money, its hard money. It's OPM, other people's money,” Adam said in a separate meeting.
A hard money loan will cover the cost of the house and the rehab. It's a loan often used by business people who flip homes and comes with a high interest rate.
Adam tells us just how expensive this venture can get if we take out a hard money loan, "Interest rate of 14%. Of course, that's pretty high. Origination loan of four points. Loan term is six months. They're going to loan you up to 70% of the ARV.”
Nathan’s sell is nearly identical, “It's a high-interest only loan. So, it's something you want to get in it and out of it extremely fast, as fast as you can."
Real estate experts we spoke with say it's dangerous for someone buying a house for themselves to get into this type of loan. But Nathan and Adam still try to sell us on it.
“At least for right now, we're looking for a home that's for us only, residential. We want to go in there and fix it up and live in it ourselves. So, can this still apply,” Trouble Shooter Mireya Villarreal asked.
Adam of Networth Realty answered, “Of course."
“This is a home just for us,” Mireya mentions during her second meeting with Nathan of New Western Acquisitions.
“I love that idea for a couple of different reasons,” Nathan replies. “We've actually, just last month we had two owner occupants come in and do this loan, rehab it and then live in it."
We met with both of these companies twice. Each time we spent 30 minutes to an hour going over the homes we could buy if we signed on with them. Problem is - We never got to see a real home they had for sale. In fact, the only way we were going to get that was if we signed a bunch of paperwork or got on their email list.
So, that’s when we went back to both of these companies, camera rolling, to find out what gives?
“We had some questions about some of the signs you put out and the advertisement this kind of pitches out,” News 4 WOAI Trouble Shooter asked as she approached Nathan Cron at New Western Acquisitions.
“I'm not interested in speaking about that,” Nathan replied.
In less than a few minutes Nathan escorted our crew out the door.
But since then he sent us a statement saying we never got to see a home because I didn't follow protocol. And we must have misunderstood him when he was talking about hard-money loans. He says he would never suggest that type of loan for a first-time homebuyer.
But just a few days earlier we caught Cron on camera saying something completely different.
“So, hard money loans are still a possibility then if it's like a residential place like a place just for me,” Mireya asked.
“If it's distressed, ya,” he answered.
We also went by Networth Realty and tried to speak with Jeremy Coburn, Adam's boss and owner of the company. Coburn had nothing to say to our camera that day.
But a few days ago he did send us a statement saying hard money loans were for commercial use only. He explained Adam Asrar is a new employee and adds, if inaccurate information was relayed during our meetings corrective action will be taken immediately.