How Money is Lost on Overseas Real Estate Investments: Schemes and Examples

Investments in foreign real estate seem like a profitable solution for preserving and increasing capital. Many investors expect stable rental income or an increase in property value, but fraudsters actively exploit this interest. They attract clients with enticing offers, guarantee high returns, and use fake documents to hide the true state of affairs.

Fraud in overseas real estate investments takes various forms: from selling non-existent properties to scams with resort real estate. Some buyers encounter fake documents for villas, while others fall victim to scams involving investments in apartments. To avoid financial losses, it is important to understand potential fraud schemes in advance and know how to verify investments in housing.

Fraud: Overseas Real Estate Investments 

Among the main fraud schemes, several of the most common can be highlighted:

1. Sale of properties without ownership rights – fraudsters sell real estate that does not legally belong to them, using fake documents.
2. Resale of one property to multiple buyers – the same property is assigned to several investors, and the scammers disappear with the money.
3. Sale of properties with debts and encumbrances – the buyer becomes the owner of a property that has debts or mortgage obligations.
4. Fake investment projects – clients are promised returns that do not exist in reality, and the funds end up in the fraudsters' accounts.
5. Construction without permit documents – buildings may be erected without compliance with regulations and may be subject to demolition.

Such schemes are used both in countries with high levels of regulation and in less developed markets, where control over real estate transactions is weaker.

Scam with Buying Property Abroad 

Buying real estate abroad requires attentiveness, as mistakes can lead to significant financial losses. Fraudsters often use tricks to hide the shortcomings of the property or even sell non-existent properties.

Signs of Possible Fraud: 

1. Refusal to provide original documents – sellers only provide copies or avoid transferring title documents.
2. Demand for full prepayment – money is required in advance, with no opportunity to inspect the property.
3. Underpriced value – a price below market value may indicate problems with the legal status of the property.
4. Rushing decisions – the buyer is forced to sign documents without thoroughly studying the conditions.
5. Lack of real inspection – deals are made based on photos that do not always match reality.

Some fraudsters arrange fake lease agreements and then sell such properties as freehold real estate.

Resort Real Estate Scams

Resort real estate is one of the most risky areas for investment due to its high popularity among buyers and the active growth of fraudulent schemes.

Common Fraud Schemes: 

1. Sale of real estate without ownership rights – buyers are given fake documents.
2. Unofficial construction – the building is erected without permits, making it legally invalid.
3. Promises of high returns – buyers are guaranteed a stable flow of tenants, but in practice, the property remains vacant.
4. Hidden fees and taxes – investors encounter unexpected expenses after the deal is concluded.

Some fraudulent companies create websites with fake reviews, hire bogus realtors, and use complex money transfer schemes, complicating the return of funds.

How to Verify Housing Investments 

To avoid falling victim to a scam, it is necessary to thoroughly check the property and the seller.

Key Precautionary Measures: 

1. Study the developer's reputation – check reviews, legal proceedings, and licenses.
2. Analyze title documents – request extracts from the real estate registry, building permits, and ownership certificates.
3. Consult with an independent lawyer – a specialist can identify fake documents and assess the legality of the deal.
4. Personal property inspection – visiting the property can confirm its real existence and compliance with stated characteristics.
5. Check payment terms – a safe option is transferring funds through an escrow account or notarial transaction support.

It is also worth considering the laws of the country where the property is purchased, as in some countries foreign investors face restrictions or difficulties in registering property.

Fraud with overseas real estate investments, scams with foreign real estate, and resort real estate scams – all these risks require a careful approach to choosing properties. Thorough verification and caution will help avoid losses and preserve capital.