Background: I have a few rental properties and have done 5 real estate transactions in the past 12 months, so I think I know what I'm talking about, but want some other opinions before I start a sh*tstorm.
My neighbor knows I invest in rental properties and he was telling me about a deal he did with a friend. This is a close friend of his and their kids go to the same small school and church, so I want to tread lightly. The friend came to my neighbor with an investment opportunity. He had bought a house and needed cash investors to help him flip it. My neighbor gave him $8k and the friend said he would pay my neighbor back $10k when the house sold. Supposedly the house was purchased late last year and sold post-flip in January 2017. My neighbor has yet to receive any money from his friend, who explained that he deposited the proceeds from the flip in his bank account, but the funds were frozen due to the friend's involvement in a stock/pyramid scheme in which the friend was a victim.
Immediately this sounds fishy to me. I work for a major bank and have never heard of such a thing. Even if it did occur, I would think it would only take a couple weeks for the bank to investigate and release the funds, not three months. So I look up the property on the county auditor's website. The website shows the property has not sold since 2007. When I've done real estate transactions the auditors page shows me as the owner within a week or two at most. My thinking is the auditors page should show two recent transactions: one for the friend buying the property and then another transfer when the flip sold.
My neighbor says everything is fine. His friend is telling him it was a foreclosure and sometimes with foreclosures things are different blah blah blah. I tell my neighbor I would ask the friend to come over and log into his bank and show him the deposit. Or show him a settlement statement from the sale. He says he asked the friend for this and the friend instead offered to show him texts between himself and his other partners which will somehow prove the transaction is real.
I want to tell my neighbor that his friend is screwing him and he should call him out on it, but I would like some other opinions before I say with certainty that he is getting screwed. To me the auditor website is clear proof that the friend is lying, not to mention how fishy and convoluted the story is in general. Anyone have any thoughts?