Report Filed: UNITED MORTGAGE AND GULFSTREAM DEVELOPMENT PRE-CONSTRUCTION SCAM Cape Coral, Florida!!
I too have a major complaint against Gulfstream Development and United Mortgage. My wife and I were first time investors when we were swindled into the Pre-Construction program. The concept was to help new students break into real estate investing with little or no risk, or so we were told. We signed up thinking this was a great deal. We were told that it would take ten months to build our houses ( two of them ) and that they had a waiting list of buyers and the houses usually had buyers for them before they were complete. Ten months to build turned into 18 months and then in the middle of the process, we were hit with an increase in building costs of $10,000 per house. I complained but I was informed that in the fine print, there was a clause that gave the builder the right to increase the cost of the houses. So this increase was added onto the mortgage. As our houses were nearing completion, we were then told the market wasn’t as good as what they had anticipated and we were then instructed to hold onto them for at least a year and the market would then turn back around and we could sell them for a nice profit. I told United Mortgage that we had no more money to make the payments as we had used $130,000 of our home equity to build the houses. United Mortgage then said they would have the houses appraised and would give us second mortgages on both houses. The appraisal came in at $373,000 each. We were lucky, we got the second mortgages, or so we thought we were lucky. The money from the second mortgages is gone and I have also used an additional $25,000 of my own money to make my $5200 a month payments. The money well has dried up and we are 1 month behind going into 2 months. It has become painfully obvious that United Mortgage and their appraiser inflated the appraisals so that we could get the second mortgage. The Lee County Auditor has the houses assesd value at $260,000. I have spoken to numerous Real Estate professionals in the Cape Coral/Fort Meyers area and they have told me that if I were lucky, I might get $220,000 for my houses but houses like mine were going for $190,000. We got hosed!! My advice to all investors is not to get invovled in Pre-Construction deals. Work in your own area slowly to increase cash flow. We are interested in pursuing a class action suit against these PREDATORS! Dave Magnolia, OhioU.S.A.