Monday, December 13, 2010

Gut Instincts


Sometimes, using your gut instincts can save you from a world of woe.

Gut Instinct.  Some people claim not to have it.  But we all do.  It is that nagging little voice in your head that says "Nothing is life is that easy - there has to be a trick!" or "Watch out, the person you are talking to is lying to you!"

Are these really metaphysical phenomenon?  ESP?  Telepathic powers?  Hardly.  It is just the lovely and powerful neural network that is your brain, picking up on cues too subtle for your conscious mind to process - or cues that your conscious mind is suppressing, oftentimes because the person you are dealing with is using distraction or other techniques to get you to ignore those cues.

For example, when we bought our office building in Old Town Alexandria (which was a heck of a deal, but more on that in another posting) there was a tenant inside already.  Before we closed, he told me that he would like to stay on as a carry-over tenant, but would like to rent the two lower levels.  However, he had a laundry list of "improvements" he wanted done, including new carpeting (the old carpeting was fine) and new paint (ditto) and some other silly nonsense.

There was something about him that didn't seem right.  His laundry list of "repairs" struck me as an excuse he could use not to pay rent (after all, I could not afford to do the repairs he wanted, anyway, at least for months).  It also struck me that he was trying to put me into a posture of defense - making it seem like I was lucky to get him as a tenant - so lucky that I would remodel the building for him!

Right off the bat, he was trying to power shift, which is a sure sign of a con job.  As landlord, I would own the building, and as a tenant, he would occupy at my sufferance.  But he wanted me to think it was the other way around.  No wonder my guts were churning!

The second thing that tipped me off was when I asked him what his business was all about.  He talked for nearly 15 minutes and I still had no idea what he did for a living.  When you ask someone what they do for a living and they hem and haw for five minutes or more, something is up.  If someone can't tell you what they do for a living in 10 words or less, watch out!  Either they are con artists, CIA agents, or in the witness protection program.  Chances are, con artists.

The other thing that was making me uneasy was that he was doing the classic technique of making a simple financial transaction complicated.  As I have noted before, the more complicated you can make any financial transaction, the easier it is to rip you off.  So instead of a simple lease agreement, he wanted me to make "repairs" to the facility first, thus complicating the original agreement considerably and providing him an "out" not to pay rent.

I told him I would think about it.  When I returned to the property several times for pre-closing inspections, I noticed that he was never there during business hours.  In fact, it seemed like he never used the space, other than as a mail drop.  Picking up the mail one day, I noticed that he had several different company names he was operating under.  Several pieces of mail were from the West Virginia Bankruptcy Court, which as troubling.  Others were labeled "Final Notice!" and yet others were clearly bounced check notices from the local bank.  My gut instincts were adding up.

I told him that I declined his generous offer and told the building owner I would take the property vacant, which I did.  And it turned out to be a good idea.  I later talked with the prior building owner and he told me that the tenant had never paid rent, ever.  Moreover, to get him out of my building, he gave him space in another building, where he never paid rent, either.  After a year of this, he had to hire a lawyer to get him out, and the fellow moved on to another amateur landlord and repeated the same trick again and again.

Who are these people?  Con artists.  They play upon your emotions and fears like a cheap violin.  Some people call them sociopaths - people who mimic the behavior of a human being, but do so only to manipulate others to their own ends.

Whatever the case, you can usually spot these types from a mile away, unless you put blinders on your radar.  And in many cases, they intentionally use distracting tricks, as magicians and sleight-of-hand artists do, to distract you from your gut instincts.  If they can create a lot of noise over here, you won't think about the nagging questions over there.  So watch out for a lot of flash and trash when dealing with folks.  People who put on ostentatious displays of wealth, or people who make a lot of fast-talk or bold promises, or people who want you to "act now" without thinking - they all have one thing in common, and that is, they are ripping you off.

Your gut is a powerful tool, in that it tells you when something isn't right.  When someone has no visible means of support, or a business model that makes no sense (or is full of incoherent jargon like "paradigm" or "space") you should step back and think about what is going on.  If necessary, do a background check on them.  A simple credit report can tell you volumes about a person.  A bank requires it, why not you?  When someone asks you for a lot of money, or wants to be a tenant, or whatever, it pays to think contemplatively and strategically, and not get drawn into their hoopla.

If you see these warning signs, use your gut instincts and walk away:

1. Something is "too good to be true".

2.  You are pressured to ACT NOW! or forever lose a good deal.

3.  They try to Power-shift the transaction, so that even though you are the one with the money, they make it seem like they are doing your a favor by taking it from you (all car dealers work this way).

4.  When you ask them a direct question, they give you evasive, meandering answers that go on for minutes, but have no real content and do not answer your question.  For example,  if someone can't tell you what they do for a living in 10 words or less, watch out!

5.  They make a simple financial deal very complicated.  Rather than merely handing over money for a good or service, an ancillary deal is brought into the mix.  They send you a cashier's check for over the purchase price of a vehicle and ask you to forward the excess by wire transfer to a friend of theirs.  As I have noted before, the more complicated you can make any financial transaction, the easier it is to rip you off.   Car dealers know this, which is why they love trade-ins, leases, extended warranties, and the like.  By the time you get done with the deal, you have no idea what you actually paid for the car!

6.  They try to be your friend in what should be an arms-length business transaction.  The car salesman is not your chum.  That man who wants to be your business partner says "let's shake on it as friends, we don't need a written agreement!"  The con artist tries to make small chat or takes an interest in your hobbies or political views.  This is just distracting noise designed to disarm you and get you to ignore the hard aspects of business deals.  A contract is a contract, and verbal promises are meaningless, even from a "friend"!

7.  When you answer the phone, they say "How are you today?" - this is usually a tip off you are being telemarketed, and a means of disarming people on the phone by distracting them.  See #6 above.

It pays to be skeptical these days, more than ever.  Over the decades, our economy has moved from an agricultural-based economy, to an industrial-based economy, to an information-based economy and finally to a fraud-based economy.

Today, people talk about Casinos as "industries" that "bring jobs and tax dollars" to a community, when in fact they produce absolutely nothing.  And con artists and frauds of all sorts are not only allowed to prey freely on the unwary, they are protected by law.  They argue that their con-jobs are "legitimate businesses" and many politicians (usually Republicans, but not always!) defend things like "Payday Loans" which cripple the poor and drive them into bankruptcy, while providing no real good to the community.

I only wish it weren't so!  30 years ago, we had usury laws to protect consumers from such abuse.  We had a lot of regulations that prevented people from being ripped-off utterly.  And we had aggressive enforcement of such laws - every city had a "bunko squad" that chased down fraudsters.  Today, that is no more and the consumer is on his own to protect himself.  Few are equipped to do so.

Your gut instincts may be your first, last, and only defense! Use them!

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