One group chat on WhatsApp has grown to 120 people, some of them prominent people in their home country of Turkey.
They didn’t all know each other in the beginning, but as investors who bought homes in Baltimore through Miami company Property Invest USA, they’re all trying to figure out what to do now after the company stopped making rental payments. They’re learning some of their properties, all located in distressed neighborhoods, are dilapidated; many, too, are without tenants.
Part of their reason for buying the properties was that they believed American systems wouldn’t allow such a mess to happen. And, along the same lines, they’re wondering if any regulatory or law enforcement agencies will do anything about it.
“We got scammed and we are kindly and urgently asking for your help to find a way to stop them,” read one message submitted online to the FBI.
There’s no indication that an investigation has been launched. The U.S. Attorney’s Office declined to comment, saying they do not confirm or deny investigations.
The Maryland Attorney General’s Office confirmed they had recently received complaints about Property Invest USA that “highlighted serious concerns which we are reviewing.” Like the federal prosecutors, the office declined to confirm or deny the existence of any investigations.
For Baltimore’s neighborhoods, at stake is the potential further deterioration of blocks already sagging under abandonment and disinvestment.
Property Invest USA’s CEO Cengiz Bayirli told investors in emails and Zoom calls that he wants to help them find solutions, according to several investors, many of whom asked for anonymity because they are hoping for a positive resolution. But they say Bayirli has also threatened to file for bankruptcy if they take civil actions, and that they will receive nothing as a result.
That was the path taken by ABC Capital, a company that similarly marketed more than 1,000 Baltimore homes to investors, many of whom reside overseas. ABC Capital faced similar accusations of fraud by investors and filed for bankruptcy last year as problems and complaints mounted. The trustee overseeing the process has asked that the company’s principals be jailed for failing to comply.
Bayirli, a Turkish native, sold 300 Baltimore homes to buyers in Turkey as well as Central America as investment properties, guaranteeing rental income and assuring a hands-off process in which maintenance would be taken care of by a local property management company. He appeared on Turkey’s CNN and in glamorous social media posts, convincing people to sink cash into homes here with the promise of 10% returns. He also offered an option for buybacks.
In every transaction, and unbeknownst to the investors, Property Invest USA had acquired the homes at low cost and flipped them the same day for on average twice the price — sometimes much more. One home was bought for $8,000 and flipped for $100,000. The company collectively paid $15 million to acquire homes and sold them for $30 million.
In the spring, investors say rent payments stopped as Bayirli made excuses or put them off. Then suddenly, he told them by email he was unable to continue Baltimore operations. Records show he continued to acquire properties into at least August, even while not making payments to existing investors.
“He stole my savings that I had set aside for my children,” said Nezih Karaca, a doctor in Istanbul who bought a home in July for $130,000. “He sold me a house that was much higher than its value, had no tenants, and was in poor condition. He sold defective goods to people and disappeared.”
Property Invest USA, by its own accord, didn’t account for the challenges and costly sums associated with renting properties, especially those in need of repair. Bayirli, in brief comments to The Banner last month, blamed the COVID-19 pandemic and said he was amending his business model. He did not respond to a request for comment Monday.
“Some tenants chose to violate their lease agreements and vacated the properties, resulting in vacancies that in some cases persist to this day. In some unfortunate instances, these vacant properties have attracted squatter invasions, which have posed a costly challenge to address and evict, due to laws that protect them,” Bayirli wrote in an email to investors that was shared with a Banner reporter. “Additionally, to make things even worse, some properties presented unforeseen repair needs, including roof leaks, mold issues, plumbing, window and door replacements, HVAC units, and various other issues caused by tenants that abandoned the properties or squatters, that required immediate fixing or replacement.”
But some homes didn’t fall into disrepair due to the pandemic — they were in bad shape to begin with. In one case, a home sold by Property Invest USA for $108,000 to an investor in Dubai had been boarded up for more than 10 years, according to Google Street View images.
Now, Bayirli is telling some investors that they owe him thousands of dollars. “These expenses were not immediately charged to you or deducted from the rents, to avoid further inconveniences in those moments of anguish and difficulty for you,” read the email.
Robert Kerber, one of the few investors located in the United States, terminated his agreement with Property Invest USA after rental payments dried up.
“He spread a lot of B.S. and blamed COVID in large part, but that is clearly just a cover,” said Kerber, who lives in Florida.
Kerber owns two homes. One is in West Baltimore and appears to be rented out to three tenants, though Bayirli sold it to him for $191,000 after acquiring it the same day for just $65,000. It’s assessed at about $120,000.
The other is in East Baltimore and, though he received rental payments through July, it appears uninhabitable. It has no windows and the rear is caving in. It was acquired in September 2020 by Property Invest USA for $18,000 and flipped to Kerber the same day for $85,000 — a 359% markup, with no improvements to the property.
One investor believed they owned two homes in West Baltimore that were being rented. She has since learned one is in disrepair — there were squatters living in it — and it is the only home on its block that is not boarded-up or torn down. It had been purchased by Property Invest USA for less than $40,000, and was flipped to her the for more than $100,000. It is assessed at less than $15,000.
She asked not to be identified and that The Banner obscure details because she is fearful of retaliation by Property Invest USA as the situation remains in limbo.
Before buying, she paid for an appraisal that valued the home at more than $150,000. It is what’s called a “desktop appraisal,” in which the appraiser did not actually see the inside of the home. The appraisal states that it is making “extraordinary assumptions” about the condition of the property, to include new plumbing and roofing, a new kitchen with stone countertops, new bathrooms, and the like. It compares the homes to others considered similar that are within a third of a mile from it, and appears to take no stock of the fact that the entire block is dilapidated or empty.
The appraiser, James D. Nolan, said in an interview that he believes the report was clear about what he knew and what he didn’t.
“It says I didn’t look at the property. It talks about extraordinary assumptions, [and] intended use,” he said. “When these people come to me, they want to know what it’s worth if they renovate it.”
When told about the investors’ lack of knowledge of the true state of the homes, he said: “That’s awful. I would never mislead anybody.”
A local title company, Dulaney Title, facilitated the transactions. A title company supervises and ensures that real estate transactions are carried out properly, including recording of documents, disbursement of funds and payments covering city and state taxes and other fees.
“We sent the money to escrow, so that means in my mind, it’s reliable,” the investor said.
Dulaney Title’s president, Wayne S. Goddard, signed the paperwork but said in a brief interview that he didn’t know anything about the deals.
There was better news regarding the second home. While it was also sold to her at well over its value and it also hasn’t been rented out, it was renovated by the property management company Reliable Property Management. The owner wasn’t aware such renovations needed to take place to begin with, and wasn’t involved in funding or facilitating them.
Keith Kaiser, of Reliable Property Management, previously told The Baltimore Banner that he fronted renovations on some homes so that homes could become rented out and generate income, and says he is owed hundreds of thousands of dollars by Bayirli. Kaiser said for more than a year, he hasn’t forwarded to Property Invest USA any rent money that he’s collected because their account with him has been in the red.
The three-bedroom home now has new walls and flooring, and though it still lacks appliances, it generally looks like the type of home investors believed they were buying in the first place. But it remains to be seen what its ultimate sale price will be.
Alper Cankaya, an engineer in Turkey, bought a home adjacent to Gilmor Homes for $132,000 in November. A neighbor, Latonya Jackson, said the home has been empty since then, though it has not fallen into disrepair like many of the others on the block, several of which are city-owned.
“Everybody’s about what they can get out of the city,” Jackson said.
Cankaya laments the money he expects to lose while sorting out his situation. But he said he’s lost something deeper.
“I lost trust in myself. I feel stupid. How could I do this? Why didn’t I go there, why didn’t I check?” he said.