Diary of a Mad Investor

[Ron H.]

A few years back, an investor hired a contractor to work on a fix and flip in Orange County. The investor's main focus was notes, but he also did the occasional flip. Throughout the project, the investor experienced countless issues with the contractor's quality of work and missed deadlines. Finally, the contractor stopped showing up all together and threatened to withhold vital documents and materials if the investor did not pay the remaining fee in advance. The project was nowhere near completion and the investor already paid in excess of the work that was performed. The investor refused and the contractor went MIA right after saying "go ahead and try to sue me."

A few months later, the contractor received a letter in the mail notifying him that his mortgage had been sold to a new lender. A second letter notified him the note's remaining balance was being called due. Guess who bought the note - the investor. Foreclosure proceedings took place and that became the investor's next flip.

The person who told me and a roomful of our buddies this story was the investor and from what I know of him, it's probably true. Fact or fiction and right or wrong, it's an interesting story so I thought I would share it.

Looking forward to your thoughts, comments, etc.

[Kevin Crosson]

Probably true. I know an investor who got into flipping after they loaned an aquaintance $10k that they thought the person was good for. The acquaintance ended up being a conman who had scammed millions from quite a few people. The investor ended up getting the conman to give them a worthless third trust deed on a property that was already leveraged way past its value.

The investor was so determined to their money back that they tracked down the people in first and second, bought their notes for twenty cents on the dollar, and let it go to foreclosure auction. At the auction, the conman had a partner who showed up and bidded and bought the property back. The price they paid was about $60k more than the investor had put into the notes, so the investor managed to make their money back 6x. Creativity is king!