The borrower was not only able to pay his friend the investor back right away, but take out a HELOC as the deal was not public therefore the lender saw him as having full equity.I'm missing some important pieces to the puzzle so please help me out!

It has always been a bit puzzling to me that people lurk without posting.

Its also just one part of the puzzle right , so if everything else on the deal makes sense, there is upside , but then you have to pay 10k more than you felt was fair for the homes, its really irrelevant in the greater scheme of things.  

I have always been dubious of the info marketing business cause 99% of it is pure crap where they give you half of the puzzle, then you need "COACHING" to get the other half.

When the economy turned, it was just a good indicator, this way I knew if people were leaving the city or were they moving in.Just a very small piece of the puzzle, but it has sure helped me avoid certain areas at certain times.

Yep, I saw that the dual job thing might puzzle folks...so I'm making things a little more clear.

Guys like @Derrick Craig can get very marginal areas to perform but in the main for out of state investors finding the best PM you can is arguably the most important piece of the puzzle.  

If all else fails you pretty much have to go find the pieces of the puzzle yourself: track down utility consumption figures from each provider, confirm property tax amounts with the municipality, and try and estimate what you expect you'll need for R&M and CapEx - this can be tough if you don't have a lot of experience but it's still a necessary exercise even if the seller does have solid financials to share.

So far I've been screwing around looking for pieces of the puzzle that do not exist and the clock is ticking.

That's a five year long process.Just because they didn't pay, doesn't mean the lien got extinguished. on RARE ocasions, some lenders were reconveying title on junior liens that they charged off but most of those were compelled to do so under settlement agreements with the 50 state attorneys generals with a national settlement from a class action against the big five (Chase, City, Wells, BofA and I think GMAC).I think i'm missing a couple pieces of the puzzle.