Indianapolis Investors BEWARE!!

29 Replies

Greetings Fellow Investors,

I wanted to share a recent experience that I hope will help both current and future investors alike. 

I am an out of state investor that lives in San Diego. I have been purchasing buy and hold properties in Indianapolis for long term investments for the last few years. Some I hold onto, and others I flip.

I recently purchased a duplex in a class B neighborhood of Indy. My regular contractor , whom I know and trust, has been overwhelmed and unable to do the work. I reached out to my wholesaler that I have purchased multiple properties from, for contractor bids and suggestions. He gave the name of a contractor named CURTIS L. HANSEN with RENOWNED CONSTRUCTION LLC. Mr. Hansen, looked at the property, and gave me a scope of work with a bid of 30k. Reasonable for the work that needed to be completed. I did a background check and called 3 separate references from real estate professionals in the area that know Mr. Hansen on a personal level. One of them a real estate agent that has a reputation to protect. All 3 of them relayed to me what a hard worker and great contractor Mr. Hansen is...... I had a very direct conversation with my wholesaler in regards to how important this was that I don't get screwed and that this contractor is someone I can trust. Again.. he assured me that this guy has done multiple projects with his buyers and is 100% trustworthy.........I think you know where this is going. 

We set a start date for construction and we talked about the funding. Typically, I set up draws of 50%, 25% and 25% at completion. I set my first draw directly from escrow in the amount of 15k. 

CLUE #1. Mr. Hansen seemed to be anxious for the funds and asked when they would be wired. His excuse was he was eager to get started.

Construction began on October 16th 2017. On October 19th, I began asking for my first photos of work completed. He sent me a few photos of the demo and said he was getting ready to start with electrical and plumbing upgrades.

CLUE #2 Mr. Hansen started making excuses about the weather being too cold to work on the exterior, and technical issues with his phone and iPad so pictures could not be sent until later that night. This is when the RED FLAGS started flying. 

CLUE #3 Mr. Hansen then called me saying that he discovered termite damage and the repair was going to add another 15k to the rehab. This guy was seriously trying to get me to send him more money. On top of that, one of the references that I received backed up his story saying that the repairs would be 15k to 20k more. I immediately told him to stop work and called my termite professional to check it out. As I expected, he told me swapping out a few 2x4's and a little work consisting of under $500 was all that was needed. 

I pressed Mr. Hansen more and more each day for proof of expenditures and work completed.  He started sending me pictures of jobs that were not mine and receipts for material that was purchased prior to my funds even being wired. At this point, It was obvious I was being taken advantage of. The question was, how much of my 15k was gone.

After a few more phone conversations and texts with the thief, He was no longer responding to me. I even tried to cut my losses and told him to keep 7k for a half days work of demo and return the other 8k. Still no response and gone is my 15k. Luckily, I do have an extensive text chain as evidence. What I can do with it, not sure. I know Indiana has a small claims limit of $8,000. And if I wanted to go to "big boy court" as one attorney labeled it, even if I won, I would most likely never see a dime. 

As far as those recommendations. Make sure you know them well. All 3 of my references turned their back on me. I asked the wholesaler to split the loss with me  in an effort to preserve future business. His response... "Take me to court" 

Mr. Hansen is a fraud. My main point in writing this post today is to warn other investors to not use this guy and to please do your homework. 

As of today, my regular contractor is on the job and is doing awesome. The project will be done in a couple of weeks. As far as Mr. Hansen, I have never heard back and he is most likely living on my 15k while looking for his next sucker.

As a sidenote, I did discover a great piece of software called phone view. I was able to download all of my texts and fraudulent pictures as a PDF from my phone. The cost was $29 for a one time purchase and was very user friendly and well organized. I have included the link below. 

Phone View Link

I hope this information helps someone out there. For me? This was a $15,000 learning experience.

Mitch

I feel your pain. Years ago, we had a rogue roofer abscond with $1500 of ours and disappear. 

We had checked references and verified he was licensed, bonded and insured the first time we worked with him. He did a good job that time. Two years later we had another roofing job to do and failed to re-check his credentials. His license expired two months prior to his signing the contract to do the work for us. I took the matter to the Washington Department of Labor and Industry, but because the contractor was no longer licensed, bonded and insured, they couldn't help me. If your state has a similar licensing department, I would contact them and see if there is anything they can do. Was the contractor licensed, bonded, and insured? Obviously the reference checks were not enough. 

For $15 grand, I would pursue justice by legal means. Even if it didn't result in the return of my money, it would serve to put the case on record and other unsuspecting souls may see it before getting trapped in a thief's lair.

I would love a feedback option in Bigger pockets. Some sort of system where people provide ratings for people they have worked with. 

Amazon has many reviews but it's the Verified Purchase ones that hold weight. 

I'm sorry that happened to you. 

@Marcia Maynard

Thanks Marcia. I am currently talking with my attorney. I agree. I would like to pursue this in court. However, legal expenses and travel would add up fast on top of the 15k I am already out. Ill keep you posted.

Hard to believe 3 different people vetted for this guy. 

How well did you know those 3 people and what were their track records?

@Mitch Smith Would you be willing to tell us who the whole saler is so we don't use them? I wouldn't want to give someone like that business and I definitely wouldn't want to get bamboozled by them in the future.

This post has been removed.

@Steve Kim

Hi Steve. It is not my intention to ruin livelihoods on Bigger Pockets. I simply want to share my experience to hopefully keep others from making the same mistakes. Feel free to contact me by PM, email or text and I would be happy to have that discussion.

Thanks Steve.

Mitch

Frequent reader, new poster here on BP, sorry to hear about your situation @Mitch Smith

I'm a real estate attorney and contractor/investor in the Indy area (based out of Shelbyville, 25 minutes SE of Indy) and I'm seeing this happen far too often right now. Fortunately for us some of the areas around Indianapolis are being revitalized, but unfortunately that means the good contractors are swamped and the hacks come out of the weeds.

Thanks for the heads up on who to watch out for, best of luck!

@Mitch Smith

Sorry you got screwed. What are the names of the 3 references and the wholesaler? Is there a reason you are protecting their identity? Others might want to avoid them too.

Also some things that might help in the future: 

1) Need to thoroughly vet the validity of references - it's easy for someone to use 3 friends/employees. I hypothesize you didn't do this since you didn't share any of them?

2) Brandon likes to say, and I agree, that you should always make sure that the contractor you work with has more to lose than you do when it comes to walking away from work with the way you set up payments; this holds true especially with new contractors but can change when you have a built a long relationship with them. If the contractor is in such dire financial straights to be playing Ponzi games, no matter how 'great' they were in the past, you don't want to be the guy holding the bag.

@Ray Lai

Although I am not happy with this wholesaler, or the other two real estate agents that I used as references, I only gave out the contractors name to prevent anyone else from getting screwed by him. Rather than blast these names out on the forum, I would be happy to share with you the info by PM. 

My intention is not to hurt anybody's business, but merely to protect others from being in my same situation. I was very disappointed that this wholesaler was not willing to split the difference with me after such a strong recommendation. I purchased two properties from him last month. He would have made the money back within a month on future deals with me. Needless to say, I know where he stands now and I will no longer be doing business with him. I simply wanted to share my experience to help others watch out for the same.

Mitch

@Mitch Smith

I feel ya, part of Dale Carnegie's golden rules is "Never criticize, condemn or complain" and blasting someone in our industry could construed as violating that. 

Although I don't think the wholesaler should've split the cost with you because it's not their job to do your due diligence for you, I do think think that there is a chance they are in cahoots with that contractor and are selling 'fake deals' to other newer investors and by not outing them they'll get away with it. Then again, it's no your responsibility either to protect others on here, but that's why I've been up-voting your posts because you're a good guy for doing so.

Ugh. Listening to this just makes me sick to my stomach, this is just all really unfortunate. I had a similar experience when my husband and I hired a contractor and even had our real estate agent refer him to us. We trusted this guy so much especially since he had worked with a pretty big broker in our area and thought, "this guy has X amount of years of experience and works with all of these agents who are investors, he must be good". Totally WRONG. After taking him to small claims here in California it's almost laughable how easy it is for these guys to get away with your money. We won the case, but this thief STILL hasn't paid. Long story short, the worse we could do to him was damage is reputation on Facebook (it's a small town so here it's significant) and put a lien on his property. Oh, and if you go through the paperwork to have a Sheriff serve the defendant, they don't have to open the door. After a few times of trying they just leave and the defendant doesn't have to show up in court. What a joke.

Hopefully Indiana is easier.

So sorry, @Mitch Smith . Unbelievable. 

@Krystle Padilla , I'm with you in California. Years ago had a rental property in Rancho Santa Margarita, and the long and short of it was a tenant I took to small claims court. I got two judgements against her, totaling @ 9,500.00.

Good luck trying to collect . She was a professional deadbeat. That one hurt. Never collected a dime. It's scary when people we think we can trust with our property or our money goes seriously sideways.

Best wishes, Mitch S.

Good to see you on here, Krystle P.  :)

@Daniel F. Harb

Thanks Daniel. I appreciate the thoughts. It was an expensive lesson but definitely moving forward. I have been very fortunate to have good luck up until this point with my contractors. This will definitely help me be more aware. 

Thanks,

Mitch

@Mitch Smith Sorry to hear your story and thanks for sharing. I feel your pain, having been ripped off of about $40k several years ago. Best of luck moving forward! 

(Sent you a PM as well)

I don't have any good advice to help on the most recent experience, but have a suggestion.  What about hiring a third party (ie. WeGoLook) to go and take pictures of the work?  

If a contractor knew that the work would be checked, might be less likely to post fake pics.

I had the same type of experience with another contractor and was thinking about going after him in court but decided not to because he had an Corporation and I was afraid he would file bankruptcy if i went after him. Which he ended up doing. Although, he did not get the permits he was supposed to and filed a claim with his bond company and got his whole bond. Now the bond company is probably going after him personally. I got $10k of the $20k he cost me. But i was glad to get something.

@Mitch Smith sorry to hear about that unfortunate event but thank you for sharing and keeping us in the community in your mind. My partner and I are from CA and newer to REI, we are focusing on the Indy market and working with a good realtor. I'm starting to analyze deals now, nothing solid yet but I'm expecting to use a good property manager and a contractor to make some updates on the property that we will buy since most of those in our radar are older homes. Any recommendations for a property manager and a contractor? Looking into areas close to downtown Indy. Thanks in advance!

@Fernando Enrile

hey Fernando. Id be happy to share with you. Feel free to PM or email me when convenient.

Thanks,

Mitch

This is why I don’t like the idea of being a remote rehabber. In theory it works but there is a single point of failure with not being boots on the ground. There is just so much risk to have your inspector and rehabber to collude together.

@Lane Kawaoka

Thank you Lane. 

I appreciate your input and up until a few years ago I would have agreed. However, The San Diego market is much more difficult to get involved in. Until I discovered out of state investing and worked hard to overcome some the obstacles that you mention, I really wasn't even able to work on my passive income. Buying rental properties at $450,000 if you are lucky, and getting a 6% return is just not worth it to me. I have established a great team of contractors, title, property managers and boots on the ground to help me run my business. And I must say, the credit goes to them. This is the first mishap that I have had and at it was because I broke one of my own rules.

I became emotionally attached to this property and wasn't patient enough to wait for a trusted member of my team to do the work.  

Although it was an expensive lesson, I learned a tremendous amount and I can guarantee that I will not make that mistake again. The price point of the market in Indianapolis at least allows me to be in the game.

Thanks for the heads up... but why so concerned about protecting the livelihood of the realtors and wholesaler? Doesn't seem like they cared at all about your livelihood!!!!!! Someone's word and their trust mean everything. Post their names and let others know who they are working with. Its just the truth......

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