All Forum Posts by: Kirti Patel

Anybody knows of any lawyer who would  take up such case on contegency basis, I might give it a try. 

Thanks everybody who has replied to my post and offered valuable advice and insight that will others like me. 

In hindsight, I realized I had made several fatal blunders. 

1) The borrowers(referred as they in this post) ran REIA, and acted as mentors to dozens of attendees. As a newbie, I was looking for industry experts and mentors. So I easily fell into their influence and trusted them without any basis

2) When they presented this tear-down-rehab deal, that was too good to be true, I did not do due diligence. To get permit to tear down a property takes over year in Chicago. They never had done such project in Chi ago. They had never rehabbed a high end single-family home property that was worth 1.8M. They flooded the REIA every week with dozens of such high-end deals with 25-30% returns offered to investors, with turnaround in less then a year. Like a kid in a candy store, I fell for it.

3) I should have got a lawyer involved during loan closing. I had provided down payment to buy property that would be rehabbed. Since I did not provide full capital for rehab, they had to acquire additional financing to fund the project and had requested me not to record the mortgage so that they can offer lender of substantial sum to have a priori claim.  It seems they used this loophole to borrow way beyond potential market value of the rehab and they hid it from me.  They would not even give me the names of other investors and lenders on this and other projects.

4)This property was held under LLC. LLC has no other asset. They have no skin in the game. So litigating against a LLC would only drain me financially. Even if I succeed in litigation against LLC, they can easily file for bankrutpcy of LLC and evade liability. I donot want to lose anymore than what I already have, hence I am trying to avoid costly legal proceedings

Thanks everyone for your support, and advice

I was new to Real Investment, and wanted to learn it so I can generate decent retirement income out of my lifelong savings. I attended REIA meetups(2015) run by Matterhorn Group in Chicago, run by Bob Brock, peter kitchin and GD Chaplin. They used to advertise lucrative rehab opportunities with them where one could invest with them and make 25% to 30% profit in matter of 10-12 months. They presented themselves as pro of the RE industry

Being new, I wanted to join with successful rehab experts like them, so I invested 200K with them to rehab one high-end property that would be sold for 1.8M with rehab cost of 1.1M. Rehab would finish in 10months. I could get upto 50K in profit. Not bad, I thought. 

But once I invested, nightmare unfolded after a year. They could not city permit to tear down old property for over a year, The person with experience was fired as partner. The General contractor was fired. The builders took up additional loans exceeding market value of would-be property, while keeping me in total dark. It took them 16months and 1.6M of debt to finish rehab and put it to market. Unfortunately, I had not recorded my mortgage deed to facilitate additional rehab loans, so I ended up as last person holding a loan and lien.  I requested the borrowers to return my loan and offered them waiver on interest and other incentives. But they refused and played hardball.  Eventually, main lender took them to foreclosure for non-payment of loan obligation. Their loan was worth more than actual market value of rehabbed home. They initially listed the property at 1.8m in 2017. Since than, they reduced it to 1.5M but found no buyers for 18 months.  Now property is foreclosed. With it, my life's savings is gone.

I doubt that property acquired for 550k, would cost 1.1M to rehab to create a market value of 1.4M. No transparency, no accountability to lenders, no communication with investors, no reporting, stalling inquiries, not responding to phones, texts  or emails was their modus operendi.  It affected my mental health so much I had to undergo medical treatment and physical therapy.  I tried to hire a lawyer but I could not afford cost of litigation, on top of losing 200k.

Scamsters like these give bad name to RE industry and keep people like me away from investing in it.