Toby wired $4,000 to a broker for a hard-money loan on a real-estate flip. The broker and lender disappeared after taking the fee, leaving the rehab unfunded. Now an investor who is a local judge is threatening to sue him personally, even though the property is owned by an LLC and his business partner signed the guarantee.
This is Toby, can I help you? Hey Toby, I appreciate you picking up, man. I'm dealing with a pretty bad situation from a flip I did 2 months ago.
What's going on, man? Tell me what's going on.
I syndicated a deal, I brought in 2 investors. My broker said the hard money lender would fund the rehab before we started construction.
So you're saying that they were going to upfront the construction cost?
Yeah, that's what he told me. The day of closing, he says, actually, you'll need to front the rehab. And he said there was a pay-up-front program, just an extra $4,000 fee. So I wired it to him.
Wait, wait, wait.
I know, pretty big red flag looking back, but you got to understand, we were hours away from closing. I didn't want to delay it even more. I haven't heard a thing from the lender and the broker disappeared.
I'm sorry to hear this, man. Unfortunately, we've heard these stories. This is why it's so important that full transparency, clarity, full honesty is so important in our space.
Yeah, I definitely learned my lesson, but that's not it. Now one of my investors who happens to be a local judge, he's threatened to sue me personally.
So you're listed as one of the guarantors, right?
No, my business partner actually signed. The property's under an LLC that we co-own.
Where are we at on getting you going and back on track? I just need a lender I can trust. Okay. All right, so let's do this. Let's get this cleaned up. And do me a favor, after we get this thing cleaned up, from now on you come directly to me, okay?
Yes, sir, I will. Thank you so much.
All right, man. All right, talk to you soon.
