Thanks to a tip from ocjohn, I’ve come across what looks like just an investment gone wrong at first glance. Upon further research I’ve found an even more interesting situation. Any personal names in this post have been jumbled for obvious reasons.

The property we’ll start with is 39 Modesto which is a detached condo in the San Simeon tract in Northpark. It was purchased using 100% financing on 7/31/2006 for $720,000 and rented out for $2850/month on 8/23/2006.

Let’s pause and take a look at what a great investment this is. 😉 Assuming a 6% Interest Only loan for the whole amount, the payments are $3600/month. After adding in HOA fees of $206/month and Property Tax (including Mello Roos) of $800/month, this ‘investor’ is going to be negative at LEAST $1750/month. This by itself is post worthy but read on to see how crazy this gets.

I became curious and wondered if this ‘investor’ (let’s call him ‘Shagi Indud’) made any other great moves. I was surprised to find out that Shagi owns FOUR properties in Orange County *AND* THREE properties in Los Angeles County:

1. 7/10/2006 – $854,000 – 444 Ponce Ave. Placentia, CA 92870

   • Lender: BNC Mortgage $854k
   • Seller: Alalanaa Bizza

     • Purchased 11/30/2005 – $677,000
     • Lender: DBA Westworks Mortgage $541,580 / Hic Star Corp $135,395

2. 7/20/2006 – $600,000 – 12301 Rives Ave. Downey, CA 90242

   • Lender: Encore Credit Corp. $480k/$120k
   • Seller: Leda and Racal Bizza

     • Purchased 2/22/2005 – $460,000
     • Lender: BNC Mortgage $459,900
     • Refinanced: Southcoast Loans & Mortgage $440k and $110k

3. 7/20/2006 – $735,000 – 1885 Gladys Ave. Signal Hill, CA 90755

   • Lender: First Franklin $588k/$147k
   • Seller: Drianna Bizza

     • Purchased 4/1/1997 by Barache Daafy (I couldn’t locate the transfer to Drianna Bizza)

4. 7/31/2006 – $720,000 – 39 Modesto Irvine, CA 92602

   • Lender: Resmae Mortgage Corp $576k/$144k
   • Seller: Red Abo Henc and Hunshiy Gnaw

     • Can’t locate prior purchase information

5. 8/7/2006 – $685,000 – 860 Buttonwood Dr. Brea, CA 92821

   • Lender: Aegis Funding Corp $548k/$137k
   • Seller: Nanda Bizza

     • Purchased 3/23/2006 – $635,000
     • Lender: Encore Credit Corp $508k/$127k

6. 8/14/2006 – $1,250,000 – 10258 Hasty Ave. Downey, CA 90241

   • Lenders: 1st Choice Mortgage $1000k / Cameron Financial Group $250k
   • Seller: Leda and Racal Bizza

     • Purchased 10/31/2003 – $485,000
     • Lender: BNC Mortgage $485k
     • Refinanced 11/4/2004 – $593,750 – New Century Mortgage Corp
     • Refinanced 3/15/2006 – $998,750 – BNC Mortgage
     • Refinanced 7/11/2006 – $126,250 – Secured Funding Corp

7. 8/21/2006 – $850,000 – 920 E. Bastanchury Rd. Placentia, CA 92870

   • Lender: Axiom Financial Services $680k/$170k
   • Seller: Alalanaa Bizza

     • Purchased 12/7/2005 – $666,000
     • Lender: BNC Mortgage $532,720 / $133,180

Now there are several things that scream out as being suspicious:
– ALL 7 properties were purchased with 100% financing
– ALL 7 properties closed within about 40 days
– ALL 7 properties were funded by different lenders
– 6 of the 7 properties were purchased from the Bizza family

I haven’t yet researched all the purchases by the Bizza family but I noticed that some of them were bought less than a year ago and then flipped to Shagi. Is there any way this could be legit? Is Shagi Indud even real? If so, Shagi Indud is in deep doo-doo with his 100% financed debt of $5,694,000!

UPDATE: I’ve updated this post with any purchase/refinance information by the Bizza family I was able to find on the homes that were flipped to Shagi. The Bizza family also bought everything on 100% financing. There is definitely something fishy going on here. Take a look at how quickly some of these properties (1,2,5 and 7) were flipped. I wonder who the loan broker for Shagi was? That person must have made a ton of shady money as well.