Flipping Houses - Chasing Fire Trucks

I had two and a half months to make rent, and I needed to start finding houses immediately. After all those medical bills, collection after collection and real estate foreclosure, my credit score was dismally low at 501. This meant that I did not qualify for traditional mortgage. I could not rely on conventional ways of investing in real estate.

One day, I was browsing in a bookstore. I breezed through some real estate books. I didn't really understand what they were talking about, but they said something about "motivated sellers". I thought, "OK, that's something to hang on my hat."What that meant was you can't make money on a $200,000 house by buying it for $200,000. You need to buy houses from motivated sellers whose houses were undervalued. I thought, "I've got to find motivated sellers." However, the book didn't say how to find them. I began to think about where these motivated sellers might be hiding. I thought, "Well, who's more motivated than people whose houses are burning down?"

So I started chasing fire trucks. That's how little I knew.

But it made sense to me. It was August 2001 in Texas, where the air is dry and temperatures can reach more than 100 degrees. Fires happened frequently. I would be out driving, and as soon as I heard a fire truck siren, I would make a U-turn and follow it. Or Veronica would watch the 5PM news and call me about a house that was burning down. They would usually announce the address on the news, so I would go there. I'd show up at people's houses while their houses were still burning down. Everything would be crispy and smell like smoke. The firefighters might still be putting out the flames. Then would walk up to the homeowner and hand out my business card. "Sir" or "Ma'am," I said. "If you need me to buy your house, I'd be happy to help."

A lot of homeowners flicked their middle fingers at me.I did that for three to four weeks. I probably chased about 20 fire trucks. But it wasn't working. I decided that was not a good time to be handing out my business cards.

Then I got a phone call from an insurance agent.

"Hi, may I speak to Mr. Montelongo?" She said.

"This is he," I said, and my chest swelled because no one called me Mr. Montelongo.

"I have a business proposition for you," she said. "But you have to make me a promise."

"Well, what's the proposition and the promise?" I said.

"I have a client whose house burned down," she said.

"It's been six months, and she already has her claim check. But she only has enough money to pay off her mortgage and not enough for repairs. She was under insured." The insurance agent pause. "Now she wants to sell her house."

I tried to stay calm. "What's the promise?" I said.

"I have another client who called me saying you showed up at her house while her house was still smoldering. She was very upset that somebody would do this. She gave me your business card," she said. "The promise is that you will not show up at people's houses like that again," she continued. "It's not the right time, and it takes four to six months for people to get their claims checks, anyway. What you're trying is not going to work."

It made sense to me. So I agreed: "In exchange for the information of the woman who settled her fire claim, I will never chase another fire truck."