Here is an article about me in Motley Fool from about two weeks ago. It was written right after I took the blog down for a couple of days. I just recently found the article and want to re-post it here. I think it’s pretty interesting. 
The author thinks I am just greedy flipper.
24 Years Old, $2 Million in the Hole
By Seth Jayson (TMF Bent)
September 25, 2006So, have you heard the one about the 24-year-old “real estate investor” who’s $2 million in debt and still hasn’t gone back to his day job? No? Alas, you may never get the full story. Last week, a Californian named Casey Serin started a blog called “Iamfacingforclosure.com,” detailing how he got himself half a dozen sinking properties and $2 million in debt. By today, he’d pulled it off the Net, with good reason.
The quick version of the story is this. After taking some courses in real estate investing, this eager kid lied his way into a slew of loans he, admittedly, didn’t deserve, and now that he’s bleeding to the tune of $20,000 a month, and the housing market is crashing around his ears, he thought taking his story to the Web might somehow help.
A part of me still wonders whether or not this wasn’t just a somewhat elaborate hoax, but if it’s not, this kid is in deep trouble. Admitting to serial lying on loan applications might be enough to get forgiveness from our short-attention-span society, and it might get you a few “attaboys” from the easily impressed. But I doubt this kind of naive, public forthrightness will serve Casey so well should any of these lenders haul him into court for fraud. (For those who just have to see what was there, a few Web searches will still turn up cached pages.)
Denial: Not an African waterway
Even if this is/was just a piece of Web 2.0 performance art, it’s not too tough to believe that there are other people in the same situation. If you read between the “Dude, you’re going to jail” comments on the site, you might have gotten the uneasy feeling, as I did, that the lesson’s not sinking in.Try this on for size. “You can’t buy this kind of experience,” wrote one reader. “Seriously it’s not the end of the world. No one who ever amounted to anything did it first crack out of the box.” It wasn’t the only comment along those lines.
With attitudes like this so prevalent, why don’t I believe things are going to clear up for people like this any time soon?
Gekko was wrong. Greed ain’t good.
The problem here isn’t real estate per se, nor bad lending.Well, let’s back up a step. If the information on that blog was genuine, Countrywide Financial (NYSE: CFC) and Citigroup (NYSE: C) made some very stupid loans. If Countrywide did, as alleged, make two loans to an overextended “self-employed” 24-year-old with nearly zero assets, will anyone else out there be surprised if its loan book becomes absolutely rank in a few months?
Greed makes you stupid
On a more philosophical level, here’s the real problem: People can’t help themselves when they think they know how to get rich quick. How quickly they forget. In 1999 and 2000, everyone was a tech-stock wizard. Everyone knew that the bandwidth appetite would keep Cisco (Nasdaq: CSCO) stock shooting toward the moon. Everyone knew that the emphasis on network architecture would make Sun Microsystems (Nasdaq: SUNW) the next IBM (NYSE: IBM), only better.Of course, the crash proved that the only thing we really had was a rising tide floating all those boats. And it receded at warp speed, leaving plenty of amateurs stuck in the muck. I suspect we’re going to see a similar problem in real estate, as more amateur flippers like Casey find themselves backed into a corner. The difference is that this might take longer to unwind, and the consequences could be a lot worse.
After all, real estate isn’t so liquid. Sellers anchor to what they paid. Buyers have no reason to rush in at the front end of the crash. Incentive schemes dreamed up by realtors, sellers, and homebuilders like Ryland (NYSE: RYL) prop up prices. Lennar (NYSE: LEN) keeps building despite the writing on the wall. As a result, it will be months before we see a real “correction.”
Moreover, unlike most amateur stock players, who are only gambling with cash on hand, the new real estate speculators depend on huge slugs of leverage. Lose everything on your pile of tech stocks, and you’re back to zero. Lose everything on leveraged real estate, and you move deep into negative territory. There’s nothing like owing $600,000 on a home that’s now worth $470,000 to make you wonder why they invented the option ARM, or the 40-year mortgage. You think it was to do you any favors?
Foolish bottom line
Let me break it down for you. If you’re a twentysomething out to make it big in the world, do yourself a favor and slow down. If you’re wearing flip-flops and low-riding jeans to closing, I’m talking to you. Real riches come over time, not overnight. You need to start with a clean financial house, make smart bets, and save your money sensibly.Twenty-four years old and $2 million in debt is no way to start your future. It’s amazing to me that anyone could ever think otherwise.
Yes, I have made some mistakes and I own up to it. I have learned (and still learning) what NOT to do. I was not careful with leverage. I was too impulsive to buy, used 100% borrowed funds and didn’t have the experience to handle so many deals all at once. Leverage turned against me.
But… if I was to do it again and do it smart and become successful, there is still the philosophical question of greed:
- Why is my desire to make money quickly in an unconventional way considered greedy?
- What’s wrong with “flipping houses” if I do it in an honest and ethical way?
- At which point does an entrepreneur’s profit-seeking mentality turn into greed?
- If I was successful and DID NOT fail, would you still call me “greedy”?
77 Comments
October 10th, 2006 at 2:39 am
I think its the elevation of greed above more noble human attributes that’s the problem. Its also the mistaken belief that others are not equally gluttonous creating a situation where a feeding frenzy develops resulting, inevitably in the flip side of greed; fear and loathing. Its human nature
October 10th, 2006 at 7:16 am
Casey,
There’s a difference between an entrepreneur and an opportunist. All entrepreneurs are opportunists. But not all opportunists are entrepreneurs. The grifter scamming grandma out of her mutual fund savings for time shares isn’t an entrepreneur. Neither is the kid selling crack on the corner. Entrepreneurs couple opportunity with value creation.
Flipping. Where is the value add? There is *none*. This is because housing is *not* a liquid market. Speculators, which is what flippers are, are beneficial to liquid markets like the stock market. That’s because they add liquidity. But do flippers add liquidity to the housing market? No. Here’s the rule-of-thumb test: Can a flipper sell short (in stock market terms, not real estate terms) a house? In other words, can I borrow a house from my broker, sell it to someone, then buy it back cheaper later to make a profit, thereby making money speculating on declines?
No. In reality flippers can *only* profit during up markets. That’s a dead giveaway that they are not adding value but instead destroying value.
Or, more simply, get a real job. If you want to be an entrepreneur or a real investor then go get a job that will give you apprentice experience in that realm.
October 10th, 2006 at 8:08 am
Hey bird dogger,
Well I hope your learning from all the critics.I think the Sacramento market is in for a real rude awakening. I am from the area and know first hand how bad the speculation got up there.There is significant downside risk there so try and unload anything you have to sell asap.You know you should get some costruction experience so you can do a lot of the work yourself. When and if you dig out of your hole, start off slowly next time. Take on one fixer and actually complete the project and if you watch you costs you can probably come out ahead.Git R done!
October 10th, 2006 at 8:24 am
Cool. Watching a car crash and I don’t have to leave home!
October 10th, 2006 at 8:37 am
* The desire to make money quickly is not in itself greedy, but doing 8 houses at once is. You should have fully completed the first house, then move on to the second. Or more aggressively, finish one, start two more; finish them, start 4 more. But never 8 right out of the gate.
* Nothing wrong with flipping houses. People bash flipping just like they bash Wal-Mart, or whatever else is the topic of the day.
* An entrepreneur’s mentality becomes greed when he becomes blind to risk and collapse.
* If you were successful, you probably would have been called reckless instead of greedy.
October 10th, 2006 at 9:01 am
“Failure” - it can’t be spelled without “u” “r” “a”.
October 10th, 2006 at 9:26 am
It is kind of amazing that you’d re-print an article that is so unflattering to you. I’s sure you feel you’re being objective, but it does come across as ego-centric.
October 10th, 2006 at 9:27 am
-I’s
+I’m
October 10th, 2006 at 9:27 am
While Casey’s actions are definitely disturbing, what is more troubling is those that seem to cheerlead him. Here is someone that admits to committing criminal acts (note that these were multiple acts) in order to obtain something he couldn’t otherwise do. Yet, some here are saying don’t worry you’ve learned a valuable lesson for next time. Frankly, I don’t understand this attitude. Would these same people say to the guy who gets caught stealing your TV set “don’t worry, at least next time you’ll know how not to get caught?” I also have to wonder if you weren’t hoping for Ken Lay to get back into the game.
I think it is a disturbing comment on the zeitgeist of our society when people are so cavalier about such things. I guess only suckers work these days, everyone else is making money by stealing it.
October 10th, 2006 at 9:37 am
Casey, greed motivates a lot of us, whether we like to admit it or not. I have to laugh at all the “holier-than-thou” types who are really deluded about themselves into thinking that feeling greedy is beneath them. I know of a few Buddhist monks who are probably above it.
But we are animals that respond to variable rate reinforcement schedules and we are capable of driving ourselves insane waiting for the big payoff.
I don’t believe Gekko was entirely wrong. To slightly alter Gordon Gekko, “Greed (can be) good.” Greed drives people to go work for small startups in the hopes of scoring big with stock options. Greed can drive us to positively work our asses off in the hopes of big payoff at the end. Maybe the payoff won’t come, but in the meantime we were busy learning something, doing something productive, instead of lying around collecting unemployment checks.
When asking somebody for advice, if the person stands to make money by slanting the advice one way, that’s what they are going to tell you. If you ask a stockbroker if now is a time to buy stocks, he says yes. If you ask a realtor if now is a good time to buy a house, he says yes. If you ask a barber if you need a haircut, he says yes. There is a natural greed hard wired in that is human nature.
Motley Fool has a stockbroker-like agenda, and that’s to keep people in the stock market forever, no matter what happens. They don’t write newsletters on horseracing or playing black jack. Maybe they are right in that riches usually build slowly, but their solution is self-serving. And it is true that greed run amuck makes people do stupid things. But MF is hardly in a position to pretend that stock investors are not motivated in part by greed. MF is distancing themselves from greed by pretending that long term stock investing is as safe as putting away savings in T-Billls, which isn’t true.
There is nothing wrong with wanting to buy houses, fix them, and sell them. And yes, even if a horrific crash, if you were real good at it, you could probably make a living doing it, but during such a time you might not get rich doing it. I guess the question to ask yourself is, would I like doing this even if I did not get rich doing it? Because if you can honestly answer yes, then that is probably your calling.
I think people resent it when somebody comes into money very quickly. That’s partly due to jealousy because - hey! Just about all of us are greedy at some level and want some of that dough. They also think if the money is going to solve a problem and the money was obtained quickly, that no lesson was learned. You’ll just blow it again.
Some people have raised money quickly in very unconventional ways to solve their financial problems. Ever hear of Karyn Bosnak? She is probably the first famous Internet panhandler. And yes, she got LOTS of hate mail while she panhandled her way out of debt. Check her out:
http://www.savekaryn.com/AboutSaveKaryn.htm
October 10th, 2006 at 9:53 am
Susan,
Give me a break. A realtor preaching about social anthropology isn’t really all that entertaining.
If you ask a stockbroker if now is a time to buy stocks, he says yes. If you ask a realtor if now is a good time to buy a house, he says yes. If you ask a barber if you need a haircut, he says yes.
Hmmm. The “stockbroker” is NASD registered, Series licensed, SEC regulated, and usually (if she’s any good) has an advanced degree that cost her over $100K and 3 years. The barber knows how to cut hair, and has to get a license from the county/state proving he can actually cut hair safely.
The realtor? They had to pass a Denny’s placemat puzzle test, and learn how to chauffeur a leased Lexus. I love how realtors like to compare themselves to professionals. Were I a barber, I’d be deeply offended.
Oh, and by the way, a stockbroker won’t ever tell you buying or selling anything is a “good idea” as a *forward looking statement*. Why, I ask you, can realtors get away making definitive *forward looking statements*? You guys need a big dose of regulatory medicine, since you obviously cannot control yourselves.
And you preach about greed.
There is nothing wrong with wanting to buy houses, fix them, and sell them.
Is there anything wrong with committing fraud in order to get the loans to buy those houses? C’mon Susan. You keep defending Casey. Did he or did he not do anything wrong? And realtors claim to have “ethics requirements”. How many clients do you lie to in order to close a deal? It’s all good, everyone does it, right?
I think people resent it when somebody comes into money very quickly. That’s partly due to jealousy because - hey! Just about all of us are greedy at some level and want some of that dough.
Lol. Your ignorance precedes you. Many of those posting here of late keeping the heat on this corruption posterboy have made orders of magnitude more money than you. I assure you of that. Jealous?
October 10th, 2006 at 10:02 am
Casey,
I’m in awe of what you do. You are now my greatest guru. I can only dream of emulating what you are doing now. If I had the money, I’d surely be your partner. Reading your story, I think you should not consider this as a loss making venture. The guys at motleyfool are just fools. They dont give enough credit to you. Ignore them. I think you’d be great if you buy a few more houses and take money at closing. Like buying a 600K home and getting a kickback of 100K at closing. This way, the seller gets his price and you get an additional 100K. Now with the 100K, pay off your mortgages for the next 5 months. A good way to balance your finances while the housing market stabilizes.
October 10th, 2006 at 10:29 am
Ha Ha Randy! I am not a realtor. Boy do you have me wrong!
October 10th, 2006 at 10:40 am
Stanely… getting cash-back at closing is a little shady because I would have to hide it from the bank. However… if i can find a way to do it:
1) 100% legally above-board with full disclosure to the lender
2) Manage to get 100% financing even with 90 day lates on my credit (or convice a credit partner)
3) Find a way to float the property
Then it’s not a bad idea..
October 10th, 2006 at 10:43 am
I thought you were a realtor too Susan. You’re post definitely comes off as cheerleading to the RE industry.
Also, to say that stock broker will only try to put you into stocks is kind of naive. A good stock broker will have you diversify into stocks, bonds, cash and frequently REIT’s. If you make good investment strategies in RE it’s good for the stock broker too, assuming you actually plan to save for retirement at some point in your life.
If you only plan on sinking your money into RE then expect to eventually get burned. RE, like stocks, is cyclical.
Also, when you actually try to defend someone like Karyn Boznak then you open yourself up to being called ethically suspect. Just because you can make money in a certain way does not justify it morally. Casey flat out admits he lied on mortgage applications. I think it’s shows and incredible amount of hubris to be so blatant about it and think that somehow he isn’t going to get nailed for it.
October 10th, 2006 at 10:50 am
Hmm, I don’t know whether to laugh at or to mourn Casey’s reactions to what he has done.
The thinking process I’m reading here just amazes me. This is what I’ve learned from the deep thinkers here:
– Because I suggest that most of us are motivated by greed at some level, that immediately proves that I approve of what Casey has done.
– Because somebody has to pass exams and get licensed to be a professional, it isn’t proper to suggest they could be subject to greed. Well that explains it. Andrew Fastow of Enron was just a figment of my imagination.
– I am expected to feel jealous because maybe Casey has more money than me. Hmm, spend my days seething with hate and envy because there are people on this planet with more money than me. Wow, a real happy productive way to spend my time.
– I am a realtor. That is the biggest surprise to me.
Sorry if I got the dogs at the pound barking here Casey! But the responses actually got me laughing - they made my day.
I’ll shut up now.
October 10th, 2006 at 10:59 am
Wow.
You are going to be rich.
There are no two ways around it. You have all the requiste skills.
You can lie, justify the lie, believe that in the end you will do good and be charasmatic. These are the traits that most businessmen wish they had.
You also have no sense of others’ risk. This is very important. In the end you are not likely to end up in jail. If things go bad you are not likely to pay. You don’t even need to feel bad, since you intended to pay and had a plan. it won’t be your fault if the banks don’t have faith.
I’ve have met many people like you and they always become wealthy.
Yes you are greedy. Had made a profit you would still be greedy. It’s evolution. You realized that work had nothing to do provising for a life.
Me. I work for a living trying to enrich the place I work and the people around me. I’ll never be wealthy.
October 10th, 2006 at 11:00 am
Susan… welcome to my life: criticism at every corner.
I don’t mind though - I can learn from it as long as its constructive.
Also, I keep in mind that what people think of me is not always a true reflection of me. Everyone has a bias, agenda, preconceived notions.
So people’s opinion of me is more like looking through a distorted mirror at a fun house.
It’s looks true but not always accurate. I have to take everything with a grain of salt and do further self analysis.
Also by looking at enough different distorted mirrors, I might come to a fairly good idea of my real self.
It also helps to have a strong foundation on certain universally true beliefs, and values. If I wasn’t grounded, it would be tough to take this kind of beating on a daily basis.
October 10th, 2006 at 11:55 am
Susan,
So did Casey do anything wrong or not? You have yet to clearly state that committing fraud for the purpose of gaining profit is wrong or unethical. All I’ve heard is that it’s greedy, and that everyone is greedy, so by extension no one has credibility to judge Casey.
I still think you’re a realtor, btw. May a realtor’s assistant. Something in the way you’ve argued throughout these threads leads to believe you have a vested interest in defending this all in general. Why? How does that fit into your mistaking greed for self-interest equations?
October 10th, 2006 at 12:03 pm
Why is my desire to make money quickly in an unconventional way considered greedy?
Let me see, make money quickly without having to work for it (that’s really what you are looking for, you don’t like to work and that much is obvious). Sounds like pretty much the definition of greed to me.
First off “flipping” is not unconventional. Many people do it. Those that make money work very hard finding deals and executing a REALISTIC plan to resell the property. What you seem to lack is the realistic plan part and the desire to work hard to get a property in shape for resell.
You expect to buy perfectly ggod properties at a “discount” and then sell them for market value. Well got news for you buddy…there is a reason those properties are being sold at a “discount” and its because they need real work to be sold at market value. Good flippers know this, and they do the work to make the deal. They don’t just buy and sell, that is not reality.
What’s wrong with “flipping houses” if I do it in an honest and ethical way?
Nothing at all. If you are willing to do the work required to make a deal profitable then its all good. Unfortunately you think this is an easy way to make dough. That’s what is wrong with you.
At which point does an entrepreneur’s profit-seeking mentality turn into greed?
When the entrepreneur is lazy and looking for a quick buck without having to work for it. True entrepreneurs are tireless workers who spend 80+ hours a week perpetuating their ideas to reach their goals. They take risks for sure, but the risk they take is working very hard for no pay in order to win the gold ring in the end.
I have worked with many of them, and I am also one. Several of the opportunities I pursued returned nothing. And a few ended up being quite rewarding. In every case, however, each one of these opportunities involved long hours, sleepless nights and enormous amounts of dedication and effort.
Sorry Casey, but nothing I have read from you indicates you are willing to put in the time to make something big happen. Trying to make money quick and easy does not qualify you as an entrepreneur.
If I was successful and DID NOT fail, would you still call me “greedy”?
Success requires hard work no mater what you do. You do not seem so willing to work hard so I guess we don’t have to worry about the NOT FAIL part now do we?
October 10th, 2006 at 12:19 pm
Telling a client it’s time for a haircut is considered unethical solicitation for work … especially people with no or very little hair.
October 10th, 2006 at 12:55 pm
“What’s wrong with “flipping houses” if I do it in an honest and ethical way?”
There’s plenty wrong with it. Flippers ruin neighborhoods and fuel bubbles, and you can’t take part in unethical behavior in “an honest and ethical way.”
My own neighborhood has been decimated by flippers, first driving up prices so that none of the working class families here could afford to buy in the area they’d been renting in for years, eventually pricing them out of the rental market so they had to move into crummy ghettoized neighborhoods far from where they work, and now leaving us with broken-windowed and dead-lawned foreclosures dotting every block. Thanks, flippers!
Aesthetically, they’ve destroyed the architectural heritage of our neighborhood, with many of them gutting beautiful old Mission Revival bungalows and stripping all the good stuff out, selling it to architectural scrapyards and then putting in cheap modern stuff guaranteed to sell fa$t.
You have to judge the ethicality of your chosen course of action by its repercussions. If what you are doing does not improve the world and actively decreases the quality of life for more people than it benefits, it is not worth doing - even if it makes you hundreds of millions of dollars.
October 10th, 2006 at 12:56 pm
Susan,
You know what, I don’t care what you do but I completely disagree with your original statement. This is coming from someone who expressly said that greed is not the problem. Casey’s problem isn’t greed, his problems are reckless ignorance, unjustified optimism and willingness to lie on legal documents.
October 10th, 2006 at 12:56 pm
Even your photo icon is crooked.
October 10th, 2006 at 12:58 pm
“While Casey’s actions are definitely disturbing, what is more troubling is those that seem to cheerlead him.”
I’ll tell you why there are people like this…it’s kind of like the kid that keeps daring you to do stupider and stupider stuff..just because they get some kind of thrill by living vicariously through someone else’s life..makes up for their own lonely existence..and when the cheerleading and bad advice finally end up getting this kid in major trouble (actually they are enabling this bad behaviour), these are the same lpeople that are going to comment..gee, I didn’t think he would ACTUALLY do it!
October 10th, 2006 at 1:05 pm
What a stupid advice by Sac Realtor. No wonder you’re a realtor. Why most realtors I know are people that can’t get a job before becoming a realtors. This can’t be a coincidence.
October 10th, 2006 at 2:12 pm
Have you ever wonder why debt was against the law only a few hundred years ago? Not only that, but punishment for not paying your debt was death by either public hanging or other colorful ways. The public had a moral disregard for debt. Usury laws were in place for this particular reason. Now, we have done a 180 degree turn on things and this actually speaks more to our overall cultural obsession with debt and credit. Even look at one of the above posters who had $20,000 in credit card debt, created a website, and actually had people pay her debt off. Other people’s money paying off her inability to control her spending. Now she is selling a book and possibly, according to her website, is going to have a movie. Can you believe this? If this were only a few centuries ago she would be branded and sent off to debtors prison. But alas, many of us would be branded since our culture is one in which debt is synonymous with credit.
How can we point the finger at you if you are only functioning within the rules of the game? I believe most posters do not detest you that you are greedy since we all have a tinge of that in our red blood, but the fact that you lied and tried to accelerate the rules of the game in your favor. One thing our society has a hard time accepting is liars. We love the Horatio Alger stories since these are embedded in the seed of American culture. Start with nothing except the rags on your back and make it all the way to the top. That is if you follow the rules and you have not.
All of us have an inherent sense of greed or at least wanting more. For example, we all go to work expecting a check for our long hard hours. This is the core of a capitalist society. The only reason you are here on the web is because the real estate market crashed ahead of your time. And this too is part of the Capitalist system. As in any Ponzi scheme, the last one out usually has to turn off the lights and mop up the floors. Just imagine if you had started two years earlier, then none of this would have happened…right? Actually, I have a feeling that you would have your name penned on 30 different contracts and would be in debt for $10,000,000. Heck, if you’re going to lie why not lie all the way?
And those seminars are exercises in old school behavioral psychology. They run on the assumption of a variable rate of reinforcement, the strongest force known in this Jedi’s world. Below is an example of variable rate reinforcement:
The Lottery
Slots
Deal or No Deal
You get the picture. And seminars have such a large draw because they work. The caveat being that it will work for those five percent of the population who have some knowledge of the market, have learned via experience, and actually realize that success does equal hard work and time. If anything Casey, you learned all these skills and they will serve you well in the future. My lesson in hard knocks came at the hand of the technology bubble. Yes, that time when 20 percent year over year returns seemed like my God given right! When California housing went up 20 percent year over year for five years all I could think of was how eerily similar this was. I am not comparing housing to stocks but the mindset you demonstrate was very similar to my logic and thinking at the time. Except I did not lie and my funding source was cash advances on credit cards. Either way, my gut told me I can make 20 percent returns month to month, forget year to year, and I will be wealthy in only a few years. I had a few successes that clouded my judgment (think of this as winning $200 with the first quarter at a slot machine) and I mistook luck and timing with market intelligence. I did well for one year and needless to say lost everything come 2000; well, I should say I lost all the profits I had since I at least had the fortune to pay off the credit card advances. The party ends quickly my friend. You’ve learned a valuable lesson. I have a feeling the next few years are going to bring out a lot of your brethren and you will not feel alone. Unfortunately, I do not see the market turning anytime soon and wish you the best.
October 10th, 2006 at 2:14 pm
Casey
Who are these people who keep telling you to keep on with your scams? Are they people you know from the seminars?
You have been getting some very good advice from people like Randy H, but you only seem to be listening to the ones who feed your fantasy.
You say you have learned but I’m not seeing it.
October 10th, 2006 at 2:16 pm
Casey,
I am sorry to hear of your troubles, but you are still very young and should be able to recover from bankruptcy. I got into bad credit card trouble when I was an 18 year old college freshman–while definitely nowhere near your level of debt, the amount seemed insurmountable to someone with no income or prospects for income at the time. I dragged the debt around for over 5 years and finally dug my way out before going to graduate school at age 26. My credit was ruined, but that doesn’t affect whether you can get a student loan. By age 30, I was once again a productive, taxpaying citizen. I own a home (bought it from a flipper, no less!), two cars, etc. I still have high student loan debt, but the grad degree meant the difference between a $35K per year job and $100K per year job, so I think it was worth it.
You will make it through this, but you need to do something now, so you can start the clock on 7 years of credit hell that there is no escaping.
October 10th, 2006 at 2:22 pm
” She never liked it because it smelled fishy to have to write letters of explanation to the lenders about why I am buying yet another “primary residence”.”
It might be one thing to sign a “liar loan” made out by someone else. ( young, unsophisticated optomist, with enthusiasm pumped up by realtors/bankers/appraisers who all make money no matter what happens to you after the sale)…
It’s another thing entirely to write a “letter of explanation” to a lender explaining that you plan to make 6 different homes your primary residence.
You didn’t mention this in your earlier “coming clean” - what else aren’t you telling the world? Is there more?
I wonder if it will make a difference to a jury?
October 10th, 2006 at 3:26 pm
Dude–
Everyone here is so critical of you.
You do not seem to realize that the entire POINT of what you were doing with these houses was a deliberate fraud. In other words, the kind of conduct you engaged in is exactlywhat is done by people who are deliberately attempting to defraud their lenders, and subsequent purchasers, with no intention of actually fixing up the houses.
You actually are apparently so dumb that you did not realize you were engaged in an entirely fraudulent scheme (although you were obviously aware that you committed fraud as to specific aspects of it, i.e., lieing on your mortgage docs).
This is analagous to someone obtaining a gun, going into the bank, pointing it at a bank teller, getting the money, and thinking: “Gee, I know pointing a gun at someone is wrong, but this is a cool way to make some money! Other than pointing the gun at this person, there’s nothing wrong with what I’m doing, is there?”
In legal terms, you had the “intent” to do what you did, but claim that you did not have the “motive.” In other words, you intended to lie on your mortgage docs, but did not do so with the motive of defrauding anyone. However, I think if you consult with a lawyer you will find that even if you are being honest about your true motive, that is not a defense to what you did.
October 10th, 2006 at 3:28 pm
I appreciate the Nick Leeson, Barings Bank reference. When I studied that case in B-school there was a little blurb at the end about how Leeson turned out to be a genuine sociopath, and possibly an undiagnosed autistic.
As this saga drags on I’m seeing some similarities to Casey. He seems entirely oblivious to what most people would agree to be normative reality.
In Leeson’s famous jailhouse interview right after he was imprisoned, he stepped up to come clean and apologize. However, watching the interview, you quickly realized that he wasn’t sorry for what he did; he was sorry he got caught. That sounds a little familiar to this guy’s story.
October 10th, 2006 at 4:10 pm
“In Leeson’s famous jailhouse interview right after he was imprisoned, he stepped up to come clean and apologize. However, watching the interview, you quickly realized that he wasn’t sorry for what he did; he was sorry he got caught. That sounds a little familiar to this guy’s story.”
I have to agree with Randy H on this one. And in this case the thing that caught up with you is the quick shift in the real estate market. If this were 2004, I have a feeling you would have pulled it off. Turned around and flipped it to another poor soul. But guess what? The market is vastly different and now regulators are tightening the noose around easy credit. Inventory is sky high. And prices are dropping. No longer are we at a fed funds rate of 1 percent. And with 2.2 million in debt, the difference between 4 percent and 6.5 percent a month could be thousands of dollars.
Are you really sorry for what you did Casey? Or sorry for being caught? I think you are trying to angle this story in the best way to get out with no skin off your back. With this blog I see it more as a defense mechanism of being with your back in the corner. Deep down you think that somehow you’ll come out ahead and heck, maybe even pocket a few bucks in your pocket. Take a look at this major denial in your own words:
“What’s wrong with “flipping houses” if I do it in an honest and ethical way?”
Committing fraud on your loan applications does not constitute ethical behavior in my book and you will find out quickly that the law does not think this is ethical either. You are a circumstance of the current market trends and unfortunately you bought at the absolute wrong time. I can accept that. Many can. Yet reading your above question I still get the sense that you feel you have not committed something wrong. In fact, it is the perfect example of justifying the ends. In this case the ends being by your definition “…my desire to make money quickly in an unconventional way considered greedy?”
Sadly, this is the logic of many bank robbers and criminals. Reminds me of that scene in Office Space where the lead characters are caught stealing money and these three technology geeks are looking up the definition of “laundering” money in the dictionary. One of the geeks responds:
“How do all the idiot criminals get away with it.?”
And then the response:
“We just don’t have any experience in this field.”
October 10th, 2006 at 4:15 pm
Leeson is still richer and certainly a lot more well known than any of the haters in this comment section
October 10th, 2006 at 4:17 pm
Leeson is still richer and certainly a lot more well known than any of the haters in this comment section
Really? What exactly is the net worth of all the “haters in the comment section?”
October 10th, 2006 at 4:29 pm
Has anybody checked if this guy is for real? Is this blog a social experiment by a writer? Someone check the public records to see if this jughead is on the deed for the property he says he owns.
Here’s some advice: Most real estate gurus income come from selling “training classes” and not from fictional investments.
October 10th, 2006 at 4:41 pm
Jenn, what graduate degree did you get?
October 10th, 2006 at 5:01 pm
From Dr. Housing Bubble:
“If this were 2004, I have a feeling you would have pulled it off. Turned around and flipped it to another poor soul.”
Nah, Casey would have doubled down in 2005, and doubled down again in 2006, and would still have lost everything. Just a bigger crater.
Working a straight job and worrying whether you can spend an extra $20 or not is really dull compared to coming up with increasingly fanciful “deals” involving hundreds of thousands of dollars, isn’t it?
October 10th, 2006 at 5:11 pm
Kim,
I got an MPA (Public Administration).
October 10th, 2006 at 5:13 pm
Nah, Casey would have doubled down in 2005, and doubled down again in 2006, and would still have lost everything. Just a bigger crater.
Probably true. One of my husband’s friends sold his house to a would be flipper. They bought the house for waaay over market back in April of last year. By the end of the year it was clear they had already lost about $50k in the thing, and they ended up selling their other property quick to cover the debt. Last I heard they were living in the propery without any other real options.
They didn’t know anything about RE, they got caught up in the mania like a lot of other people. Anyone who did any research was out of the market before people like Casey bought in.
I don’t blame Casey for being gullible. But I don’t have any respect for someone who knowingly lies to try to make a quick buck and then wonders why no one has any real sympathy for them.
October 10th, 2006 at 5:21 pm
I think Casey stacked a good chunk of cash on all the cash-back properties that he bought. Casey might even planned for this short-sale or foreclosure dilema. Casey might be smarter than an average 24 year-old.
For the last 8 months, Casey does nothing but buying houses and getting cash-back. Well I almost forgot to mention Casey sold two houses. Don’t know if Casey made any money with these two sales but even if Casey sold these two houses at his buy price, Casey still made money in cash-back. Here, I assume the cash-back was large enough to cover all fees and stuffs plus cash going into his pocket. I give Casey an A+ here for following the books/seminar/expert/etc that he learned from.
Then Casey forgot what the books/seminar/expert/etc taught him about not getting hooked with cash-back, especially, house price is depreciating every day. Cash-back does not work in this case. Even a brick would figure this out. So Casey got an F here. But wait the banks might have been robbed here. If that the case, Casey does not deserve a grade because he cheated. I take the F back and I expel Casey.
Unless I (the banks and IRS) look into Casey’s book of all his buys and sales and cash-backs, I (the banks and even the IRS) still think Casey is cooking scam here and trying to rob me again. It’s hard to buy into the idea of someone like Casey deciding to come clean all the sudden. I (the banks and IRS) will withhold my judment on short-sale or foreclosure and be thinking that Casey is scamming me and I want Casey to pay me back all the money I lend him plus interest. And if I’m the banks, I would launch an investigation on a possibility that I have been robbed by Casey. If the investigation turns out to be positive then I will take Casey and his associates, i.e. loan brokers, by the throat and yank hard until I get all my money.
I think the banks should hire a bunch of people who always suspect everyone including the Pope.
October 10th, 2006 at 5:52 pm
Greed has two faces. It’s a motivator if you control it and it’s a destroyer if you let it control you. Sometimes we can’t distinguish between the two flavors. But we usually “feel” it when it’s taking over. Obviosly you let your greed contol you. Now you pay the consequences. There’s no way out. Face it like a man and file for bankruptcy. And then expect the next 7-10 years to be rotten.
To those who think the protection of bankruptcy is not appropriate because Casey deserves all the blame - I say the lenders deserve a large part of the blame for this situation because of their own greedy behavior. They too deserve to lose money and then get fired by their stockholders for being so stupid.
October 10th, 2006 at 8:18 pm
The DA has far better things to do than spend investigative time on something like this.
Even if the DA has the time to spend frying someone for fraud, they’ll get much better mileage out of going after some huckster who calls up old people and bilks them out of their savings. Sure fraud is fraud, but the DA’s going to want a winnable case. Say what you may, but there’s reasonable doubt in this case. That means acquittal.
At the very worst, they’ll charge him, and let him plead guilty with a few years probation. But that is still a felony conviction and not to be taken lightly.
But there will be a final act to all of this…and Casey, you should just get it over with.
In additon to your real estate mess, there’s $140K of credit card debt. All your rates are destined for about 29.9%. Google for “universal default” to learn more.
It’s not common, but your creditors can haul you into bankruptcy court against your will. It would be idiotic of your creditors not to salvage what they can. There’s no assets, but you’ve got wage earning power, so that means getting a judge somewhere someplace to tell you how big a chunk gets automatically taken out of all his future wages.
While your creditors may get less in the end than they might by “working” with you, they get more certainty out of garnishing your pay — and that may suit them just fine.
Just get it over with Casey. Your goal to avoid bankruptcy and foreclosure may or may not be noble, but it’s short sighted. There’s no way you’re going to be “A paper” for at least a decade — regardless of what happens.
If you don’t call all your creditors right now and offer to garnish your own pay, it’s going to be done for you — and formally. I can tell you from personal experience that HR people aren’t thrilled with the pain of dealing with garnishments. And they sure aren’t thrilled about felonies.
October 10th, 2006 at 8:28 pm
Casey provided an open and shut case - he confessed fraud. Charging him would take no work at all and a DA might like to charge Casey so they can up their ratio of winning cases.
If a lot of voters are unhappy about flippers and “RE scamsters” they could hoist him into court to show the mob that they’re doing something about the “evil flippers.” In that case, Casey could be looking at hard time (followed by extradition if he is not a naturalized US citizen).
October 10th, 2006 at 9:16 pm
I agree with Astrid. There is an argument that Casey could face charges. There has been so much fraud associated with the recent RE boom that Casey doesn’t even have to be that good a case, he just has to be the poster boy.
He’s not as high profile at Martha S****** , but he’s made himself known with this blog. The Motley Fool wrote an article and he was also mentioned by the SF Gate. If you do a google search, he pops up all over the place. He has just enough notoriety to do himself harm. Plus, he admited he lied. He admited to fraud, in writing.
If you put him in front of a jury how sympathetic do you think he’d look? People might buy the “dumb kid” argument and give him a light sentence, but he wouldn’t get off scott free.
October 10th, 2006 at 9:17 pm
[…] I do not like Motley Fool, but the site can occasionally provide a link that leads to something interesting. This time I found a link to www.iamfacingforeclosure.com, which is a blog of “a 24-year-old aspiring real estate investor from Sacramento CA.” Unfortunately, according to the Fool article, the author of iamfacingforeclosure.com is down two million dollars and has decided to share his aftermath in a blog. Though I share many of the sentiments posted by iamfacingforeclosure’s anonymous blog readers, you still have to credit the man for his daring. Sure, he likely duped the banks for his start-up capital, ruined his future, and left himself at the mercy of unforgiving blog roamers, but he still has his life dammit. […]
October 10th, 2006 at 9:21 pm
Joe,
It sounds like you ARE, and probably always will be wealthy, even if you may never be rich.
Casey will never be wealthy, even if he becomes extremely rich.
There’s a difference. Some people can see it, others are blind to it. Consider yourself one of the lucky ones.
-btc
October 10th, 2006 at 9:41 pm
Can I possibly be the only one here who realizes that sacrealtor is an obvious troll? Some of you are responding as if this person was even trying to be serious.
-btc
October 10th, 2006 at 10:23 pm
Can I possibly be the only one here who realizes that sacrealtor is an obvious troll? Some of you are responding as if this person was even trying to be serious.
Yeah. I was silly enough to respond to a post by “sacrealtor” yesterday. It was my first day checking out the site, so I fell for the post. But after looking at todays posts, there’s no mistaking a troll in action.
October 11th, 2006 at 4:06 am
“Nick Leeson thought he could trade his way out of his leveraged (and illegal) investment losses. What started as trying to cover up a $20k trading error by his underlings, turned out by him risking $1.4 billion of Barings Bank’s (UK)money.”
That’s Leeson’s own version of events - in other words, the self-serving distortion. The forensic analysis of Barings’ records that underpins John Gapper and Nicholas Denton’s riveting book All That Glitters demolishes the “I was only trying to help a colleague” theory by demonstrating that Leeson was already a rogue trader before the colleague in question was even hired.
Also, to answer all those putting Leeson forward as a positive role model, he got off relatively lightly - but mainly because Barings’ management were so blindingly incompetent at every level. Just to give one example, Leeson’s department survived a six-week audit when it was already millions of dollars in the hole - and though the Einsteins who carried it out failed to spot this, they did at least suggest that it might not be a great idea to let Leeson authorize his own trades (well, duh). Needless to say, this wasn’t followed up, and so many other people besides Leeson had to accept partial responsibility for the eventual collapse.
Certainly, Casey’s lenders appear to be reckless, but there’s no evidence that they’re quite as hopeless as that!
October 11th, 2006 at 8:47 am
Greed is by definition a negative. Look it up - dictionary.com.
Greed might not be the right term for the discussion.
A smart, skilled, successful person can be called greedy.
A dumb, hard working person with a day job can be called greedy.
The problem with Casey’s adventure was not greed as much as ignorance of where the landmines are. We could call him a dreamer and it would be accurate. It sounds better so most people will not want to use the label in this discussion.
There are people who make a fortune quickly. Some keep it and some lose it. None have to be greedy, just successful.
People can make a fortune with real estate quickly. Some that do hang on to it. Others make it and lose it. Normally the ones who have made it and hung on to it are folks who lost before or took a while to get started. They are more aware of the landmines.
Experience or great coaching makes a difference independent of the greed factor.
Being motivated can be confused with being greedy. Greed as defined in the dictionary is more about being unbalanced in one’s motivations rather than a commentary as to one’s success ratio.
There is a couple I know that are just over the boarder in NV near I-80. They do not even think about a deal if they are not going to make $50K after they are done. For many people that would be a year’s salary. For them it is the minimum to get out of bed and get to work on a specific deal. They are far from greedy. They are just normal people who know how to earn more than many others. Working class folks who no longer sell time for money.
October 11th, 2006 at 11:52 am
I’m glad you were able to sell a few of your homes, but the odds are that at least one will be foreclosed upon before all is said and done. Having that single foreclosure on your financial record is as detrimental as having six foreclosures on your record. The damage to your credit will be irreparable (at least for the next 10 years). Simple things, like purchasing a car or attempting to get your electricity turned on if you move to another city, will be impossible.
The old adage “if it’s too good to be true” is certainly applicable in your case. Even if you come out of this with some surplus funds and immediately pay off any foreclosure/bankruptcy, it will still be on your credit history. Period. You can tell prospective lenders any story you want, but frankly they will look at the report and your application will be denied.
The fact that you’re not working during this entire fiasco is a testament to your lack of understanding into the severity of your situation. When charges are being levied against you and your attorney is attempting to mitigate your liability, you have nothing to bring to the table, like a steady income, whereby you can pay restitution, fines, or whatever penalties/costs are attached to you. Having no income and attempting to live like you have been at 24 just screams slacker to the judge/prosecutor.
October 11th, 2006 at 3:46 pm
Having no income and attempting to live like you have been at 24 just screams slacker to the judge/prosecutor.
I knew a gal who got caught embezzling payroll funds at about 27 years of age. She was actually a very nice girl by all appearances. Pleasant to talk to and always nice, humble and outgoing.
After she got busted it turned out that she was pretty small-time, but she had done enough crimes at a couple companies to land her a hard felony conviction and some intense prosecution.
In the end, the judge was “lenient” on her sentencing and gave her only 1 year of mandatory jail time. The largest reason for that was that she had a college degree, had for the most part worked hard, and was able to get money from friends and family to pay back most of the damages, the rest to be garnished from wages over the next 10 years of her life or so. And she was barred from ever working in accounting or payroll again. Oh, and the permanent record of a felony conviction, which one would hope would keep her out of payroll anyway.
The judge won’t be so lenient on Casey. Not with his track record, lack of future prospects, and all this great evidence he’s provided here for many of us to capture and save for later, when we can send it in to the prosecutor.
October 11th, 2006 at 8:07 pm
Casey,
Have you contacted the bank on the property you did the wrap loan on? Didn’t think so.
How about those creditor phone calls? You stopped mentioning them. Still ducking them?
Does your “RE attorney” know of the scope of your self admitted fraud? What is his name?
I am amazed that the lenders have not taken action yet, considering the facts involved.
October 12th, 2006 at 6:56 pm
Don’t take it (too) personally, but it’s not clear to me that you ever aspired to “make money” but rather just to find some. Making money implies creating value. Did you aspire to do so? You aspired to benefit from arbitrage, in this case the difference between a market at one point, and the same market later. I also earn money through arbitrage, but I tend to take safer bets. Trees don’t grow to the sky, economists say, giggling. You extended already-loose finance terms through deception, grabbing a big chunk of… of… stuff you don’t even want or appreciate. Anyway, the market turned against you and now you’re toast.
Take a look at this stock:
http://finance.yahoo.com/q/bc?s=MNCS.OB&t=2y
Watch it rise seemingly forever. For years!
Then watch what it did today.
Lost 30%.
And you know what? I, as an older and wiser person, knew not to touch this stock. Many investors were watching it, as more and more people insisted this one could be the money machine. Just LOOK at it. It grew every day, every single day, for YEARS. Suddenly a million clowns piled into the bus. Now a great many lost 30% of their principle. Ha ha, oops. Anyway, I watched with many other more experienced investors as this happened. And we knew it would do just this very thing.
During more recent loan dealings, I’ve presented more pessimistic appraisals. Did I ever think I’d make a lot of money in real estate? I probably will. But I also worked like death. And I often, for weeks at a time, was dirty, running machines and fixing leaks and nailing things and topping trees and painting parts and scraping and spraying and planting and such. This we call ’sweat equity’. This is a dependable way to make money in real estate.
Now you need to sell this s*** . Do your best at it. Ignore people telling you you’re all wrong or immoral or criminal. One of the hardest skills at these times is knowing which voices to utterly tune-in, and which to utterly tune out. You work in your spreadsheet at least an hour a day. You do your deal(s). You have discovered the whipsaw force of finance and it’s making a man out of you. Just not a rich man. Do what’s necessary and I do guarantee that future deals will find you wiser.
October 13th, 2006 at 9:30 pm
Casey:
I’m sure you don’t need any more comments. By now, you seem to pretty much know what you did wrong.
Since you made several mistakes that most real estate seminars would specifically warn you about, I wonder what the classes are, that you took - I mean, the companies as well as the instructors. I hope you have not paid a lot of money for these classes.
October 14th, 2006 at 2:15 pm
You got lost thinking that money was the key to happiness.
Now you have to grow up a little.
That’s all.
Good luck.
October 14th, 2006 at 4:21 pm
Ok, this is a bit off topic, but I have to comment on the poster lionizing stockbrokers.
I worked in compliance for a bank that utilized series 7 licensed brokers to provide their customers with brokerage services. For the most part, they seemed like a good sort - for sales people, that is. However, a good percentage were shady, bottom line driven and several were investigated by the SEC (a toothless tiger if there ever was one). One even got locked out of her office while the SEC siezed her files. No sanctions, no imprisonment, just seizing her files and scaring her a bit. She was back at work 2 days later.
Stockbrokers, realtors and yes, barbers are just like the rest of us - some good, some shady and some downright con artists. I’m thinking now of the broker who had the regular habit of putting elderly women (75+) into high risk mutual funds. Since I worked for the bank, all I could do was shake my head and hope that the SEC would notice a pattern. I was in for the real surprise when I found out how infrequently they acted and how infrequently there were ANY sort of consequences.
With people like that, you can’t even trust your instincts - any of these money suckers can be so adept at the con that your cash will be gone faster than getting caught in a sidewalk game of 3 card monty.
I don’t have answers - but try to stay with reputable brokerage houses and unless you have a high tolerance for risk (say you are 24 with no real assets), stay away from the get rich quick schemes.
Casey - I’m not sure what to think about you. I feel bad for you and then I think you are deluding yourself and then I think you might find a way to pull your self out of this through sheer force of denial.
I hope you learned your lesson about lying on apps - it actually is something they do for your own good. These sleazy mortgage brokers are no better than any other sales person - if you find a good one, they can offer you all sorts of helpful advice. Hopefully next time you get a shady one you can start looking for someone else.
*and all these people who b**** and moan about the lying over and over - let he who is without sin cast the first stone. I guess you never overestimated your tax deductions (really? even those clothes you donated to charity?), exaggerated your income on a credit card app, or embellished your resume in any way. We all have to learn from our mistakes and if you are smart, you figure out that you may have escaped penalty this time, but it’s really better not to tempt fate in that particular manner again.
October 15th, 2006 at 2:17 pm
Imagine an auction where the price of an item is raised tenfold because of phony betters that mumble abstract value and get the price higher and higher, and the winner will never be able to pay the amount. Such is “the king is naked” reflection on what real estate was in the last 5 years. People who get 1/2 million mortgages and will never ever be able to pay it off.
Hard labour camps for debtors might bring one to senses regarding their financial ability.
October 24th, 2006 at 10:45 am
If I were you I wouldnt advertise to the whole world that you committed fraud against the banks. You could get some serious years in prison for doing the things you’ve done.
There have been a lot of other people who have done the same things you have done but they have kept quiet. In return they are probably not going to get caught and prosecuted.
I bet the Realtors and loan officers you have used over the past couple of years are sweating bullets right now knowing you are blabbing to the world your shady stuff! They are probably going to wind up losing their licences or worse for being a part of these transactions.
As a real estate investor myself I think that your biggest mistake is failing to think ahead. You have to start looking at real estate as a long term investment. You start by buying your own primary residence - buy a good house in a good area and hold on to it!
October 24th, 2006 at 12:47 pm
Thank God for people like you. The Caseys of the world are the source of apocryphal warnings for those who, like myself, need to take heed of the traps that greed-induced delusions and blind optimism can place on the path to riches.
I say this because I myself am a very young man–23 years old– who felt the excitement of the past real estate market. I was even thinking of plunking down some hard-earned savings on an underpriced condo on the Maine coastline this summer, flipping it and getting a healthy return on it. But after doing some research, I came to the conclusion that it’s best to be patient, see how the prices work out over the following few years, wait for the market to bottom out and then to buy. Of course one has to take the fundamentals into consideration: always invest in your local market, put in the sweat equity necessary to sell, take a look at the real price of property (nominal price over rent, sorta like the price/earnings ratio) in whatever market you seek to invest, and hope for the best. And of course, I am saving a huge chunk of the money I am now making at a regular 9 to 5 job, knowing that debt is the devil stalking anyone who’s trying to make it. I also listen to Warren Buffett and his advice; the man proves 40 billion-fold that he knows what he’s talking about.
I don’t know where I am exactly going with this. I guess I am just trying to say that not all 23 year olds out there are sophomoric or deluded or criminally greedy. And that Casey Serin and his ilk scare the sh*t out of people like me….
November 9th, 2006 at 2:18 pm
[…] I’m with the commenter who wrote “It’s not the greed, it’s the stupidity, stupid”. […]
April 10th, 2007 at 3:58 pm
You bit off more than you can chew, that’s noviceness and immaturity.
Nothing wrong at all with greed, as it is along with fear is the pillar on which capitalism stands.