What happened? Why am I facing foreclosure? Basically, I bit off more than I could chew.
Here is the story.
I started investing in October 2005 and went full-time in January of this year (2006). This is after going to numerous real estate investing seminars, reading books and learning from other investors for the past 2 years. I did my first successful deal in October while still at my full time job. In January I quit my website programming job and went all out!
From October 2005 to May 2006 I bought 8 houses in 4 different states, mostly with the help of 100% stated income loans (liar loans). Most are fixers - I was going to rehab and flip each one within a month or so. Buying was easy, but man was I in for a surprise (or a lesson?).
Eager to Buy with No Experience and No Solid Plan.
Instead of having a plan for getting in, and getting out, I thought I would just “wing it”. You see, I become a “motivated” buyer. I needed to buy and sell some houses quickly because I quit my job and needed to make a living in this business - NOW! They warned us in the seminars NOT to do this.
They told us to keep a full-time job. Work as a “bird dog” for other investors at first. Then start slow. Build your team. Have extra cash saved up. Buy low. Avoid heavy fixers. Do one at a time. Stay local. No traveling. No speculating!
I ignored most of the advice from my gurus…
True, I was not purely speculating. I did buy most of the houses at a discount. So that if the market went up or down, I would still be able to flip it and make a profit. But I did not buy at a big enough discount to cover my lack of experience. Buying low is only one part of the formula.
Since I didn’t have any money, I “juiced up” the equity on most of the houses by getting cash at close. The cash-back was to pay for the holding costs, travel, repairs, etc. So every time I bought one there was a “CHA-CHING” sound and my bank account got fatter. This gave me a false sense of profit and kept me going.
I grossly underestimated everything. I bought many houses sight unseen! And the ones I did see I was still too optimistic. I miscalculated the money+time it would take to find contractors, manage contractors, do repairs, and resell quickly. Add the cost of doing out-of-state deals. I was not prepared for the huge travel expenses and the difficulty of managing all these deals remotely.
Everything went wrong. The rehabs were way behind schedule and grossly over budget. I was too busy flying around the country visiting each job. No time to manage details. I couldn’t sell the houses fast enough. I managed to sell only 2 out of 8, and got stuck with the rest.
The holding costs is what started killing me. Paying 15,000+ per month in mortgage payments and utilities can really drain ones’ reserves. All the cash I pulled out at close is now gone - for repairs, mortgage payments and travel expenses. And the houses are not selling fast enough to keep me afloat.
As the last resort I went for one more cash-at-close deal.
It’s a nice model home from a builder. The builder and I structured a pretty good deal. I would buy the house for full retail value. The builder would pay my closing costs and give me $50,000 cash back at close and lease the house for 12 months. Sweet! I told him I will close with no problems.
I went out to apply for financing figuring I will get a 100% loan just like before. However, this time my credit score took a dive because of all the maxed-out credit cards and credit lines. I kept calling different mortgage brokers, looking at different programs. Finally I found the right program. I was barely qualifying but everything was going smooth.
But then…
They Googled me!
The lender found one of my early blogs where I was talking about investing in fixer-uppers around the country. So they denied the loan! My mortgage broker was really amazed. He has never seen them get so picky and go to such length to investigate the borrower.
The problem is that I was running the loan as a “second home”. Lenders’ definition of a “second home” is for PERSONAL use. Reading my old blog, it was clear that I am buying the home as an investment to flip it. If I ran it as an investment home, I would NOT have been able to qualify for the loan. So I was basically lying to the bank about my owner-occupied status and other things.
Lying about the owner-occupied status and income was easy to do. Seems like every other investor was taking advantage of it. Since that was the only way I would qualify for 100% financing, I too was doing my deals via “liar loans”.
When I was caught, I felt very embarrassed and guilty for all the shady loans I’ve done. My wife never liked these loans. She hates “fishy” business. I knew she was right and I told her I’ll stop lying on these loans - “Just one last one!”.
At this time (July 2006) we had almost $20,000/mo in expenses. I desperately needed $50,000 cash-back on this last deal to buy some time. We already used up over $120,000 of credit card and credit lines and I was desperate. That’s why I still went for this last deal even though my wife and I both agreed that we need to do this business 100% above board.
So the irony is that I was cought through blogging. You’ve heard about people being fired by blogging about their work. Well, I may be the first borrower to be denied a loan for blogging about the deals.
Since it’s all out in the open, I might as well keep blogging, continue being honest, admit my faults, and try to make it right.
Back to the story…
The Last Straw
Since that last cash-back deal fell through I started falling behind on payments on all the mortgages. I ran out of money to finish repairs, pay utilities, credit lines, etc. I ran out of money to live!
Every penny went to float the deals. The credit cards are pretty much all maxed out. Nothing is left.
I got kind of depressed for a week or so. I didn’t want to think about it. The head-in-the-sand type of thing. But now I am beginning to face my problems.
Now What?
My wife is a full time student and I need to put food on the table. Both of our credit is on the line. It will be ruined if I don’t do something quick. I want to avoid foreclosure and bankruptcy and maybe get a little cash by selling my houses. I am not sure how realistic this is.
I may have to get back to a full-time job so I can pay basic bills. I AM grateful to at least have my web development skills to fall back on. I may do some wholesaling or help other investors to make a little money. I don’t know. I’m looking at all possibilities.
It’s embarrassing to talk about this. Yes it’s my fault and I deserve the consequences. It sure is a tough way to learn though. This will teach me to be more responsible and play smart next time.
I started this foreclosure blog in order to talk about my experience. Hopefully this will help you if you’re in the same situation or know somebody who is.
Leave me a comment below. Encouragement, advice, tips, prayers are appreciated.
136 Comments
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Hi Casey,
Sorry to hear about your finances. I am forwarding your link to the Berkeley Investors Group. You never know who might be interested in picking up something. -
Thank you… if anybody has any questions first look at the property pages (links under my picture top right). There are pictures, loan info, appraisals, etc. I will be updating the status via comments.
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Casey,
Been thinking about you alot and will be holding you up in prayer. -
Casey,
I wish we were in a position to help. Even though you have made mistakes, I admire your how you jumped in and gave it a go. Most people wont even try. It sounds like you know what went wrong, so after you are able to correct the situation you are in you will be successful with your next efforts. Don’t give up! We will keep you in our prayers.
Anna and Brian -
hey casey,i’m praying for you.and if you can’t make it out this coming monday(the 18th) then we as a rou will be praying for you.but in truth,we’d love to pray WITH you.if there is any chance for you to make it,feel free to call me.much love.
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Dear Casey,
Sorry to hear of your struggles, maybe it will work
out somehow. I noticed that funshway of your homes is all wrong. If you want, I can work with you
to fix this, so that they can finally sell.
Let me know.
Joseph R. S -
Casey,
I am sorry to hear about everything going on. Life lessons aren’t fun - I’ll be praying for you.
~Kate Holmes -
We entreprenuers many times need to recieve 20 no’s to get our one YES. When we get the yes it usually pays huge. Just take this situation as a 1/20. The fact that you are willing to take great risks to achieve great things puts you on the top of the list in my book. I have only spoken with you briefly, however I think you are a tremendously strong and smart individual who i admire and your lessons will be close to my heart. I thank you for sharing them with all of us. I will continue to analyze the remaining properties you still poses and keep in contact with you.
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There is high cost and damage created by flippers to a community.
Local residents are priced out of their own town, and have to move.
Schools, businesses have to close since no family can afford to live there.
RE tax rises causing hardship for local residents. Miseries abound for everyone.But this is only possible thanks to Greenspan.
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Ha
HAHAHAHAHAHAHAH
I LOVE YOU MAN!!!!
You just admitted to federal mail fraud and a bunch of other federal crimes on the Internets!!
Be sure to tell the judge that “it’s actually pretty common”
PS can you design my website pricedoutofahomebecauseofretardedflippers.com? -
There is a reason that banks traditionally required 10-20% down. People like this flipper are willing to lie to obtain financing for properties that they have no intention of living in, and certainly no ability to afford carrying costs. There are legitimate business endeavors, and there are illegitimate endeavors. RE flipping like this falls into the latter category. There are currently many flippers in a similar boat. Most of them are there because they had get-rich-quick illusions, and were willing to do anything to become “RE investors.” Each one of them is facing the same fate. The result is artificially inflated housing costs for legitimate would-be owners. Let’s hope that the lending institutions bring back their traditional standards so that this kind of insanity does not continue.
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So let me get this straight. You got denied for a loan because you were blogging about committing fraud on mortgage applications and a mortgage company found your blog?
For one thing, I don’t think that lenders usually google real estate loan applicant. On top of that, in case you haven’t noticed, Google doesn’t show blog results normally. You have to use their blog search site.
I call troll.
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They came to my original semi-private blog through a run-about way. I myself was surprised.
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Seriously…
What were you thinking? Was it simple greed that blinded you from the logic of your decision making process?
I’ve read the comments about people praying for you and wishing they could help. That was nice…probably short on sincerity but nice just the same.
This economy needs people like you Casey. We need you to lose your homes and tank your credit. Actually we need about 2 million people to do the same. Then the pendulum can swing back and reality can once again rule the financial decisions this country makes.
So you may see this comment as cold hearted, punitive or just plain mean. You played yourself cowboy. The next 7 - 10 years are going to suck for you.
The good news is your young. What if this had happened and you were in your 50s?
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[…] I’m a 24-year-old real estate investor from Sacramento CA. This is my first year full-time in the business and I got in over my head. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, meeting good people, finding solutions and blogging about it. There is hope so I’m still smiling. Comments appreciated! […]
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I too have been fooled by late polling data, but don’t get down. Always be optimistic about your odds of victory. Quote a deep insider or two.
Always works for me!
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Casey,
Just read more about you…wow, investing in flipper-uppers…ouch. Investing is supposed to be done on newly built single family homes…unless you own a construction company and have tons of capital. Sorry man, but don’t give up. There is a great area to get into, fixer-uppers just ain’t it.
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Words fail to describe this situation.
I guess all I can say is that you fit the textbook example of “hubris”
Trying to be smarter than everybody else.
The American way of doing things. And, even now, you talk of wanting to stay in the business and “help” others buy bying and reselling houses that you have re-habbed. That ,Sir, is just wrong.
I suggest that you grow up,and stop trying to “get-rich-quick”. Go back to website design,and build a career there.Accumulate money by working for it(a novel and out-moded concept)and buy a house to live in rather than an investment. (another out-moded idea) -
And I also don’t see how this blog, as entertaining as it is, is going to help you. In a few days you will be famous the world over. Anyone who wants to buy a property of you, will know your financial situation and is going to squeeze you, meaning they will offer the same as the bank will get when they foreclose your property and sell it. And you will take it, since you have no choice. You make one lousy businessman, but that was obvious from the start. Others have pointed out your real situation, you should take their advice, close down this site, get a lawyer and buy a lottery ticket. You never know, you need divine help anyway.
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You lept before looking. That’s something age brings - perspective. Perhaps if you got a real estate license first and tried making a living selling real estate you might have had a reality check. We always get phone calls from wack jobs proudly announcing “I’m an investor” - Our first question is “Oh, really? Who’s book did you read?” They want to buy a house with no money down, no credit score and no income and for 20% less than market!!
Get a clue. Why would I, a professional Realtor, turn over such a deal to someone when I could easily buy it myself? That’s right, I’d buy it before telling you about it! So would anyone else in real estate. So, hurry up and send in that $50 and I’ll tell you in my new book how I made a killing buying and selling real estate.
Also, put yourself in the Seller’s position. Why would a seller turn over equity to someone who fit the above criteria without a substancial down payment? Also watch out for those pro companies buying up ‘ugly’ homes. They are going to screw you royal.
Barnum was right!
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Casey,
You are a criminal and your have not learnt your lesson untill you spend your time in jail.
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a “private” blog? *head asplodes* Um, that’s not how those work. They are googleable. And you used to be a webbie?!
This will be a good test — apparently people are praying for you. We’ll see how that works out.
Meanwhile, a U.S. Attorney is reviewing your statements regarding real estate fraud.
I would suggest *immediately* suing every real estate seminar you attended, and every broker that you received counsel from.
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Seems 24 year-old Casey got himself into 2.2 MILLION in mortgage debt…and is about to foreclose on 5 houses. Here is part of how he ‘did it’. The sad thing is….none of this surprises me. I will go into more detail later.why he is facing foreclosure: ——————————————————————- What happened? Why am I facing foreclosure? Basically, I bit off more than I could chew. Here is the long story. I started investing full-time in January of this year. This is after
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Sorry Casey, there is no hope for you and you have nothing to smile about.
Why are you in foreclosure? Because you became a flipper after the housing bubble popped (the bubble popping in July 05). You did all kinds of research, but going to “get rich quick” seminars and talking to other flippers is not research. In the end you fell into the mass delusion that comes with all bubbles. (owning 7 houses at 24 with no actual job or money should have been your first clue something was wrong)
Let me fill you in on a few facts. Housing goes down. The Majority can be wrong. The Economy can be manipulated.
You have been played for a fool. Researching the facts above will show you how, and the future you face (and the damage to society you have done). Start by reading history books, particularly ones about the causes of the Great Depression. For more contemporary information a good source is TheHousingBubbleBlog.com.
Some advice, Fire sale everything and declare bankruptcy ASAP and hope the court is lenient. The longer you wait, the worse its going to get. Pretty soon people such as yourself will be a dime a dozen, and the bankruptcy judge will have no pity left.
There will be no market turnaround. There will be no “renting till the things improves”. The reality is, YOU ARE DOOMED. Thanks to the new bankruptcy laws, you are going to be paying for those flips for the rest of your life. But that’s a better fate then some of the other ones looming on your horizon. The sooner you realize this, the sooner you have a chance of saving yourself
Harsh words? Buddy, you ain’t seen nothing yet
A new world Debt Slave is born.
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Wow, sorry to hear about this! I have a housing bubble blog where I post my rants and raves but I cringe when I see a living example of the bad consequences and somebody going through hell as a result.
If it’s any consolation even Donald Trump has been at the brink a few times. Real estate investing has a way of doing that - either making people fantasmagorically wealthy or dropping them down the well of bankruptcy - and it feels like a roller coaster ride while it all happens.
You have a lot of courage posting this. You may end up helping a lot of other people because of it.
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This situation is sad but it seems you might learn your lesson. As others have stated you violated a number of laws and if you’re lucky will get off without jail time.
My only recommendation for you is to seek help after this mess is done due to your persistent lying and deception you obviously have some deep rooted character flaw. Harsh, yes it is although I think you’ll agree over time that it is true.
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Bryan, bad advice. Multifamily units are a waste of time. The cash and effort required for the measly cashflow is a poor investment. Also multifamily properties are the last to appreciate and the first to drop in value through a changing market. Single Family Homes are the American Dream and will always be desirable. Families dont want to end up in a 4 plex, they want a home with a yard.
Real Estate is a long term investment strrategy. The market over the last few years has nothing to do with appreciating markets. There is always a booming market and cooling market in the country.
BUT over the ast 100 years the average real estate appreciation has been 4.4% where as the S&P 500 has average about 12%. This is where the power of leverage comes in to play as any money you have tied into Equity coul be in the market earning 12%.
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Ok I beat on you now and you did post the comments
I’ll offer up some advice, get a job _yesterday_, as a web developer you should easily be able to generate $60-80K/yr without too much effort and you can start working on a plan to get things squared away. Cut your expenses to ZERO, cell phone, cable, eating out, fancy organic meals….gone, gone, gone. Work 2 or 3 part-time jobs in your spare time and you should easily be able to add another $2K to your income immediately maybe more depending on the opportunity. Don’t shoot for ‘future’ opportunities as you need the money NOW so only take jobs with immediate payoff.Think of this as real estate triage and stop the bleeding as soon as possible. At the end of the day none of us responding will incur any of the pain so you need to deal with the problems now and be drastic, this will soon be a history lesson and you’ll be able to say thanks for the experience but don’t overextend yourself again.
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her that my “friends” from the temple back in the day are basically asking for a beating in the coming housing bust. She was like “what housing bust”? Hahahaha….poor mom, doesn’t understand that these friends of mine have fallen into the same trap as this poor sap. I mean she did sell her apartment building right BEFORE the housing boom and was trying to get me to buy into the real estate bubble (with Lancaster of all things!) right AFTER the price has skyrocketd. She’s one of those “CNN Investors” that sees
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Multi-family.
Fair enough, George
I respect your opinion, but there are 4-plexs that are 1300sf with yards in good locations It only takes 10% down because it’s “residential” and one example (maybe not a good one because I violated your rule and put down 20%) is $1100 month mortgage payment (including taxes and insurance on a 30 year fixed at 6.5%), only $2200 a month income when purchased but up to $2500 after 2 years and “sweat equity”. Property management is 10% and repairs are approx 10%. No vacancy so far; knock on wood.
$900 a month net for a $40K investment equals about 27% not even accounting for appreciation (and remember, I’m in it for the very long haul). Actually, I purchased 2, 4 plexes across the street from each other with these exact same numbers.
You can have your 12%. I don’t mind the “effort” to get my return. And that was the point. If it sounds too good to be true, it probably is. All these get-rich-quick, pyramid scheme flippers made their own beds (or graves, whatever).
To his credit, at least Casey was trying to make improvement to his flips; he was just to naive and inexperienced. I hope he is successful in the future, as I hope are all people who are willing to work for their reward. That is the intention of my advice on multi-family properties, agree with it or not
)Regards,
Bryan -
I do not believe this is real. The market clearly turned around summer ‘05. Who would make these mistakes with zero knowledge of that? Who would admit fraud in a public forum? What lawyer would take this case without $$$? In my opinion, something’s not right here.
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Dude…lying to the bank…whata strategy.
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Casey,
I am sorry for your temporary misfortune. Just remember that Donald Trump was in a similar position (in multiple scale) in 1993 and he is in the Fortune 400 of richest people in the world in the latest issue of Forbes magazine. I appreciate your openness in exposing your lesson learned and I hope your experience will prevent someone from repeating the same mistakes. Good luck to you.
–Roberto
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George, you are dead wrong about multi-family properties. It’s with the cash flow from multi-family investments that I supported myself during the past 10 years, and now that I’ve sold them I’m set for the rest of my life. Retired at 44.
Yes, with multi-family.
I agree that single family is the most flexible type of property to buy and sell, but not necessarily the most lucrative. All of my multi-family properties (fourplexes, duplexes, apartments) cash-flowed from day one, and quite handsomely too (average cash-on-cash return for the FIRST year was an average of 35% after putting 20% down).
Granted, I bought at the bottom of the market (I can’t imagine doing otherwise), and held them for years, not months, and I was in a market like California and Nevada where prices weren’t being artificially inflated by a glut of inexperienced investors.
A real estate investor (a REAL investor, not a scam-artist), gave me invaluable advice: always make your money on the purchase, not on the sale. In other words, buy below market so you don’t have to worry about cash flow or blue-sky forecasts of appreciaton or the economy or the price of tea in China.
For me, that’s the only way to invest in real estate because otherwise there are too many variables that can get you in trouble.
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Casey,
I could almost sympathize with you because you are much younger than myself, but really you should have known what you were doing. If the boom lasted another year or so and the house prices rose quite a bit more, you would have started a website howimademillionsflippinghouses.com. You took the chance (even though the odds were extremely against you) and you lost. It’s like that guy who took everything he had (which I believe was in the mid 150K’s) and put it down on a roulette wheel and won. He came out like a superstar! But what if he lost, what was plan B? Suicide?
You can take every bit of money you have and buy thousands of lottery tickets with it, thus giving you greater odds. If you win, you win big…. something to be proud of, if you lose, what then? You’re flat broke! What can be worse than that? The situation you are in right now! After all, having no assets is much better than having negative assets.
Maybe you need to start a flipper support group and maybe preach about how stupid you were to do this in the first place. Maybe it will do some good….
I have a child and am stuck renting. Why? Not because I can’t afford to buy, but because houses are so overpriced and I knew for years that it will turn around and many people who bought will get burned. I had no idea when it would happen, but all I could do is wait. I was so pissed at all the people who were paying these ridiculous prices and using the ridiculous loans; thus making me have to wait so many years to buy at a real price. Now that time has come and I’m glad. I don’t know how long it’s going to take, because I’m not buying until I start seeing pre-2000 prices.
You do deserve what is coming to you though and it’s going to get alot worse before it starts to get better. Good luck!
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Have noticed that one of the things that has changed most over the last 30 years is that housing has grown unaffordable for an increasing fraction of the population. At the rate things had been going particularly in the mid 90’s through 05 time frame, the “American Dream” (brought to you by the oil-auto-mortgage banking-real estate industry through television, newspapers, and the radio whose owners are beholden to these leading advertisers) of the detached single family house was destined to run in with the reality of ever higher debt service payments and energy costs. Incidentally, what the house in the suburbs generally gives one is a big debt load, a high operating cost, particularly for heating and cooling, a long commute, some degree of isolation, particularly for non-working mothers,
and, yes, some appreciation.A couple things:
1. Character is destiny.
The guy facing foreclosure hear based his activity on fraud as he misrepresented himself as intending to live in the houses when he had not such intention whatsoever. Incidentally, just because a lot of people are doing something that is wrong and illegal doesn’t make it ok. It is still wrong and illegal. He also had a seeming blindness to the reality of the situation that the real estate markets in much of the country, particularly on the coasts, was greatly inflated, that the prices had risen to the level in the summer of 2005 beyond which people’s income could not support them, and the Fed would continue to raise interest rates in an effort to reduce inflation produced by rising oil costs. So, dude, you will continue to make these mistakes just like most foolish sociopaths because of who you are. And yes, I said sociopath. The dead giveaway is your shameless seeking of pity which is the hallmark of a sociopath along with the short-sightedness, blatant dishonesty, and thrill-seeking.
2. A house is a place to live in.
A lot of people these days no longer seem to believe that. Instead they have been seeing a house as just an investment and, in many cases, as a money management device. The end result of this recent run-up in housing has been that many people, particularly young locals, are unable to afford housing and will be that many ARM-holders will become financially insolvent. This phenomenon is consistent with the lack of sense of place, family, history, and community that is a leading characteristic of modern American sterile homogenous suburban sprawl with its attendant lifestyle of going into debt and wasting oil to buy cheap mass-produced stuff leading to the end result of making some corporate share-holders and executives very rich and garbage dumps bigger, a splendid display brought to you by the people who know the price of everything, but the value of nothing.
4 Rules of investing
A fool and his money are soon parted.
There is no fool like an old fool.
There is no keeping a fool from his foolishness.
(This one is also known as once a fool, always a fool.)A fool is born every minute.
Thank you Casey, the flipped-fool, and others, for so brilliantly illustrating the first and third of these rules in action. And rest assured, that the mortgage lenders, by and large, just like the contractors will abide by the dictum “Never give a sucker an even break.”
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First of all, you need to generate some cashflow. The only quick way is to try to get a job ASAP!
As I see it, you have 2 choices.
#1. Sell the houses NOW. Take whatever you can get, cut your losses and live with the consequences. Forget about trying to come out whole, and selling them for what you need to get whole. Give someone a deal like YOU should have made when you got into this. (the money is made on the buy, not the sell). The sooner the better, as it will only get worse.
#2. File for bankruptcy, the sooner the better. I certainly don’t know all the ramifications of this decision, but it might allow you wipe the slate and start over. But it is probably better then trying to survive by coming out whole.
A quick death is much better then one by a thousand cuts, be it by selling at a fire sale or filing bankruptcy, and you are certainly taking the death by a thousand cuts route at this point.
The best you can hope for is to come out of this learning a very hard and expensive lesson. A bankruptcy on your credit report isn’t the end of the world, and it will at least keep you from doing something stupid like this again for a few years. If you can sell, you will still more then likely end up owing better then $200k -$300k in debt with credit cards and RE losses. It is up to you to decide what you want to do.
Also, go to www.daveramsey.com for some money advice from a guy who went through something similar about 16 years ago.
So how much money are you making selling ads on this site? Is it enough to try to salvage anything, since you don’t have any other form of income?
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Casey
- cut your losses. Get out now in case the markets tank
- file for bankruptcy if need beGood on you for taking a risk - you will come out of this ok and it may teach the banks a lesson. If you had done this 3 years ago you would be laughing right now, so you were a bit late to the boat (I have no properties BTW as I think they are overpriced).
Clean yourself up, save some cash while working as a programmer and watch for the next boom in 10 years time.
Best wishes,
Phil
Perth, Australia -
Casey,
Whether or not you pay for it in the form of college or seminar tuitions, education does not come free.
You will be fortunate if the fraudulent practices don’t cost you more, in the way of criminal or civil penalties.
But it takes genuine courage to make the leap into any full time business, and exponentially more courage to admit to the world you’ve engaged in shabby practices and made mistakes.
Ignore those who are criticizing you here. The world is too full of get-rich-quick artists, and you are (bravely) providing a counterweight to that.
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work for a living, get rich buying real estate, date expensive models and have expensive divorces. Ah, the American Dream. Just go to those Trump Learning Annex seminars, buy the books, get access to gobs of debt via “liars loans”, and you’re on your way to riches! Oh, it’s just sooooooooooo easy! Well, like The Donald before him, this 24-year-old FB kid is on the verge of bankruptcy, owing $2.2 Million. My first question is: HOW THE FLYING F*CK DID A 24-YEAR-OLD GET TWO POINT
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I am sorry to hear of your misfortune. This will unfortunately be a growing problem in real estate.
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I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, finding solutions and blogging about it. Comments appreciated! How it all went down: I started investing in October 2005 and went full-time in January of this year (2006)
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and advice out of it. Plus my properties got extra exposure and that’s always good. Why so Negative? I think people were negative because: Many (not all) people reading “Bubble Blogs” are negative to begin with. Me calling the loan “liar loan” made it seem REALLY bad. Some people DO NOT realize that these loans are pretty typical in the industry. It is controversial to be this honest about my situation. Many people think “flippers” and
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Question:
If you set up a company, and you face foreclosure, is it YOU or the COMPANY the faces the bankruptcy.
In other words, if you set up a company and you face foreclosure, is your credit record protected? Thanks.
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Hi,
Another question is, if you flip your property to ANOTHER INVESTOR, wont that save you from going to foreclosure?
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Yes, I agree with what some others have said, and I will go into a little more detail so it isn’t too vague. In fact, others reading this might learn some valuable money tips from the second half…
- sell the houses now, not necessarily for pennies, but don’t wait to make a profit - if you lose $10,000-$20,000 on a deal, it’s better than waiting 3 more months to sell it while each month stacks another $15,000 of debt onto the scale.
- After selling them all, you can pay off a huge portion of your loans, and even keep a little extra cash around for the next 2 months payments while you find a job. At this point you may have no assets left, but will only be in debt maybe $130,000 - that is a lot, but on a mortgate it’s a pretty low monthly payment (~$700) and you can recover from that with no problem.
- Live within your means while working a job. Pay the $700 each month to slowly pay off your loans, pay for the residence you live in (rented our bought, whatever) and don’t spend more than the balance - in fact, you should save some money too.
- Once you have some money saved, you can put some into aggressive stocks (aggressive because you’re young and don’t need to retire soon). You can also (also, not instead) slowly put some money into real estate investing (on the side, not as a full-time job). Put 10-20% down on a house, rent it out, let the rent pay off the mortgage on that house (with no positive cash flow yet), and then you can either sell it in 5 years for double what you put in (b/c of the increased equity), or you can wait 10 years for the mortgage to be gone and sell it for more, or now that the mortgage is paid off, you can pocket the rent each month (+$400-$500 each month).
By the way, this renting strategy should be done only with $50,000 - $100,000 homes - anything more won’t rent well, rents won’t increase enough to cover the increased mortgage payments, and the equity won’t increase as quickly due to all the interest on a huge loan.
This is much slower than what you were trying to do, but OVER THE YEARS it will make you wealthy. With this investment strategy, your average growth rate averages to around 14%-20% which is HUGE if you’re diligent about saving money to put into it. You don’t need to do real-estate investing full-time to get rich. Just take it slow, each year saving up money to put into the next home you’ll buy. If you do this, you will have a very comfortable retirement (and may even be able to retire early…)
Good luck everyone.
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“I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 5 houses. I’m learning my lessons, finding solutions and blogging about it. Comments appreciated!” The positive aspect of this account is that the investor takes responsibility for his actions. In his blog, he lists his mistakes and he seems to be
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After reading this entire scenario, Michael’s advice is the best. At this stage of the game you need to get out. If you can’t negotiate with your lenders (because they won’t talk to you), get someone who specializes in loss mitigation to do it for you.
Deed in lieu of foreclosure is your best bet. It may also save you from deficiency judgments (that’s when the lender notifies the IRS that they got less for the house than they lent you, and the IRS sends you a 1099 for the difference between what you owed and what the lender settled for in a short sale — yes, you would also be responsible for the taxes on this 1099).
You will eventually recover and it will take at least 10 years, but its better than going to prison for loan fraud which is what you’ve committed. Negotiate now and get out. This time, do your homework, intern or birddog for a real investor, and eventually you can do this right the next time.
Good luck.
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Wow! Incredible story….best of luck turning this around!
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I want to echo Vegas Investor’s warning…
If you SHORT YOUR LOANS, YOU WILL OWE TAXES ON THE NET GAIN! This is bad bad bad bad news.
As I mentioned in my e-mail to you, if your lender shorts a $295k loan down to $200k, they will report the 95k (plus their expenses) to the IRS as income, and you’ll owe taxes (both federal and state).
Contact your lenders (as many of them as possible), and as for them to arrange deeds in lieu of foreclosure. It really is your safest bet to put all of this behind you.
At this point, barring a s*%tload of money falling out of the sky and landing in your lap to tide you over through the market cycle (which could easily be five years), your best bet is to get out of this and move on.
Michael
P.S. How much money could you have earned (consulting) instead of chasing one idea after another to resolve your financial mess?
P.P.S I know you think you learned a lot in the seminars that you attended, but if you think you’ve got to pay your agents $2500 if you find a buyer for your own property, then you *really* need some more experience in real estate. You’ve got the right to cancel a listing agreement at any time, for virtually any reason, and you only owe that agent a comission if they brought the Buyer to you, you cancelled the contract, and went ahead and sold the property to that Buyer.
Michael
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). Most are fixers - I was going to rehab and flip each one within a month or so. Buying was easy, but man was I in for a surprise (or a lesson?)….” He began to write a tell all blog about his adventures. Here is the reason why.
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Am in the same situation as you. I just was in foreclosure last month because I was 2 months behind my mortgage for the last 6 months. The bank issued foreclosure right away and will not accept later payments. I should have rented out the house instead of hoping to sell it and make a quick buck. Too late, I have already lost the house. I have $14,000 to my name and waiting to go back again. I have found houses in Pennsylvania for $12000-$20000 but needs repair. I don’t have money for repair. Since these properties are in depressed areas, do you think I will be able to obtain government grants? My credit is also very bad right now. Do not give up. Go back to your job and look forward to new deals this time with more caution.
Filomena
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Well I guess I want mostly to agree with JJ but I do have to agree in general with those who think the situation is now beyond hope of recovery without a period of considerable hardship.
See, I am from England but now reside in Iowa. There was a “Bubble” in England that literally priced the first time buyers out of the market. This was largely started by the Thatcher Government who continually preached “Entrepreneureal Investment” ad infinitum, giving even the uneducated the idea that they should borrow money and jump into a business they “Thought” they could handle. Small business loans became popular advertising and “Equity Loans” became every second Ad on TV as the Bubble grew.
The first time buyers’ pay however did not match the inflated house prices however, remember these loans were taken out based on “Valuations” by Realtors and not on actual sales. When it reached the point where first timers couldn’t afford to buy a damned thing because even the cheapest house was out of their “Borrowing” range everything screeched to a halt and values fell dramatically. All the “Equity Loaners”, especially those who have used the money to start a business were left with a property they owed a fortune on but could never make the money to pay off.
I’ve been in Iowa 6 years now, nearly 7 I guess, and have seen the same signs (With minor variations) happening here. Notice the lack of “Equity Loan” ads on TV lately? The financial companies know what is going to happen, and they don’t really want to get stuck with millions of foreclosed properties to sell although they can’t lose because even if that happens most of those property “Values” had already been paid to them before the “Equity” was taken, in other words they cannot lose whether you pay off your loan or get foreclosed because the money you “Borrowed” was never there in the first place, it was always “Theirs” because they created it.
Example, you bought a house in 1995 for $50,000. In 2005 it was valued at $100,000 so you borrowed the extra $50,000. Now, suddenly, you owe maybe $75,000 on a house you can’t sell for more than $60,000 - because nobody in the market for that grade of house can afford to buy the damned thing. You are in a $15,000 hole you cannot sell your way out of at the very least. Effectively you have been tricked into taking out a total mortgage of $100,000 for a $60,000 house. If you pay the lender has doubl;ed his money, if you fail the lender gets a $60,000 house plus the $25,000 you had already paid on it before taking out the ‘Equity Loan”.
The second con is the idea of “Fixing Up”. I am a professional in the maintenance trade and can do ALL the work myself, except of course for a few jobs that require special equipment or occasionally a second pair of hands. It is NOT easy work and anybody who tells you you can do “Quick and Easy” fix ups to fool a professional surveyor is either a liar or as stupid as you are to fall for it. You may fool a private buyer and even I can get fooled sometimes, but not over several things in the same house. I am not the least bit surprised that Casey got bigger bills for work done than he expected, this is because “Certified” people cannot afford to do “Quick and Easy”, it simply does not work that way.
What this means is that a cheap house is cheap for a valid reason in most cases, someone who thinks thay can buy it and do cheap fix ups on it is in for one of two things, either a lot of hard work themselves or a lot of money to contractors. If a fix costs $5000 it is unlikely to add that much value to the property. I once won a competition (In the UK) which got my house with rotten old windows replaced with brand new thernally efficient double glazed units. This would have cost me if I’d been paying for them about $30,000 so I called the lender to see what their estimate of equity gain might be. They said maybe a couple of thousand, well maybe $5000 because people nowadays expected double glazing and in any case would “See” the value of the windows but “Not see” the labor costs. They were right, when I sold the place it actually cost me a little money because the housing bubble had already “Burst”. In my case the damage was minimal but had I owned several like it as Casey does the damage would have been considerable, although the amounts would have been smaller. (By the way I converted the above example to Dollars so it made sense to US readers).
Whilst I don’t agree with everything in this article it makes interesting reading.
http://www.economist.com/finan.....id=3722894
I will just quote a small part of it…
The figures look even more striking in the San Francisco Bay Area, where it is possible to rent an $800,000 house for $2,000 a month. Making the same assumptions about rents and house prices, but also deducting tax relief on a fixed-rate mortgage and adding property taxes, a buyer would pay $120,000 more over seven years than if he had rented. House prices in San Francisco would need to rise by at least 4% a year (2% in real terms) for it to prove cheaper to buy a house. Since 1950 American house prices in real terms have risen by an annual average of just over 1%. To expect them to rise faster from their current dizzy heights smacks of irrational exuberance, to say the least.
I believe what I see happening is the huge lending corporations taking advantage of get rich wannabees and the innocent home buyer at no risk whatsoever to themselves or their business. How can there be any risk when the worst case scenario for them is foreclosure and ownership of properties that have already been paid for…
In closing then I don’t condemn anyone, in fact I hope Casey can recover from this setback and frankly I don’t really see Casey as the guilty party where “Lying” is concerned because the lenders Lie consistently all the time, just read the small print. The types of loans offered that enable this kind of business actually encourage it to be thought of as “Not really lying, just not quite telling the truth”, as indeed many “Brokers” will just “Leave out” some adverse details.
Charlie
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4 different states, mostly with the help of 100% stated income loans (liar loans). Most are fixers - I was going to rehab and flip each one within a month or so. Buying was easy, but man was I in for a surprise (or a lesson?). Read the whole story here.
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Speak to a debt counsellor. It might be even worth going under. You’re a young guy. You can get it back over time. You messed up. If you’re truly sorry then TELL EVERYONE YOU MEET to sell NOW and not to BUY now. You might save idiots from themselves. Send your story to TV stations and newspapers. Tell everyine about the reality. There is no quick fix. All markets go up and down. Estate agents are liars as are lenders and property developers. If only the SEC could put them away.
We have the same idiocy in UK as they do in Ireland, Spain, Australia, New Zealand etc Liquidity by Greenspan and Bernanke created it, fuelled by the media saying its a sure thing and then ignorants and greedy people like you did exactly as they hoped and kept the economy alive until Greenspan could retire.
All the best -
So basically you thought you could borrow money from someone else to buy some stuff and then sell it on to someone else for a vast profit while sat around on your big, fat pimply butt?
Haha! I hope this hurts!
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A fool and his money are parted.
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Well it is good you’ve hit rock bottom and are trying to be honest. Everyone makes mistakes - including moral mistakes, a.k.a. evil. All we can do is be humble and admit it. I should probably take my own advice.
Being guilty isn’t going to help anyone. Guilt often leads to more bad behavior. Guilt is a product of ego…you feel bad because you thought you were great, and now you realize you are not. Just admit you are not that great and you’ll feel better. Again, I should take this advice myself.
But, having said that, I get the feeling that you are still thinking you will be rich some day. If so, you haven’t learned your lesson. Accept that you are an average person. Don’t go to real estate or stock investing or Tony Robbins seminars. Try to destroy your ego, it will be better for you and better for the world. You thought that most people were just too stupid to sign a bunch of papers and become millioners, but not you? If you still think that, you’re still a jerk. If not, you should try to be happy that you’ve progressed, and not dwell on the past. What’s done is done.
People who go to those seminars are like that, in my opinion. They egos won’t let them accept that they don’t have the talent to be rich. It makes them feel good to be told that anyone can do it. But why would the truly smart and talented people leave these opportunities open? If you could use a computer program that showed you which stocks to buy, why wouldn’t the professionals use it with all their resources? Why wouldn’t they start companies that flip houses? (Yeah, there probably are such companies, but if they worked consistently there would be more, and the existing ones would expand until there were no easy opportunties left. The market is efficient. That is in my opinion the fundamental characteristic of the free market, and yet many so-called entrepeneurs don’t grasp it because they are not very intelligent and blinded by greed and ego)
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Hi-
I am curious about some more details due to the fact that my company is heading out there in a week to our corporate office. We are doing a seminar in Northern California and are looking for some investment pieces.
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[IMG] ________________________ Just click here and prepare the rofls. Make sure to read his claim, and then read on towards the comment session. It gets funnier the further you get down on the page. Just a word to the rest of you out there that are considering committing fraud or breaking some other kind of law, don’t
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Casey,
Just heard your story on NPR driving in to work this morning and immediately checked out your blog. Your forthright admission of error and sharing of your story are admirable. While your financial situation is dire, all is not lost. You may find that your notoriety is a marketable asset.
There was an interesting book I read a while back: “A Mathematician Plays the Stock Market” by John Allen Paulos in which he detailed his irrational exuberance about WorldCom stock and how he got in way over his head. He piled bad decision upon bad decision and eventually wound up in dire financial straits. I point this out only because there may be a book in the making here. Your blog is the outline.
I wish you the best of luck in getting out from under the pile of rocks you find yourself in. Keep writing, it may just be your ticket out of despair.
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I bought 8 houses in 4 different states, mostly with the help of 100% stated income loans (liar loans). Most are fixers - I was going to rehab and flip each one within a month or so. Buying was easy, but man was I in for a surprise (or a lesson?)[/b] http://iamfacingforeclosure.co.....reclosure/
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Burn those houses down, get the insurance money, then split.
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Basically, Casey bought his first house in Sacramento and flipped it for an easy 30K profit. From there, he bought eight houses with essentially no money down. And now that the market is making it harder for him to sell these homes at a profit, the costs of holding any one of these houses is killing him. His blog, I am Facing Foreclosure, is an interesting read, I alternately feel terribly sorry for this guy and angry, especially when he keeps talking about getting back into the real-estate game after all he
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HI, CASEY!
I just read about your financial situation. It brought to mind something I was told recently. Someone said that no matter what happens during our lives, we are always remembered by how we finish. When we face a crisis, we usually have a variety of choices to handle the mess. Most of the options do not even come close to what one might recognize as a strong finish. The best way to finish strong is to be obedient to God. What is He calling you to do? Are you seeking counsel from godly men? Do you have a band of brothers that you meet with regularly? Are you making Him the priority in your life right now? I’m praying for you, brother. Feel free to call me. -
[…] I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, finding solutions and blogging about it. […]
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First off, why should anyone believe the story you are telling now and that THIS BLOG is not the business model behind the LIES!
Clever if that is true; although very cheesy and desperate if you ask me.
But assuming what you are saying is true, you are a COMPLETE MORON! I mean you are quite the fool. You fail to learn, you have no idea that by talking about your scams you are putting yourself into deeper trouble down the road, and you have absolutely no business savvy or intuition whatsoever.
Why should anyone feel bad for you? Are you kidding? You did this to yourself because of your own stupidity and lack of risk management. Its all just a game for you isnt it.
You are too stupid, too blind, too much like an InSync singer to know any good. I hope you pay for your actions and that people don’t get fooled into CLICKING ADS or DONATING to this blog!
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Hi Casey!
Thanks for sharing, I admire your courage to pull it off so far the things many people have been trying to do in a life time. You must be good sales man or very smart. Please don’t you ever quit the business because I want to learn how get the sellers and buyers to trust you.
I have attended all these seminars with their “next day instant Millioner” promises but I have never withness a person actually try it and make it. Yo did made it but a little reckless.
Just correct some of your mistakes here and there and skies will be your limit.
Chris
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Flippers destroy neighborhoods.
You didn’t just hurt yourself, you hurt honest people trying to make a community with families and kids. Your delinquent houses make their neighborhoods more dangerous. Their kids wonder why they don’t live in a neighborhood with nice well-cared core homes.
Well, it’s because of Casey Serim and his scamming.
Enjoy the flames Casey you earned ‘em.
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I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, finding solutions and blogging about it. Investing is different from buying-and-selling homes to make a buck. I suspected a lot of people would be hurting right now as the realestate boom is cooling off.
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story, between October 2005 and May 2006, he bought eight homes in six states using 100 percent stated income loans, getting $15,000 to $50,000 cash back on every loan, he says. Of course, “Everything went wrong,” Serin writes in his first blog entry. “The rehabs were way behind schedule and grossly over budget. I was too busy flying around the country visiting each job. No time to manage details. I couldn’t sell the houses fast enough. I managed to sell only 2 out of 8, and got stuck with the
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Casey, in my opinion it sounds like you have HAVE committed fraud on your loan applications. When you state your income on quick qualifier loan, it does not mean that you “make it up”. Also, you can’t state that you “intend to occupy” 8 houses as your principal residence. Although many lenders follow a system that allows you to get away with this, I believe this IS actual lender fraud. Also, if I buyer “takes over” your payments, the lender must approve this take over. Otherwise, if the lender finds out, they can immediately call the loan and require the entire balance to be paid. THIS should be disclosed to any buyer, otherwise you may be setting up a new buyer for disaster and you may be opening yourself up to a lawsuit by this buyer. I admire your will and your determination, but I beleive that you are a bit reckless and self destructive. This website, although interesting, I believe could get you into legal difficulties, and is also a bit reckless. The positive is that others can hopefully learn from your behavior. I sincerely wish you luck - be careful.
Rich Farnsworth -
To make this story truly complete you need to sell your homes on EBay!
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That $100K+ that you now owe would’ve been a much better investment in an EDUMUCATION!!!
Perhaps something that explains the legalities of Real Estate like… oh I dunno… a Real Estate License.
I paid $350 through an online site for mine. Thats a lot less than $100K+ and I hate to tell you, I’m not looking at going to jail anytime soon, and have actually made something called a PROFIT from my investments. We can talk a little more about that after 7 to 10 years when were both 30 and you’re finally out of bankruptcy.
You might’ve guessed I’m your age. Went a different path though. From Sacramento too, funny enough. Have dreams of making the 1st $mill. by the time I’m 30 - and well on the way now thanks to staying focused on the things that I KNOW WORK BEST…like web design, advertising, and video productions.
No need to try to “get rich quick” overnight anymore. That’s how I landed in jail for posession of drugs, and wound up nearly dead in a hospital, lost all my so-called “friends” and had to start over by getting my EDUMUCATION! But that stories not nearly as funny nor exciting as yours.
I’ll leave you with a little recognized fact of life called Karma. Even though my life is on the straight and narrow now…Karma seems to have a way to come back to me every now and then and remind me of something that I did wrong back in the day. Get used to it - and start creating as much GOOD Karma as you can for yourself - because you are certainly going to need it! Good Luck!
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ahhhh another real estate seminar victim, if real estate was so successful and easy ..why arent the guys that push it ….still doing it…of course they say they do…but they dont..they make their money off people like you..i had an opportunity to become involved with a real estate seminar group and it was the leading one…and quite frankly they are all snake oil salesmen..it wasnt greenspan that created this phenomena..it was fraudsters ..who firstly refined it in other countries ..ie Australia…
quite simply - the old business rules will always apply …there is no such thing as a new economy ..just a new group of fraudsters with a new game …wake up people …if you act like a sheep …and follow the leader ..then they will lead you to their trough..i admire your fortitude and go getter attitude but temper it with some reality of your own..and you will do fine..nobody was ever successful by following the crowd…..only by leading it !
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Casey,
Carl Conli is correct.
If you were obedient to God, you would have been able to flip all your properties for millions of dollars and you would be sitting on a beach somewhere retired.
The good news is: Carl is praying for you and if he prays long and hard enough God will bring an investor in to bail you out and buy all your properties before foreclosure.
Carl–keep praying for Casey. I know you can make this happen for him. -
Sounds like you definitely overpaid on whatever books and classes you bought. And paying $41,000 over the listing price on your property on Larchmont in North Highlands, in March of this year, was crazy.
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[…] I’m a 24-year-old aspiring real estate entrepreneur from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, finding solutions and blogging about it. Comments appreciated! […]
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I did the same thing. I went from 0 - 1000 units in three years.
I thought I would wait until a bank said “no”, I thought they were smarter than I was, and if they said it was okay, than it must be fine.I have had my butt kicked for two years. The minute home builders started carrying their own financing, and interest only loans with 3 year ballons…I was dead.
I also had no conception of what have 1,000 apartment units meant.
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I went through major depression, and wanted to curl up in a ball.
I am back now…and I understand what “market conditions” mean.
I always thought if you worked harder, you could over come any obsticale.I have picked my self back up, and I have two thriving companies.
I am 36, you are 24…you will be a better person, and buisness person from this experience.
I think you were in the wrong field, do what you are good at doing. You should be in Sales!
Take a deep breathe and try again in a couple of years.My biggest leason….stick to doing what you are good at doing.
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Why people never look in history books before jumping in.
Greenspan created extra liquidity and everyone jumped in believing that with short span all be millionaires. Strangely 1999-2000 bubble was already forgotten.
It is like in late 20s, right before 29 crash, Mellon, Mitchell and few other bankers created extra liquidity, and it was peoples greed and stupidity that bid up prices to levels that could not be justified.
I am becoming more and more convinced that people are more afraid of being left overboard than of loosing their hard earned money.
Yes, you need to take risks to make big $, but they need to be calculated risks.
One should never bet the farm. If I see a brilliant opportunity, that can take me to a next level, then I might consider risking 50%, but that is it.
The first and most important rule of investing is to learn how NOT to loose money. Making money comes secondary.
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[…] More … […]
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This is so true. Amazing how history repeats itself. However, it is still not too late to bail out and take a limited loss. But, just like in 2000 people will hold, pray and hope that the crash is only temporary.
Just like in 1929 big guys that pumped liquidity in the market, cashed in, and let the average Joe hold and hope.Similar what Japanese thought back in 80’s when the real estate started going south. They were surprised to see the real estate go down by 60% or 70%. When it was down 30% people thought it was the best time to jump in and so on…until everyone was wiped out.
I can hear people talk how you can not compare 1929, 2000 or Japan in 80’s. It is hard to accept losses, but sometimes we have to..
But there will be next chance after the real estate, the fed will lower rates again, a new bubble will be on its way and everyone is going to jump in. Banks will probably come up with some new loans where you only pay $100 per month but after 10 years it resets to $10000 I’m just not sure what the market or instrument will be. Make sure to start buying early; don’t wait 5 years into the bubble.
Levarege is nice on the way up, but it’s a real b**** on the way down
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Casey, I think you are full of ****. Post the addresses of these properties you supposedly own, so that it can be verified that you truly are the owner.
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For your remaining houses, I have a program you can utilize to sell them at full value quickly. www.yourEzsale.com/R30699
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So, Casey… who was it that encouraged you to LIE on your loan applications? I’m curious.
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[…] For now, I don’t really have any more conclusions or thoughts. Just check out his blog and see for yourself: http://www.iamfacingforeclosure.com (you can start at Why I am Facing Foreclosure). […]
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[…] Wow. Turns out that there's a 24-yr-old "Real Estate Expert" in the Sacramento, CA area who has bought no less than 8 properties in the past calendar year. He was a subscriber to the Carlton Sheets program, among others. And he's in a world of ship right now.If you don't know about the story of this guy, Casey Serin… now is the time to learn. His website is a wildly entertaining read. Throughout his website, he dodges the gray line of what's right and what's wrong.Worse: He's put enough info on his website that … well, he can do some serious jail time.Trust me: EVERY Realtor should take a few minutes to review his website, and his semi-sad story. Start here: http://iamfacingforeclosure.co.....losure/And his home page:http://iamfacingforeclosure.com/And the news goes on… every day. Just do a Google search on http://news.google.com and enter "Casey Serin"You'll be amazed. This … er, 'investor' has lied, cheated, swindled and taken advantage of our current Mortgage Lending System - nine ways from Sunday. There are lessons here. Many. Again: read and be amazed. […]
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[…] Here is part of how he ‘did it’. The sad thing is….none of this surprises me. I will go into more detail later.why he is facing foreclosure: ——————————————————————- What happened? Why am I facing foreclosure? Basically, I bit off more than I could chew. […]
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[…] I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, finding solutions and blogging about it. […]
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[…] most people who attempt this end up like this guy http://iamfacingforeclosure.co.....reclosure/ ^ very good read. __________________ A bunch of my shoes are for sale. http://forum.e46fanatics.com/s.....p?t=410036 takeing all offers […]
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I have been a RE professional for 23 yrs, and am just starting to dabble in the investing side. Of course I have missed the boat !! For not getting into it over the past 5 yrs when things were booming, but so be it…. I still hope to do well.
But I have to point out what Michael said a few responses back. “Flipping” has developed a very bad conotation….. due to people( investors) engaging in fradualent actions, beginning with false contracts, inflated sales prices, and liar loans etc . And these “flipping” transactions are what have hurt communities and the economy etc….. But flipping a property, by buying a fixer upper, rehabbing it, and selling for market value, at a profit to the investor, is perfectly legal, and is good for the local commmunity/market. Flipping is only bad, when fraudulent activites occur within that flip. It is the fraudulent behavior that is a detriment to the housing market, and not the flipping.Good luck to you Casey, I am a risk taker also, and admire your courage at such a young age. But, you need to operate in an ethical fashion and hopefully you will learn that from this lesson. It appears you needed a lesson !
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[…] Don’t do what he did, which is - […]
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[…] Facing Foreclosure…should have stuck with web programming. http://iamfacingforeclosure.co.....reclosure/ Quote: […]
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These “get rich quick” seminars and books remind of a valuable quote from a Dilbert cartoon.
“Beware the advice of successful people, they do not desire company.”
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[…] Mortgage Blog News - I happened across this blog today: "I am Facing Foreclosure". I suppose it is possible that this blog is a farce, but I did find some interesting highlights of pure greed and fraud. […]
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[…]This blogger/investor is only 24 years old and finds himself $2.2 million in debt after only 9 months.In “Why Am I Facing Foreclosure,” Casey Serin wrote,I started investing full-time in January of this year. This is after going to numerous real estate investing seminars, reading books and learning from other investors for the past 2 years. Made a few successful deals on the side and was anxious to go full-time. I quit my website programming job and went all out! In the last 6 months I bought 7 houses in 4 different states, mostly with the help of 100% LTV stated income (liar’s) loans. Most are fixers. . […]
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“From October 2005 to May 2006 I bought 8 houses in 4 different states, mostly with the help of 100% stated income loans”
You my friend are a liar and a fake. If you are honest post up your deeds or loan docs without personal information. NO lender in the world would lend someone 8 loans at 100% CLTV across 4 state lines. The problems with your story comes from even the basic prinicipals of mortgage lending. You have to justify residency with a (LOE) of why you are purchasing multiple properties, even on stated loans you need to verify employment. NO underwriter would sign off the 2nd or 3rd property. Usually 2nd properties are maxed out at 90% LTV. Your site is scam and I really do hope someone seeks legal action against you. No f***ing person who is in the mortgage business will buy your lame story.
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[…] 8 casas, 8 meses, 4 estados Volviendo a escribir un poco, ac� hay una interesante historia escrita hace unos d�as por Ramit Sethi sobre algunas decisiones est�pidas que tom� Casey Serin creyendo que el negocio de las propiedades (o Real Estate, como les gusta a algunos llamarlo por estos lares) perdona todos los errores que uno puede cometer.Puede servir para los que est�n en el mismo negocio conocer los errores de Serin con vistas a que no nos pasen a nosotros, y de paso ver si puede salir de esta situaci�n. […]
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interesting blog. It is by a 24 year old budding “investor”, who didn’t know any better and took what we wanted to believe from various get rich quick seminars. His name is Casey Serin, and he bought 8 houses in 8 months with no money down, and lost. http://iamfacingforeclosure.co.....reclosure/ Check out out some of the comments. Wow. Why is Real Estate so interesting? Cos is can make smart people do dumb things, and dumb people do smart things.
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[…] I Am Facing Foreclosure is Casey’s blog about what he did, how it all went wrong, and what he is going to do about it. I guess the blog is his way of turning lemon into lemonade. The blog has received a ton of press and helped Casey get a ton of traffic. However, he’ll need a bunch of tier 1 media outlets talking about him before those Google ads on his blog can bail him out. […]
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[…] Whether its web development or real estate, you should always go into new ventures slowly and cautiously. The worst thing you can do starting out in an industry is to overwhelm yourself and dig a hole too deep to climb your way back out of. I was checking John’s blog yesterday and came across a post about Casey Serin from California. I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 4 houses. I’m learning my lessons, finding solutions and blogging about it. Comments appreciated! […]
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[…] This Real Estate Flipper Takes the Cake! Now He Has A Blog! […]
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Hey Casey I have a bridge I can sell you. It’s a fixer-up. I’m sure the profit will be healthy with the flip.
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entreprenuers many times need to recieve 20 no’s to get our one YES. When we get the yes it …
receive is misspelled
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Although I think you did it too quickly without a solid business plan I give you props because it takes gutts to do what you did and that’s a real entrepreneur, just in your case with less brains. I’ve been reading on your friends Ramit’s site. I don’t get his blog either on how to become rich. It looks like he is selling a book but not really giving any good info on steps or how. I’m confused. Anyway I hope everything works out for you and not to give up in real estate. I also own a rental income property and looking to purchase my second one once I find it.
later -finance ninja
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[…] The parallels to business are obvious. The difference between Donald Trump and some other real estate investors is simply that The Donald got lucky on some of his bigger deals (remember, he’s had almost as many deals go bad as have gone well). The other investors might be working just as hard as him, and have just as much knowledge as him, but they haven’t had the luck to get over the hump. On the other hand, the difference between The Donald and Casey Serin, is that The Donald worked hard to acquire the knowledge necessary to succeed and then worked hard to apply it. Casey, on the other hand, is living in a pipe dream where he can go to a weekend seminar and start earning millions every year. Casey would like to skip the “work hard and watch for your break” step and just get lucky from the get-go. After all, since every deal turns a profit, the more deals the better, right? […]
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ken best said “There is high cost and damage created by flippers to a community.
Local residents are priced out of their own town, and have to move.
Schools, businesses have to close since no family can afford to live there.
RE tax rises causing hardship for local residents. Miseries abound for everyone.”I’d seriously like to know how this is possible. In the state I live in (NJ), they only perform reassessments once every 10 years or so. Also, if someone doesn’t overextend themselves, by their own choice I might add, then they can prepare for taxes going up anyway.
I can remember that happening to our local community. The RE taxes literally went up by 80% in one year. This was because of those “nasty builders”, building more new homes in our area, which in turn required 2 new schools to be built. Of course, the influx of people occurred over a period of 6-7 years, so the locals were smart enough to see the increase, and prepare accordingly.
Our house has been appraised at double the amount we paid 6 years ago. And homes have been sold for even more than that in our area (because of divorce and/or poor planning on the owner’s part - one in particular was an accountant, rather hilarious IMHO). -
[…] Also, even if he takes a loss on the houses, he got cash at closing for each so I think selling would be a much bigger loss than if he just owed their market value at purchase. […]
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[…] I’m a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I’m learning my lessons, finding solutions and blogging about it. Comments appreciated! - Casey Serin […]
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Casey I could use my address for my blog; but I’m not writing to get hits tonight. I am hoping you will seek the input from an attorney to go over this tape. I’m concerned for you. But one thing I like is that for a young person, I find you to be a light in the tunnel. You seem to be someone who is trying to come clean in the face of a serious problem. I respect that. I think it’s good of you to want to help others: not many people in your situation would think of doing that right now. I also think you’re an industrious young person who had high hopes and desires: that’s to be commended. But in all honesty I think you were led down a slippery slope. Not many people would do this type of interview and then let themselves be the object of the interview. It sounded like your guest was fishing for information and trying to get you to admit somethings that perhaps should not be out in the public eye. So just to protect yourself: get yourself an attorney. It may be that your openness will be both a blessing and a curse. I hope not: because we need young people with your hutzpah. Thank you for sharing your experiences, but in this litigatious society, I think you will need legal help.
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: I’m a 24 yr old real estate investor from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone, and blog my lessons to help others in trouble. Comments welcome! Email CaseyView All Entries
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Do you really think that these “gurus” hold these “seminars” to tell everyone their real estate secrets out of the goodness of their hearts? After all, telling thousands of others their methods can only make their own real estate speculation that much more expensive and that much less lucrative.
I’m sure they’d rather travel around talking to know-nothings who have no money but scrape up hundreds to give to financial snake-oil salesmen than to actually put their methods into practice, and sit back and reap the money.
You call yourself a “real-estate investor” - and I suppose you are, since your name is on the papers. But it’s not your profession, your livelihood, or your occupation. It’s what you’re the victim of.
That you refer to these con men as “gurus” makes me wince and shake my head.
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The problem people, is not with flipping, nor with flippers. Making money in the purchase by buying Low, and selling high after adding value is basic to any exchange. Adding value can be in material improvements or in immaterial value adds.
The point is sane risk versus insane risk. And sane leveraging versus insane over-leveraging. There is a mentality that has a basic distaste for this sort of wheeler-dealer exchange, but millions of people operate on similar premises, successfully, and no one says a word.
The whole residential Real Estate market, from lowly “flippers” up the food chain to residential realtors and appraisers and lenders, have all collectively contributed to this situation, Realtors are NOT exempt from blame and have an in-built bias towards over-valuing, by NECESSITY, since in order to receive a healthy commission a healthy amount of equity must exist in a property and some of this equity really does seem to come in from thin air sometimes….
And yes, greedy investors are horrendously to blame too.
A realtor complained about the naiveté of someone wanting to pay 20% below market for a property. I only buy properties that are at least 20% below market, I have friends who buy 30, 35%. A commodity is only valued what people will pay for it, if I will only pay $90,000 for the house you believe is worth $180,000 that is its value to me. If there are a lot of people like me, this is the market.
I’m into commodities: a good deal of import/export international trade works on the same basis, Oil for example, an oil supply contract can be, and often are, flipped on the secondary market priced with a lower platt discount than you purchased it. Cargill sells millions of tons of wheat purchased at artificially lowered prices, market up higher. They sell at different FOB and CIF prices to different markets, some of the price differentials are due to shipping concerns, much of it is simply because they can get away with charging, say, Sudan or Ethiopia more than they can get away with charging, oh say, Uzbekistan.
As for working hard, saving, etc. This is common sense and fundamental. It’s a lost virtue with our young generation. That being said, there will always be people willing to hustle at substantial risks. Some people call them gambler, keep in mind our stock market and commodities market and FOREX market is built on a more insane tolerance for absurd risk, in my opinion, than poor Casey. At least his real estate is solid, not some future or option whose value exists in an ethereal nether-region.
He needs the lecture, but the holier than thou attitude is sickening, especially from the overly risk adverse.
A moderate tolerance for risk is a good thing, I think, and healthy and has made some people huge fortunes.
An excessive tolerance for risk is, on the other hand, a sign of hubris, desperation, or idiocy.
An excessive dislike of risk is cowardice.
A moderate dislike of risk is sane and healthy and touches the same golden mean that a moderate tolerance for risk does, with the exception that it tends to preserve what we have, but not increase it.
We have 4 cases, 2 healthy, 2 pathological, I fault not the moderate, the excessive can be faulted in both cases.
Only gamble what you can afford to loose, in other words. If you have nothing to loose then gamble away, if you have everything to loose beware!
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Thanks for starting a blog on the “truth about real estate business”. I said business and not investment, because what you are doing is not investing, it’s working. Anyhow, I thank you for putting up your experience.
Your experience has led to many people who came out and share their good experience and comments.
I’ll share a few things I’ve learned on Wall St. Wealth is created over a period of time. Rich is obtained overnight. True investment means good cash flow, and you will increase your asset value as time passes. Rich is that of lotto jackpot, a pro-sport contract. To be Rich, you need to be REALLY good at something or be really lucky (ie timing factor, good guesses). To be wealthy, you need to be patient, wise and able to sort out good information. Your blog has led to many good suggestions here, and I’ve learned quite a bit.
Well wishes to your future endeavors. You will be able to pick yourself back up and be well off soon.
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: I’m a 24 yr old real estate investor from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone. I’m going to weigh in here and point out a very common misunderstanding when it comes to real estate “investing” as Casey calls it. First and foremost,
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I’m a 24 yr old real estate investor from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone, and blog my lessons to help others in trouble.” What he really did is by questionable means, ( some say fraud), used “liar loans”, 0 % percent
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If you click on “Sercasey’s Photos” on his flicker, there is a place called FAVORITES where Casey picks some of his favorite photos from other flicker members. There are 12 different pictures of JAIL CELLS. (YES…I SAID JAIL CELLS) He even makes comments about them to the other members. Was there a JAIL CELL PICTURE CONTEST? Or are you comparision shopping for your future home? The hits just keep coming!!!!!!!
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Casey,
I produce the a radio show called Real Estate Revolution Radio which is sponsored by Global Wealth Solutions in Chicago. Would you be willing to do a phone interview with us for our radio show? Your situation is unfortunate and even more so is that many more in this country are facing the same situation. Please contact me using the supplied email address. I cannot guarantee that we can help you but we can surely try.
http://RealEstateRevolutionRadio.com/
Be blessed and keep looking up!
Ralph -
As an investor I can advice you to just walk away. Let them foreclose. Keep what ever you got left and pay off your own home, if it is homesteaded they can not take it. don’t blame yourself, you took a chance and should be commened for it, most of the world just stands on the side lines.
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You should have taken all the money from the equity lines as your profit then rented out the homes to pay off the mortgages. 6 months down the road you refinance the equity lines into the mortgages and have your renters pay off your loans. You still would have made the quick money from the equity lines but now its your profit. A rental house is great because its something you own that someone else is paying down. Even if your just getting enough from your renters to pay your bills its still worth it because their still building your equity (and your credit)… which is money you can keep taking out of the house down the road. Its kinda like farming.
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After I started reading some of his posts I realized I had read his story in USA Today a few months ago and had inteded to post on it then and forgot about it. If you are thinking of flipping houses it’s a good read. This is his post from September 5th explaining how he got into the mess he is in then you can go forward from there. Foreclosure, mortgage fraud, stress. It’s like a soap opera but, people, listen to me, this is real.
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I am truly sorry for your predicament.
From 1999 to 2005 most if not all of us have been living in a state of competition. If anyone followed the market trend, particularly real estate, one would realize that the market would have never softened at it has.
With interest rates at an all time low following 9/11, investors and people with money invested in real estate.
Home ownership soon became out of reach to most people.
Like someone running a marathon race I did not want to be left behind while everyone else around me was making money. I searched public records for homes I had seen for sale. I saw prices brought for and sold.Some people made $75K after one year owing the home. I wanted to secure my financial future. Thus I too tried to make money. I got into real estate. I bought a 3 family in September 04. I spent some 40K to make repairs to it. Now I am selling it to get out this terrible market we are in. I will make only 10K of that money back which I will use to pay off relatives I borrowed from. Your story is quite compeling. I’ve learn an important lesson. I’ve learnt to trust in GOD. We lose sight of what’s important when we become too ambitious. Every day I give thanks to God for my family, health and job. We are our worst enemy. take it easy. take it slow. Ask and it shall be given to you. I pray God for a resolution to all the world’s problems. Be kind to one another. That is my message. Peace!
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Keep going strong Casey.
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I’m 24 years old myself. I bought my first home (townhome) for 197k back in Nov of 2004. By Nov of 2005 it was listing for 215k! So I bought my second townhome in Dec 2005 for 204k; the builder was asking 218k.
The builder kept telling me that each place I bought would go up 12-15% in the first year. I told them “we’ll see!”
Wow am I glad I did not buy more than one. Everything with the second townhome is going great, but I realize that if I had 5-6 of the same deals, I would have no chance of survival.
So I’m done with that idea! I do flooring for work, so I will continue to rent one of the properties and fix it up with low cost to me if needed. And just wait……. Stay afloat!!
What I have learned at 24 yrs of age? Hard work and an honest days living always feels best at the end of the day!
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bought 8 houses in 8 months in 4 different states. Unfortunately he bought at the peak of the market and has been unable to sell these homes. This blog is following every single mistake and attempt to rectify his mistakes. He has currently had 4 homes foreclosed, sold 2 homes, and 2 are trying to
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Ah, so this is where it all started.
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people. I’m not smarter or better than anyone else, and who knows what I would do if my circumstances had been the same as other people? That said, however, I can’t help but feel much better about me and my decision-making capability after reading this
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the plug, I kept borrowing more and more via additional credit lines to keep feeding the machine a couple of extra months. I thought if I can finish the repairs and sell everything I can pay it all back. Then in August 2006 I ran out of money and started this blog After making $30K on the first deal and paying off all our debt, I jumped the gun and quit my Programming job in Jan 2006 to do real estate flipping full-time. Looking back, I quit that job too early!! I should have stayed and done deals on the side
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