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Old 05-13-2008, 11:04 AM   #21
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All his rationalizations sound like something you hear in one of those "Real Estate Seminars". I'll bet he's busy looking for another investment so he can fulfill his "passion".

As they say, a fool and his money are soon parted.
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Old 05-13-2008, 11:06 AM   #22
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Can you say "retard?" I thought you could.

At least when I read accounts like this one (and the iamfacingforeclosure.com moron), my own investing mistakes don't seem so bad.
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Old 05-13-2008, 11:11 AM   #23
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This guy stuck 10-40% down on the places and didn't bail out soon enough, or have the means to hold onto some of them (which i find odd). I don't know how the stock market is going to move, but have money in it anyway - don't see much difference.
If you have used margin to speculate on penny stocks that you know nothing about, then you're correct, there is no difference.
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Old 05-13-2008, 12:38 PM   #24
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My guess is that he really had short-term goals for this "investment". Something like a 50% return, rather than a comfortable S&P index. Taxes and maintenance would cost far more than fees and dividend expenses for stocks.

He can't really have thought much about this.
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Old 05-13-2008, 03:21 PM   #25
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Brewer, I thought of the same thing. But, this guy one-upped iamfacingforclosure-casey. Casey only had 8 properties.

-CC
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Old 05-13-2008, 05:04 PM   #26
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Brewer, I thought of the same thing. But, this guy one-upped iamfacingforclosure-casey. Casey only had 8 properties.

-CC
Yeah, but Casey didn't sink $800k into them I wonder how much property value he controlled. Hard to burn that much cash if you have tenants, etc. unless you are really leveraged.
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Old 05-14-2008, 01:10 AM   #27
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My favorite was the end quote
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Where I went wrong is I invested heavily in an area that wasn't my passion and I had a really demanding full-time job so I couldn't pay attention to nuances, the little indicators telling you the housing market was going soft," he said. "I was in over my head."


800K in stock options is pretty nice. I know plenty of people in Silicon Valley that worked for many companies over many years and made almost nothing on stock options.

I have zero sympathy for the guy because bankruptcy is not a victim less action. If you own an S&P 500 or total marketing index fund, some money he isn't paying back was supposed to go to companies we collectively own.
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Old 05-14-2008, 06:35 AM   #28
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Can you say "retard?" I thought you could.

At least when I read accounts like this one (and the iamfacingforeclosure.com moron), my own investing mistakes don't seem so bad.
"mistake" is buying one bad home investment. "retard" applies for a half dozen or more.

There must be a burning "gambling passion" within seemingly rational folks that causes them to ignore risk and put so much concentration in one investment.

I met a customer yesterday - 60 years old, engineer, painfully logical and methodical, successful corporate career -- turns out he bought 6 houses/properties in Florida a couple years ago - each financed with multiple mortgages (a total of 12 mortgage companies involved).

There's clearly individual "investing blind spots" - maybe everyone has them - that's were bouncing ideas off a mentor, advisor, this board, your dog (well not dog...) might help expose them.
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Old 05-14-2008, 08:01 AM   #29
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Wonder what these people learned from this experience. If they tough it out - rather than throw in the towel via bankrupcy - the experience can be life altering.

Obviously they'll learn persistence and determination (something they missed as kids if bankrupcy is the first consideration). And honoring the contract you signed.

They'll learn to LBYM to keep the bills paid.

They'll learn a life time of plumbing, electrical and carpentry tricks because they'll have to service the units themselves.

But most importantly, they'll remain active enough in the RE market to identify a bottom (having bought at the top). This will present an opportunity to offset thier losses with gains from other property.

That's how it went for me.
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Old 05-14-2008, 09:07 AM   #30
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I think the concept- 800k invested into 10 different properties makes sense. The execution of the concept- using negative ammortization loans- was weak and not well thought out.

I could not see a negative ammortization loan ever helping, unless property appreciated faster than loan accumulated.

Why he just wouldn't raise rent to cover the true cost of the property is beyond me.

One person's stupidity is another person's job security. Why the bank would make a loan like this is well beyond me.
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Old 05-14-2008, 09:20 AM   #31
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I think the concept- 800k invested into 10 different properties makes sense. The execution of the concept- using negative ammortization loans- was weak and not well thought out.

I could not see a negative ammortization loan ever helping, unless property appreciated faster than loan accumulated.
Just a guess, but the neg am loans were probably the only way the cash flow from the properties could service the debt on those overpriced purchases.
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Old 05-14-2008, 10:16 AM   #32
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Why he just wouldn't raise rent to cover the true cost of the property is beyond me.
Presumably the rents were already at market rates. Or the tenants held relatively long-term leases.

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One person's stupidity is another person's job security. Why the bank would make a loan like this is well beyond me.
You've essentially answered your own question! There's no shortage of fools employed by the American banks.
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Old 05-14-2008, 10:26 AM   #33
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I feel sorry for the family.....he will always be chasing that next "get rich quick" scheme.
BTW....I am digging the hair!
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Old 05-14-2008, 10:39 AM   #34
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Let me get this straight.
$800k / 9 properties = $89k on average
Why would he need an negative amortization loan, unless he didn't stand a chance on paying the bills in the first place (by tenants)?

I'm guessing that there was a little bit of "stretching the truth" on his part between each of the various lenders.

I honestly would hope I'd spend $800k in options better than this, especially after making statements like "On the surface it looks like total devastation but it's just the opposite. I'm confident our lives will be much, much richer as a result.".
Is there really that much money to be had out in CA?
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Old 05-14-2008, 10:44 AM   #35
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Let me get this straight.
$800k / 9 properties = $89k on average
Why would he need an negative amortization loan, unless he didn't stand a chance on paying the bills in the first place (by tenants)?
At the height of the bubble, rents would in no way cover property costs plus debt service at 80% LTV with even an interest only mortgage. Shmuckster did his deals with the only instrument that might work (for a while): negative am loans.
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Old 05-14-2008, 10:48 AM   #36
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Let me get this straight. $800k / 9 properties = $89k on average Why would he need an negative amortization loan, unless he didn't stand a chance on paying the bills in the first place (by tenants)?

I'm guessing that there was a little bit of "stretching the truth" on his part between each of the various lenders.
I wonder if the alleged $800,000 in stock options ever existed in the first place. Any one who claims that bakruptcy will enrich his family's lives is capable of saying / believing almost anything.
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Old 05-14-2008, 12:23 PM   #37
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Why the bank would make a loan like this is well beyond me.
Because they knew the government would bail them out with your tax money when the loans went bad.
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