Posted by SteveC on March 24, 2006 at 24:16:45:
For the last 2 1/2 years my life( along with my family ) has been pure hell. It started about 7 years ago when I had a desire to make some extra money from a previous debt left by my 1st wife( about 26K…after divorce she got a free education and I got stuck with the debt…but thats another story altogether). Anyway…I was highly motivated and started learning about RE investing. RE fascinated me and along the way I stumbled onto Creonline. Armed with some info here and several “guru” books and courses later I was off…to disaster. At the time my credit score was about 740 and I had a income from my primary job of about 55K. Not having the confidence to go at this alone I sought the advise of a Realtor. MISTAKE #1. It turned out later that she was one of the most unprofessional, unethical people I ever met. The first house was bought with no money down(bought as a rehab using borrowed money from family and friends…bought at a auction). 4 months into it my Common sense was showing no money to be made so I voiced my opinions to her. Her response to me was that “youre right…let me get a mortgage and Ill get you off the title and carry the property myself”. Obviously scared and relying on a professional’s judgement I agreed to the refi. In the process I lost about 1k and all the sweat equity with it. I later found out that she had a buyer on a lease option that deposited to her about 10K and bought the house eventually from her and she made about 2k on the end. I went to her office…we had words…and I was removed. I filed a complaint on her with the local board of Realtors and she received a slap on the hand. Mistake #2. I allowed someone else to have too much control of my decisions. The Realtor was fired( she even came to my door crying and wanted a second chance…unreal). So back to the drawing board. I swore Id never do that again. About a month later I was referred to a mortgage broker on a refi on my house. She also doubled as a realtor. The refi went smoothly and was actually impressed at here knowlege of the buisnes of RE. She also had about 10 properties as rentals and here husband was a broker. Ill never forget her comment to me " I can make you 40k within 2 months". So…wanting to have someone show me how to do it I allowed the second Realtor to guide me in buying properties. And my hell began. Within about 18months my wife and I had 6 properties. Knowing what I know now…everyone of the properties werebought illegally and unethically. Essentially they were all bought as owner occupied and she provided us with someone that was suppose to buy them back from us in 12 months or so. Money was made up front by getting a deposit and all were lease-optioned. Once sold SHE SAID we would make 5 - 10k on the sale. She quoted this on HER comps of the properties. So for someone(me) that wanted to learn the art of flipping I was now the landlord of 6 properties. 6 nightmares. It didnt take long for the first couple of her “potential” buyers to bail and a few others to stop paying to realize I was over my head. Remeber the Realtor told me that the properties would sell quickly?..honestly not only were her buyers unable buy (EVER!!) but the properties were over inflated during the appraisals( by her people remeber). These properties couldnt have sold within a act of God! As I eventually evicted every single person she initially put in the houses and had lost every bit of my savings to evictions, repairs etc…I put the brakes on my relationship with her and her group of friends. The straw that broke the camels back was a deal she wanted me to do involving a potential buyer that had money to lay down. (I had still maintained my credit score through this and was taking a second job just to keep myself afloat. All I can say is it was rough). The snake(Realtor) wanted me to buy the home as owner occuppied again. She had worked with the people that was to eventually buy from me and initially would be me tenants. The kicker was that the house I was to buy was about 140K and these people had 12k to give to me as their deposit. 12k. Alot of money at a time when I was drowning. Cant tell you that I didnt need that money badly. But something just went off. I had had enough of her and her coniving ethics. I was so sick of the game I allowed myself to be in. I simply called the buyer and told him to take his 12k and find someone else outside the realtor that would allow him to either land contract or do a extended lease option with a fraction of that money down. 1 week later he called me almost…telling me thanks and that he actually had credit enough to buy a house and wouldnt have to use all of his savings to do so. Awesome. Apparently the snake had told him hed have to wait about 2 years befor hed be able to buy a house. Anyway…she got word that of what I told him and she was screaming at me telling me “I had no right to ruin that deal and that she had helped me buy 6 houses” Really? The conversation turned ugly and alot of profanity was yelled at each but who cares. I was venting for 3 years of frustration. Screw her and her friends. Needless to say I never talked to her again. And I make sure at our local REI club to spread the word. So…as I tried to salvage the mess that I was in everything bad that could happen happened. A couple more evictions and a couple of significant repairs on at least 2 of the properties left me drained. Not only did I still have the 26K in debt buy now I was about 18K farther in debt with credit cards.( 1 house took me 3 months to evict the person and not only did he leave me a $800 waterbill but left me with water damage in the laundry room and ruined carpet in 2 rooms. Man!. So heavily in debt and my credit cards maxed out I tried to sell or refi them just to do anything that could help. It was at this time that I began to understand the properties were over inflated (based on surrounding comps) and no other realtors were willing to help( no money to be made). In august of 2004, my wife and I file bankruptcy. I cant tell you how hard that was. If left me so emotionally devastated. I hate to admit it but I cried so many nights that I cant remember. There were days I couldnt go to work or eat. The stress still is with me today and it certainly has rocked any confidence that I once had. Ill never forget the day we filed BK…my credit score was 720. My attorney was amazed that I lasted as long as I did. At least I got to quit my second job now. There is some much more to this that I could add. more details of what happened and why it was such a mess but Id probably need another post just to feel in the details. It has taken me alot of guts to post this. Ive wanted to post this for so long but was ashamed. I can remeber surfing this site years ago for info as a hungry newbie. Seems so long now. But…life goes on. Finally Mistake #3 to indef… Due Diligence…there is never enough information to be learned or had. Be in control. Never Ever Ever Ever Ever allow someone else to make your decisions. Dont worry about making people(Realtors, Brokers, whoever)…mad at you for not agreeing with them. Its your life noone elses. Dont confuse being nice with being a target. The decisions that you make affect your life and noone elses when it come to REI. The bottom line is you and what your capable of. Be a man(or woman) and step up to the plate during decisions. What happened to me is nearly all my fault. Lack of understanding…lack of experince…lack of confidence…lack of balls…Itd be so easy for me to blame All of this on the Realtors but the real truth is …The choices were all mine. My intentions were in the right place but emotionally I should never have let it happened. I knew better but caved in to the vision of money and letting some professional hold my hand. Im exactly where I should be based on the choices that I made. I hope this helps any new person looking to pursue REI…learn my mistakes and apply them to yours. Dont allow what I did to ruin your motivation. Anyway…believe it or not I still want to pursue REI. I know what can be done and what can be made with it. If anything …Ive learned the buisness while I was falling. Now with my credit shot for awhile I definitely have to learn to be creative(along with smart and patient)Im sorry for such a long post. There is so much more I could add but youve gotten the picture. Id really apperciate any positve feedback and try not to be to critical of my position. I absolutely love this forum and if anything it has kept my passion for the buisness alive. Take care and have a good one all!!!