15
Dec

Real Estate Gone Bad & Why You Should Listen To Your Wife

Brevard County Florida Real EstateLike anyone always looking for an opportunity, real estate piqued my curiosity just a few years back. The Brevard County Florida market in 2004-2005 looked pretty good. People I knew were having spec homes built and turning around and selling them a year after closing for 20% to 25% more than the price they paid. Everyone was doing it.

We did it as well. In fact, our first spec home was purchased for $242,000 in June of 2004 and sold just 10 months later for $345,000. Our initial thought was, watch out Robert Kiyosaki we’re coming up behind. Fortunately we hit the crest of the wave for the boom real estate market in Florida and were riding pretty high after that deal. The home was completed in April of 2005, we signed our certificate of occupancy and had the buying offer 22 hours later. It couldn’t get any better than that.

Shortly after that we signed our next deal and purchased another home for nearly the same price, but considerably smaller. We didn’t expect to make quite as much from this home as the last, but would have been quite happy with $20K to $30K. Then on to the third deal we went, picking up a very nice home to flip for a purchase price of $300,000. We certainly thought this was the way to go in investing and were considering a rental cabin in North Georgia as another way to diversify our income.

Then things began to get weird. We were actively looking for a vacation cabin rental and had made an offer on one after spending an entire exhausting day looking at more cabins than I ever care to again. The weird thing was, no one ever told us if our offer was accepted (obviously we eventually figured out it wasn’t) and no one from the real estate company we spent the entire day with ever called us back, ever. Here we were, driving all that way from Central Florida to North Georgia to spend time looking for real estate, making an offer on a cabin and never receiving a call from the agent we met with. Most agents would salivate and kill for a lead like that. We took it as a sign.

A few months later with construction on our second spec home not even started, we took a look at our finances and opted to drop out of our third deal only 3 days before the actual closing. This was almost as smart a move as the decision to buy our first spec home.

The Florida Real Estate Market Tanks

The construction on our second investment home was excruciatingly slow and it was finally completed 13 months after closing. This was unfortunately right at the time the market began to slide into oblivion in Florida. So here we were, stuck with making full payments on a home that was worth less than we paid for it. Our hopes were raised when we received an offer just 30 days after it being on the market. They were later dashed when we found out the prospective buyer had no money and no job. Much of my adventures into affiliate marketing have been roller-coaster rides such as this.

This adventure turned out to be a year long ordeal of ups and downs, cutting back everywhere we could, praying for relief and shelling out what to us was a huge amount of money every month for nothing. Six months after closing we switched from a listing only company to work with a full service real estate agent and learned about short sales. A short sale is basically when the bank decides to take the price you can reasonably sell a house for in the present market rather than go into foreclosure.

After another 3 months or so of no action we then came up with a strategy to lower the price of the home $10,000 every 2 to 3 weeks until it sold. To make a much too long story short, the house eventually sold for $180,000 in a short sale. To remind you, we purchased the house two years earlier for $242,000.

What Did I Learn?

This was a very hard lesson. My wife and I were not in enthusiastic agreement on this investment and I did not give that adequate weight when deciding to go ahead with it. You never know how things are going to turn out, but it makes life a lot happier when you can agree with your spouse on such a huge decision. That is the big lesson here guys.

This was also a lesson is perseverance. I had to have my nose to the grindstone every day to keep from having to go back to a thing call a job. It was a serious consideration to supplement our income with my previous career as a graphic artist. Thankfully that never had to happen because the house sold about 3 months ago. It sold in the nick of time because we couldn’t afford to make one more payment on it.

Thankfully in a short sale the bank takes what it can get from the sale and the deal is over. However, we still had 1 years worth of interest payments and 1 years worth of full mortgage payments completely down the drain.

What do you do when you watch $30,000 disappear like that? Move on, that’s all you can do. It’s sort of like watching a once profitable website completely lose rankings and listings in Google. You just keep building, keep adding pages, keep tweaking and keep working until it turns around. That’s why it’s important to diversify your online income as well. I love the eBay affiliate program and it is my biggest money maker now, but it’s not the only game in town and I never want to make it that way.

Spread out your income, diversify your affiliate programs and listen to your wife on important decisions. Need I say more?

Alan

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7 Responses to “Real Estate Gone Bad & Why You Should Listen To Your Wife”

  1. This was a good post. Thanks for sharing that.

  2. How come wives are always right? I am glad to hear that my wife is not the only one that is always right.

    Evidently many people did not listen to their wives when it comes to real estate investing. I am a foreclosure investor and I am overwhelmed with product. Foreclosure investing, when done correctly can be very lucrative. To learn more go to my Blog at http://www.shortclosures.com. We discuss many aspects of foreclosures and short sales.

    Thanks again for the great article.

  3. I was interested to read that you never heard back regarding the offer you made in the North Georgia Mountains.

    I am a Realtor in the Helen area- please feel free to e-mail me confidentally.

    Harriet@GetGeorgiaMtns.com

    There has to be MORE to that part of the story.
    Looking forward to hearing it.

    Have a lovely evening.

  4. Dick,

    Yes, that intuition thing seems to bite you sometimes.

    Harriet,

    Thanks, we’re not in a financial position to be able to invest in a cabin right now, but I will keep you in mind for when we are.

  5. I have a friend that I have been trying to give advice to for years, but every now and again he will pop up and ask me why something isn’t working for him and I will again tell him what I have told him a thousand times before and still and yet he decides I don’t know what I am doing and will go it on his own.

    His new endevour is buying land, now, at a time when the market is down, the price of houses are dropping and so is the price of land, and yet he is thrilled with what he is buying and hopes to sell for a good profit!

    I guess the moral is, check it all out before you stick your $$ into it, you might not come out on top the next time!

    Ron Killian

  6. […] from about $1,900 per month to about $1,000 per month and I was in deep trouble, especially with a spec home on the market that we couldn’t […]

  7. […] of the month and combined with finally selling our investment home this past September, that was a poor investment, we now have approximately $3,000 less per month in […]

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