How I lost about ~1M in Net Worth in 2.5 Years

[Teetster]

As requested in this thread:

http://forumserver.twoplustwo.com/showfl...e=0#Post9657450

I figured I'd post my story for the public's entertainment. TLDR at the bottom.

Lets go back to August 2004.

At that point. I owned a home with about 120K equity. I had a job paying 110K/yr salary w/ benefits. I had

somewhere around 40K in cash and retirement savings. I had also managed to sock away 11K in my (at that point)

2 year old son's college account. We were debt free.

Also, I owned and managed a successful web hosting company. The web hosting company was cash flow positive by

about 7K/month. We had around 1000 clients, 40 servers and I had 2 employees working for me. Based on revenue

the company was worth about 250K if I decided to sell it.

We were doing really well. My wife didn't have to work so she could care for our son.

It was always our dream to live on Kauai (Hawaii). We had planned to wait until we had a big nest egg saved

before we moved. Well, with the equity in our home, our savings and how well my company was doing we decided,

why wait. Lets go now. So we did.

We sold our home, netted about 100K and bought a townhouse in Kauai for about 370K. We moved in August 04. I

continued to work my job remote until January because they needed me to finish a project. That helped us get

settled.

At this point we had about:

120K in cash
250K value of my company
40K in retirement
11K in college funds

Late Spring 2005:

We've been on Kauai for a while. I'm just living off my company income which is enough to pay all the bills but

that is about it. We see what's happening in Real Estate (its booming) and decide to start selling. We get our

licenses and get going. We take off right away and within 3 months we net 40K in commissions. Yahoo.

Its about this time that my wife decides she wants to move from our townhome to a bigger single-family. Why?

The neighbors are noisy and she just wants a single-family. OK... We look. We end up selling the townhouse,

making a small profit, and buying a place at 750K.

It was an IO loan (yuck) and even so much more than we can afford with the income of my business alone. But our

quick success in RE led us to believe we could afford it if we just kept selling homes. Plus my business was

growing. So we figured we'd be fine.

About this same time we decide to be generous with our wealth and success and help my in-laws buy a home. So we

buy a single family in upstate NY for about 220K. Its the most expensive house in the town. We put 10% down.

We figured, real estate never goes down, so hey this will be a good investment for 10 years or so. We made all

the payments on it and didn't ask them to pay rent.

Summer/Fall 2005:

Almost immediately after we bought our new home and my in-laws home the RE market in Kauai dried up like a

[censored] prune. We didn't sell another house for 6 months. My company was doing OK but because it was bringing

in for us far less than our monthly nut, we were bleeding money. Our savings was drying up fast.

So we looked at options. Put the Kauai house we were in on the market. We had 2 buyers write contracts. Both

ended up falling through. (The floods on Kauai majorly destroyed one buyers home, so he couldn't sell to buy

ours. Great!)

We looked at the Big Island RE market - it was still strong, or so it seemed, so we decided to move there and

start our RE business there. We figured that since it was a bigger market we would be able to make more money.

We rented our home on Kauai, for $2K less per month than the payment.

January 2006:

We spent a fortune to move our stuff, moved to Kona and bought a condo. For 675K it was a real bargain. Or so

it seemed.

Our real estate business never took off. Our savings were gone. I had to sell my company to get us cash to pay

our bills. By this time we were about 55K in credit card debt.

I sold my company. Paid off our bills and that gave us enough money to survive a while.

May 2006:

We never sold a single propery in Kona. We had a few clients but by now RE was not selling ANYWHERE. We only

had a little money left in the bank. So we decided I had to get back into software development so we went back

to the mainland to look for work.

First in California. I got 2 really good offers. I turned them down to take my old job back in DC - but

working remote. At this time I had the brilliant idea that we would move back to upstate NY to be close to

family. (To make the wife happy.)

So, I go back to Kona, pack up our stuff and put the house on the market for sale/rent. It never sold or

rented.

$6000 later, our container was on its way to NY to my in-laws house where we would live until we found another

place.

August 2006:

I'm working my old job. It sucks, but the pay is fabulous. (Contract == lots of $$) Living with the in-laws

sucks, but we're looking for our own home. Upstate NY is boring and depressing. But hey, the wife is happy.

We decide to buy a home. 210K. We've still not sold the home in Kauai (750K) or Kona (675K) or the in-laws

home. Still, we bought the home anyways because we knew we were about to not be able to make payments on the

Hawaii property and if we didn't buy now it would be 7 years before we could.

What a huge mistake.

The mortgage guy raped us on fees and NY taxes suck. Almost $15K to close a loan with only a 3K down payment.

Great! Well, now we move into our new NY home. My wife loves it. I do not. But at least she's happy.


Fall/Winter 2006:

Still working my job. We've completely exausted our savings. Our credit cards have rung up trying to pay for

all the homes. I decide its no longer worth it paying 10K+ per month on property we will never sell and/or

rent. (Kona never rented.) So I stop. I cash out my retirement to pay off bills. I'm now only able to pay

for my home and my in-laws.

I completely, totally hate living in NY. The weather is dreary, cold and miserable. There is nothing to do.

Want to go out to eat? Its a 45 minute drive. Plus, family is over like EVERY night. I can't stand being

around family that much.

Add to that, I'm afraid of losing my job because the company I work for is bleeding money badly. Not a big deal

in some places but good luck finding work in upstate NY that pays more than $15/hr.

I am in suicidal depression.

I tell my wife I want out of NY.

Finally after many arguments / discussions / etc. She agrees to move. (Thank GOD!) We look at Florida and Las

Vegas. We end up deciding on Vegas.


November/December 2006:

We FSBO'd our house in NY. We had a buyer who was going to buy as we left. But like clockwork, 2 days before

closing she wigs out and cancels. Great.

So, December 2006 we move. We now live just outside Vegas. We're renting because I'm not buying a house again

for a long long long time.



Today:

We're on the edge of bankruptcy. We're renting here in NV and trying to be frugal. Its not going to make a

difference until we get rid of real estate. We're in the red even on basic expenses.

I haven't paid on the two homes in Hawaii in 8 months. This is what I figure:

Kauai House: Paid: 750K, Worth: 600K, Now Owe: ~780K
Kona Condo: Paid: 675K, Worth: 475K, Now Owe: ~700K

I think at least one of these has or is about to be foreclosed upon.

Our home in NY is empty and I'm still making payments. 2.5K/month. Yay.

It and my in-laws home are on the market. There is some interest but no buyers. Yay. Both are worth less

than we paid, probably by about 10K.

I just found out today that the company I am contracting with is laying off employees and contractors. 10% of

my group was let go today. My boss told me point blank that I am at risk and may be gone in 6 weeks.

Since I'm paying for the 2 NY homes and our home/living I'm way in the red ever month. We've racked up 25K in

credit card debts. All of the homes we own are not worth what we paid for them.

I figure my net worth is about -500K to -600K right now.

The good news? I am a decent winner at live poker. I live near a lot of casino's so when I lose my job I have

an alt source of income. Also, there is a lot of software work out here. Well, a lot compared to upstate NY.



TLDR:

Had lots of money, a good job and owned a company making lots of money. Bought a lot of real estate during the

bubble that I couldn't sell or rent. Spent all my money on mortgage payments. Now completely broke and in

danger of losing my job.

[qdmcg]

WOW

dude, that sucks ass. i'm not going to pretend that I understand all of this stuff, but a lot of this is from poor choices that you made, yes? (i don't mean to offend, genuinely curious)

[MasterLJ]

Wow man...

I wish the best of luck to you and your family.

Get your resume out there NOW. DO NOT wait until you are pink slipped.

Btw, I'm an IT recruiter if you want to send me your resume. I couldn't convince my boss to do this free of markup, but you never know, it could end up getting a decent job making 6 figures if you have the right skills.

PM me your e-mail address if you are interested, I will do the best I can to help.

[Shrug]

Wow...just wow.
Hope you get your feet back on the ground soon.

Maybe some of the wanna-be ballas here will actually take the time to read this and learn....only a few poor or ill-timed choices and everything can go up in flames.

Good luck to you and your family.

[teddy forrest]

pretty cool to spew out your life story to a bunch of geeky strangers...i believe the moral of the story is women will bring you down..from everything you said i have concluded you were doing everything for the wrong reason <your wife> and nothing for yourself...with all that scratch think of the fun you couldve/shouldve had....dude all u had to do was buy some prada hair products or paul sebastian, a little cologne, a leather jacket, and open a strip club in Portland, and youd be living the life of your dreams, of a real man...never let a woman bring you down its pure death.

[barryc83]

Damn man thats a story. I honestly thought you were gonna tell us a story about gambling, but you got [censored] by RE. At least youre not in NY right? Good luck man.

[Bakes]

why did you buy so many houses

[SomethingClever]

Yikes. Talk about getting overextended. The power of leverage in reverse.

Best of luck to you turning it around.

[Curtrosity]

buy a house...

lose a house.

[NoMeansYes_]

Like everyone has said, WOW. LIFE DOESN'T ALWAYS GO UPWARDS.