I’ve been fascinated by the story of Casey Serin, a 24-year-old who dived into real estate investing as the market turned sour. He bought the bulk of his properties in 2005 with “liar loans,” which lets borrowers state their own income to get into more house that they could afford. And with interest-only payments, for at least a few years you can afford your dream house. This housing boom has created new rules that prevent housing from ever going down; by the time you balloon payment begins, you can refinance and cash out a little to get marble countertops or a new car. Unfortunately for many people reading from a DC condo right now, we know this recent housing boom was no different from previous ones.
Casey bought houses at their peak prices, sometimes without even looking at them in person, and found himself unable to get buyers interested. Since he quit his web designer job to be a RE investor, there was no income coming in. He started a blog about his problems, which was immediately successful though it put him on the hook legally since he admits to lying on his loans. The USA Today did a profile on him called 10 mistakes that made flipping a flop.
In one year, the 24-year-old website-designer-turned-real estate-flipper bought eight homes in four states — and in every case but one, he put no money down. At his peak, in April, Serin had $93,000 he’d taken out of the homes as he bought them. By July, he was broke, desperate for one last deal.
Now? Serin has $140,000 in credit card and credit-line debt and five houses in foreclosure. Last month, he started iamfacingforeclosure.com, a blog that’s drawn both notes of condolence and expletive-laced condemnation.
He is sitting on $2.2 million in debt. Only in America will banks lend such a large amount of money to a web designer. But to his credit, if he simply dived in four years earlier, he would be a very wealthy man right now.
I’m not a RE investor but I’m fascinated by this story because I completely missed the boat. I did not buy any properties and got to sit on the sidelines watching other people’s wealth increase. I am a bitter renter. But the fact that my rent payment is less than what many of you Whole Food shoppers pay for food a month does ease the pain.
The fun part of all this, and why I’m writing about Casey, is his brilliant blog. He is a soap opera writer, stirring up the pot and getting everyone in a froth over his idiotic moves and statements. Examples:
– Continual search for “creative” and “sweet” deals even though he has to borrow thousands of dollars a month from friends and family.
– Selling a reliable car and buying a used Jetta with a subwoofer that is in dire condition.
– Following the advice of “gurus” and attending real estate seminars. He recently attended a one-week RE seminar and posted about how the book Getting Things Done might turn things around for him.
– Postings of his discretionary spending which includes visits to Macaroni Grill and Jamba Juice (West Coast equivalent of Smoothie King). The Jamba Juice mentions guarantee at least 100 comments.
– Complete unwillingness to file for bankruptcy (until yesterday).
For the past couple months I know he’s been trolling, but I just can’t look away. I really want to see where this ends up: if his wife will divorce him, if he will go to jail, or if he will land a sweet deal to get him out of the mess. And it’s educational too because I have learned more about RE investing from the hilarious comments section than anywhere else.
I look forward to a housing crash, which would only affect speculators like Casey or buyers who bought more than they could afford. Unless the dollar falls, which is a real possibility for 2007, a housing free-fall would be a most pleasant development to someone like me who is sitting on cash.