Overcoming Real Estate Losses is a blog that I’ve been slowly reading during the past two weeks. I am mentioning it here because it’s one of those blogs that you start reading and you wonder how you just spent two hours reading a blog.
The blog starts off with this post:
The time has come!!
Real estate investors who have lost money need support. I’m hoping that this will be the place to get it. Or, at the very least, whine about your experience and feel better.
I’ll tell you a little about my situation now. In future posts, you’ll get the whole story. What I really want is to hear about you. So, I’ll go first and then it’s your turn.
My husband and I entered the real estate investment market at the end of 2000 (we are not agents or in any other related fields), when we were 34 years old. At the suggestion of my brother (who didn’t enter the market until much later), we used the exploding equity in our house and started buying single family homes in Riverside County of Southern California. We lived in San Diego at the time and couldn’t make the numbers work there, so we traveled 45 minutes north up the 15 and landed in Temecula, just over the county line (with houses priced 1/2 of the going rate in San Diego). We didn’t know it, but Temecula was on the cusp of booming–and so was our portfolio.
We ended up buying three homes in Temecula initially and two up the 15 a bit more in Lake Elsinore. We bought many others, but I’ll get into that another time. We managed all of the homes ourselves–never working with property managers (PM’s). This becomes really important later on, as it is one of the reasons for our demise. We later expanded into Texas. That’s when we had our first taste of what working with a PM was like.
In 2005, we had millions in assets. By then I was having our sixth baby and couldn’t manage the houses myself. Our equity had now doubled, but we had a negative cash flow each month. We decided that my husband would leave his job and manage our investments. The first thing we had to do was generate a cash flow. We looked at everything: TICs, NNN, duplexes, car washes, apartments, worm farms, everything. We decided to 1031 four of the houses into two apartments in other states because the cash flow on Loopnet.com looked so good (OK, as many of you already know, that would be our second mistake).
Continue to the blog… Enjoy