From Motley Fool
So, have you heard the one about the 24-year-old “real estate investor” who’s $2 million in debt and still hasn’t gone back to his day job? No? Alas, you may never get the full story. Last week, a Californian named Casey Serin started a blog called “Iamfacingforclosure.com,” detailing how he got himself half a dozen sinking properties and $2 million in debt. By today, he’d pulled it off the Net, with good reason.
The quick version of the story is this. After taking some courses in real estate investing, this eager kid lied his way into a slew of loans he, admittedly, didn’t deserve, and now that he’s bleeding to the tune of $20,000 a month, and the housing market is crashing around his ears, he thought taking his story to the Web might somehow help.
A part of me still wonders whether or not this wasn’t just a somewhat elaborate hoax, but if it’s not, this kid is in deep trouble. Admitting to serial lying on loan applications might be enough to get forgiveness from our short-attention-span society, and it might get you a few “attaboys” from the easily impressed. But I doubt this kind of naive, public forthrightness will serve Casey so well should any of these lenders haul him into court for fraud.
Moreover, unlike most amateur stock players, who are only gambling with cash on hand, the new real estate speculators depend on huge slugs of leverage. Lose everything on your pile of tech stocks, and you’re back to zero. Lose everything on leveraged real estate, and you move deep into negative territory. There’s nothing like owing $600,000 on a home that’s now worth $470,000 to make you wonder why they invented the option ARM, or the 40-year mortgage. You think it was to do you any favors?
Let me break it down for you. If you’re a twentysomething out to make it big in the world, do yourself a favor and slow down. If you’re wearing flip-flops and low-riding jeans to closing, I’m talking to you. Real riches come over time, not overnight. You need to start with a clean financial house, make smart bets, and save your money sensibly.
Twenty-four years old and $2 million in debt is no way to start your future. It’s amazing to me that anyone could ever think otherwise.