September 16th, 2006   8:00 am

I am $2.2 Million In Debt

Here my financial statement that is submitted to the bank as part of the shortsale packet to avoid foreclosure. Note, this does not reflect the Utah property that I just sold on the wrap a couple of days ago. But its close enough:

Financial Statement

Here is the expenses portion of the income statement. Notice the 20 grand in monthly expenses mostly because of mortgages on 6 houses and huge credit card bills.

Financial Statement - Expenses

Here you can see the balance sheet portion showing assets and liabilities. I have 2 million in assets (value) and 2.2 million in liabilities (debt). The assets are the 6 houses and money in the bank. Yeah right, what money? The liabilities are my mortgages on those houses and my unsecured credit cards / credit lines.

Financial Statement - Liabilities

I am $2.2 million in debt but if you subtract the value of the real estate I am actually only about $200,000 in debt… only!

I did not include the cost of liquidating (selling) the real estate. The cost of selling is typically 7-20% depending on how hot the market is.

Back in 2004 you can pay a broker 5% plus some closing costs and you’re done. In a down market like we have now you have much harder time.

First, You have to discount the price by 5-10% unless you want to be on the market for 6 months or longer competing with all the other inventory.

Oh and on top of that you have to make sure you have the cleanest and nicest house or the picky buyers of the down market will move on to the next one. Cleaning / remodeling will add to the selling costs.

Also if this is an investment house and its currently vacant you have to add the holding costs for every month on the market. This includes mortgage payments, utilities and maintenance.

Then, after you pay the 6% commission, closing costs, transfer taxes and other associated fees you will be lucky if you net 80% of value. Of course, if you are a savvy investor and know how to market your property correctly you can usually do better then that, but I’m talking the typical scenario for most people.

So if you adjust my real estate assets of 2 million to reflect the typical 20% selling cost you are talking about only 1.6 million. Subtract 2.2 in debt and I am -$600,000. That’s not fun.

Do you see why I am facing foreclosure?

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39 Comments

  • 1. Joey Joe Joe Junior Shapadoo
    September 21st, 2006 at 3:39 pm

    >I am $2.2 million in debt but if you subtract the value of the
    >real estate I am actually only about $200,000 in debt… only!

    Um, no, sweetie. See, the “value” of your real estate is currently going down. Unfortunately, you aren’t the one that gets to determine what the value of those houses are. They’re only worth what someone will pay you for them. I can assure you it’s not quite $2M.

  • too bad bro, but like they say: “YOU made YOUR bed,now sleep in it” DOnt look for handouts @ 24 you should have never tried investing in realestate or anything for that mater.

    Good luck you will need it

  • Try going to Oprah to see if her and Phil can help you and many others in your situation.

  • @Joey: the 2M in value of real estate is my conservative estimate of current value considering the market is going down. But yes, you’re right that 2M will become 1.6M in now time as we correct here in California and other markets.

    @RE.Agent: how can you predict 30% gain year after year?? RE market is doing 6%/yr historically. When it goes up too high too soon it corrects itself just like now in CA and elsewhere. At least that’s what I’ve been told and read. I’m not an expert here.

  • “So if you adjust my real estate assets of 2 million to reflect the typical 20% selling cost you are talking about only 1.6 million. Subtract 2.2 in debt and I am -$400,000. That’s not fun.”

    Not to burst your bubble, but $1.6MM less $2.2MM of debt leaves you in the hole $600k, not $400k.

  • Teh gains are permanent! Tent cities and hondas full of silver! 14 million dollar starter homes! Buy now or be priced out forever!

  • Actually, you will be lucky to get 60 cents on the dollar for your real estate. So, like even that Real Estate shill Cramer says, if you don’t cash out you have no profit. Your real estate net worth is purely imaginary.

    You could have read the blogs, and researched before getting your greedy little hands on properties you could not afford. You could have been careful, but you weren’t. Begging on the internet is a novel idea, but I would rather give to a guy on the street with barely the shirt on his back. Sorry.

  • California RE always goes up, it never goes down. In fact California RE goes up at an alarming rate.

    If you can just hold on for another six months you should easily make 10%, making you even. If you can hold out for a year you’ll make 20% equity and you’ll be $200K ahead, pretty good money for not working, isn’t it?

    HANG ON! Don’t sell. The value can only increase.

  • Just Hang On is clearly an idiot. Did the California market come back in 6 months last time it crashed? NO. It took 7 years or more for it to get back to where it started when the crash happened in the early 90’s.

    Don’t get me wrong. I’m all for optimism. But when economists who are supposed to be experts in economic cycles start trying to tell us the market will turn around in 6 months they are either thinking wishfully, lying to you, or smoking some good herb.

  • From what I’m hearing and seeing, where going to have quite a correction in the next few years. Especially here in CA. They say to expect -30% or something like that before it starts to even out.

  • I wonder if you just made the story up to get into the news.How did you manage to get that much credit from the bank?I can´t believe it

  • My best friend was laid off a couple years ago and was forced to move from Dallas, TX where he owned a 3600 sf ($165,000 new) house to the Bay Area, CA. They are renting a 1500 sf house for $2000/ month that is/was “worth” $700,000! Somehow, y’all got way out of whack out there in Ca. As part of a visit last summer, we drove around to chuckle at the folly of an 800 sf run-down dump in Oakland costing $400,000.

  • I have mixed emotions about reading your blog. I appreciate you honesty and hopefully others won’t take your path. On the other side, you need to lay in the bed you created without any bailout from folks who have lived by financial responsibility.

    I have two kids near your age and they also need to learn that something isn’t for nothing. I hope you understand that there may be many others hurt directly or indirectly by your selfishness.

  • DrChaos is close to dead right.. his link was bad but I was able to negotiate the Cornell web site using Title and Section number within the listing. Lets try the link again at “http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001344—-000-.html”
    If this does not work, start at the top under www.law.cornell.edu/uscode and navigate to Title18, Part 1, Chapter 63, section 1344 of the US Code.

    Also realize that some of the loans you took are recourse loans. I suggest you stop asking to be ‘made whole’ and have some cash out on the deal. It will not happen.

    I also agree.. you need a lawyer… bad.

    I also suggest you ponder the effect that speculating on the market has on those people who are buying a house to live in. You were competing against them in the prices of houses, using loans whose payments are not sustainable. The result being driving up the price of houses to those who need to live in them.

  • You probably thought your were the next Maloof or Oates, didn’t ya? While the average family had to scrimp to afford the houses you were flipping. I think you need to spend some time homeless on the street, sleeping in doorways and eating from trash cans, to fully appreciate the galactic scale of your screwup.

  • “They say to expect -30% or something like that before it starts to even out.”

    It sounds like you want to believe the bitter renting bubble blogers who have been trying to years to trick people in to not buying real estate.

    If you own in Sac you will be all set since real estate “always” goes up in value because “they are not making land any more”. If you don’t believe me ask any other Realtor…

  • Dude; It must suck to be you! I’m speechless. How did you get these loans? I’m also a web designer. I bought my first house in San Diego in 1999, I kept roomates in it to save on the 1500/mo mortgage which got me through the years. I sold it in 2005 for a hefty profit. I now have the money in CD’s paying 5% interest. I now rent while awaiting the crash. I didn’t make a million had I bought several homes in 1999 I wish I had but I bought my home to live in and had no idea that the price would triple in 5 years.

    I really don’t have any advice for you. Maybe return the keys to the banks and bail to Mexico? If I were you I’d take off any identifying information on your blog. Your financial statement is especially going to hang you…just take down the blog.

  • Trump Learning Annex seminars, buy the books, get access to gobs of debt via “liars loans”, and you’re on your way to riches! Oh, it’s just sooooooooooo easy! Well, like The Donald before him, this 24-year-old FB kid is on the verge of bankruptcy, owing $2.2 Million. My first question is: HOW THE FLYING F*CK DID A 24-YEAR-OLD GET TWO POINT TWO F*CKING MILLION DOLLARS IN DEBT APPROVED. What the hell is going on out there? But I’ll give it to him. Instead of going silently in the night, he created a website and laid

  • Is everyone this stupid in Sacramento?

  • the property at all they talk to you about a short sale, deed-in-lieu (giving them the keys), etc. They normally want to collect some financial information from you - how much you make, what your expenses are, etc. Basically they are filling out your financial statement on their computer. I never saw any harm to be upfront with them and give them all the numbers. I figure it can’t hurt - they are going to see it with my short sale packet anyway. I’ve had mixed experiences.

  • Have you considered renting your property. I dont know the markets you own property in but if you have 20 million in property it seems if you rented it you could get 17k a month. If you got a job that paid 60k a year that would bring in 5k a month. Anyway that would leave you with 2k a month to live on while you try to sell your properties. I have an Investment Property calculator you could use to run numbers on your different properties. Although all the properties might have negative cashflow I would concentrate my marketing efforts on trying to sell the houses with the worst cashflow.

  • 22. Too many pessimests
    October 9th, 2006 at 6:31 pm

    What’s funny about this post, or rather the replies, are the amount of “naysayers”, “told you so’s”, “you should go homeless” “lay in your own bed” people out there.

    Those folks are a bunch of losers who never take chances, never took a chance on the market, and always look back w/ 20/20 vision after not making ballsy decisions and then say “I told you so.” Meanwhile they hate their job, hate their income, but love to bash those who take risks and are successful but love even more to gloat over those who fell down.

    You only learn from mistakes, so congratulations on a huge learning opportunity and success is only that much closer.

    Don’t listen to the clowns on this board too busy laughing at your misfortune. It’s not as important that you fell down but whether you get up. Keep on keeping on.

  • GREEDY PEOPLE WILL NOT INHERIT THE KINGDOM OF GOD.
    So much greed of people, how sad, and in the same breath, consider themselves christains.

  • I hardly recall the good book saying it quite like that, but I do know this…Blessings are layed up for the righteous and the just, and before any of you believe you are more righteous than he I say this…let him who is without sin cast the first stone!

    If you truly want out of this mess, or any mess you first have to realize two things. First, your words are the most powerful thing you have, along with belief and attitude (and, of course prayer). If your words are positive, positive things will happen. It’s a law, just like gravity. For those who have written less than positive comments on this site, I challenge you to look at your own lives and reflect how much more positive they could be. What blessings are you missing out on because your own words deny them from coming to fruition?

    Second coming from a reality standpoint you must walk by faith and not by sight! If you say to these houses that they will be sold and you believe with all your heart that they will be sold then the entire universe will work to make it so. Put your trust in God instead of in people, regardless of what people will say or do or whether they think you’re right or wrong. Ask for forgiveness if you have done wrong. But most importantly, realize that there are only two kinds of people. Those who are saved, and those who are about to be saved. Which one are you? If you are about to be, then just repeat this prayer out loud…’Father, forgive my sins. Jesus, come into my heart and make me the person you want me to be. Thank you for saving me today.’ Now, where is Jesus…if he’s in your heart, there is only hope for you. If you’ll just put your trust in Him, you will see great things happen, and oh yeah, you have to speak it into existence.

  • I applaud you for having the courage at 24 years old to
    be a real estate investor. While things may have gone bad
    the lessons learned will serve you in the future. I think ultimatelly you will be very successful but the number one
    lesson you should learn form this experience is be honest in your business dealings . The mortgage lenders may have made it easy for you to fudge the truth on you stated income loans, but you went along with them.

    Keep your head up and move on to your next endeavor
    but this time with honesty and integrity.

  • It sounds like you learned how to manipulate the system to aquire more real estate than you could afford. You’ll probably have to hire lawyers to manipulate the system to get you out of this one.

    Many think that real estate always goes up in value, but I think when people realize how much their actual labor they must produce over 30 years (more if they refinance) to pay off these high priced mortgages, the market will correct itself.

    In reality what you have done is expose yourself as someone who is not credable or responsible for his debts and does not have sound investing principles or plan.

    This being true, you’re not the only investor in history to leave a wake of animosity in his/her own wake. It will be interesting to see how this plays out!

  • I am a home inspector and real estate investor. I typically buy foreclosed properties at less than 50% the current market value. Sure some of them need some repairs, but then I believe I have a pretty good idea of what they need. I can also do many of the repairs myself during slow times. Now the properties I usually buy are cheap, very cheap like $25,000 to $68,000. It is difficult to lose much money at that price. usually I make $20,000 to $40,000 per deal.

    You are just a putz. What were you thinking? Buying houses without looking at them or getting inspections, and buying such expensive houses so fast that you have no means to carry the payments for any period without practically forcing you into financial disaster. I do like people like you! It justs provides more opportunities for me!

    I do hope that you can whine all the way to jail and bankruptcy court.

  • […] Though Casey is in millions of dollars worth of debt, he is doing something that most people wouldn’t consider in a million years. The experiences, trials, and tribulations that he is enduring are priceless experiences that he can use for a lifetime. […]

  • I thought of you when watching this video, http://www.flippernation.com/, except you did it on a larger scale. If only you had walked away from each property making US$75.00, that first US$30K profit was just too much seduction for you.

    Also you might want to take some time and read Proverbs 22. http://www.biblegateway.com/pa.....version=9;

  • : I’m a 24 yr old real estate investor from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone, and blog my lessons to help others in trouble. Comments welcome! Email CaseyView All Entries

  • One good thing about all this is that a hard lesson will be learned.You are young and this fall will be invaluable, you have many more years ahead of you to try again.The things that went against you is that you were under capitalized and expanded way too fast, not realizing that carrying costs and not being able to hold on for the long term would bury you.As the old saying goes your better off with 100% of one house than 0% of 8 houses.Cheers, Merry Xmas and Good Luck in your Future you have time to recover and learn…..

  • : I’m a 24 yr old real estate investor from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone. I’m going to weigh in here and point out a very common misunderstanding when it comes to real estate “investing” as Casey calls it. First and foremost,

  • I’m a 24 yr old real estate investor from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone, and blog my lessons to help others in trouble.” What he really did is by questionable means, ( some say fraud), used “liar loans”, 0 % percent

  • ” Too many pessimests ”
    October 9th, 2006 at 6:31 pm

    —> Are you Mr. R. Kiyosaki?

  • “Those folks are a bunch of losers who never take chances”

    There’s a difference between taking a chance and being a damn fool. :)

  • I’m really sickened by how nasty a lot of these comments are. I would be shocked if a single one of these posters hadn’t made some huge mistakes of their own during their lifetime. Clue me in here, because I didn’t read anything asking for financial help? Cut the guy a break already — there may be a point where you need a little compassion and HELPFUL, nonjudgemental advice.

  • 37. Ytzaak Zylbersztein
    January 31st, 2007 at 5:50 pm

    Please take a closer look at 32 year old Brian Hunter from Amaranth hedge fund, who managed to lose 6.5 Billion (with capital B) US dollars within 2 weeks and the then the Amaranth fund collapsed on 10 bln total loses., all events happened last fall 2006.
    And all that because of an adverse spread position on natural gas futures market for delivery in spring 2007.
    Brian Hunter lives in Calgary, Alberta and drives Bentley (in winter) and Maserati (in summer) and is awaiting propositions of another deal.
    Brian Hunter was trading 10% of all natural gas in the world, taking positions 1000% bigger than the old market savvy veterans in natural gas futures.
    So what is some little fix & flip for 2.2 million.
    This is America 2007.
    To the daring belongs the future. Go West young man go West.

  • 38. ALooserWithAJob
    February 1st, 2007 at 8:00 pm

    Get over it Lea. This guy is in the hole 2.2 million due to easy credit…c’mon with a 160K in credit alone you have to see the problem.

    Easy credit practices like this have screw much of America. Yet the people who think they can take that easy money and lose it and then expect the American taxpayers to pay for it all have another thing coming! This guy should already be in jail!

    I suppose this financial genius should run many corporations in America now cause to you, “at least he tried!”

    This guy needs a good azzkicking for being such a dumbhead.

  • blog is following every single mistake and attempt to rectify his mistakes. He has currently had 4 homes foreclosed, sold 2 homes, and 2 are trying to sell. He is trying to even just “short sale” the homes for less money than he bought it for. He was $2.2 million in real estate debt. This guy even if he sells everything will end up deeply in debt from this mishap. Is it a mishap? I don’t know. Is he to blame? Yes. Is the mortgage company also to blame? Probably, he admits to using stated income loans, as he calls them liar

  • About K.C. Heron 24 yr old “Would-be Real Estate Mogul”, now “World’s Most Hated Blogger” from Sacramento. In flipping 8 homes, made “10 Mistakes”, with $2.2 million in debt, tried to stop foreclosure, looking to pay off debt, openly share mistakes and help others avoid foreclosure. |View All Entries

  • This confirms my motto: Keep it sweet and simple Smile in the face of adversity and try and try again Shunning mediocrity can lead to big successes and equally huge failures Casey Serin foreclosed 6 properties and has $2.2 Million in debt from his failed real estate investments.  Here are the 10 mistakes he committed. Mistakes are normal part of our lives.  Don’t be sorry if you committed any…irregardless of the degree of  the consequences

  • . Um, sure. I watch the current grasping for straws, for ad revenue, for donations and I am just sad. Sure, this may turn things around for a week or two but the reality is that this person is still $200,000 or $250,000 in debt and thinks that trips to Macaroni grill, Jamba Juice, Ikea and Starbucks are OK, justified even. This person is still unemployed, still not opening his mail and still lying to himself and those around him. Many people in the housing industry