Knowing when to walk away from a situational scenario that doesn’t look promising is not a prophetic science. Without a doubt, some of the flips I closed down and bought from builders in 2005 were clearly laggards that weren’t deals and that I should have stayed away from. And I mean that literally. At the trust closing signing table, I could, but didn’t, just get up and walk away. And it’s not like I’ve never done that before. One of my first changes in 2003 resulted in exactly that result, where the terms of the loan were not explicitly what they were supposed to be. Three days later, when the terms of the loan were amended to my liking, I went back into escrow, waived the loan documents, flipped the house over and made a quick $68,000.

As to why more caution was not exercised at the five rapid-exchange houses planned in 2005, three in Southern California and two in Las Vegas, which were earmarked for a quick profit, is easily answered. Greed. It was greed that got the better half of me. Although Gordon Gekko may have said that “greed is good,” I can tell you the gospel, and that is that “greed is destructive” if not handled properly. Think of greed as fire. You can use it to heat your shelter and provide comfort for your family, or you can misuse it and it will burn down your shelter and kill you and your family! It sounds crude, but I don’t know how to make it clearer. In terms of time frame, all five homes were purchased during 2005 and should have been off the books for the first half of 2006 (given an average time to market of three to six months), but instead were not completely off the books. off the books until early 2007.

Ultimately, it was about five quick deals (having successfully launched some thirty or thirty Five properties in Phoenix, Las Vegas, and Riverside before them) that I should have walked away from. Although these five houses alone were not the primary reason for the financial collapse, they did substantially drain my cash reserves at the time, which had a domino effect and was a contributing cause of defaulting on mortgage debt service for the nine condominiums that he had recently purchased. . In short, it was too much, too soon. And simply put, it was over my head. At my pinnacle I had about a dozen properties either in contract, in development, or in escrow on the flip side. My level of activity was probably equivalent to that of a small property management company or a local developer. Activity speed, where I was working more than sixty hours a week and logging more than 25,000 thousand miles a year in my car between trips to Phoenix, Las Vegas and Riverside, at a more reasonable level I should have taken a three. period of a year to develop, rather than the eighteen months that I squeezed it into during the five years that Potter Equities was actively operating.

In total, these five deals, or rather laggards, cost me almost a quarter of a million, which is a quarter of a million dollars that I will never see again. Much of that monetary loss was primarily due to mortgage debt service on the five investments, which I could have netted $15,000 from those five properties, but I almost wrote a check on escrow to close, which is always a painful experience. I hope you never experience writing a check in escrow. It’s a horrible, sick feeling.

The other half of the collapse was the nine condominiums that should never have been purchased. Without going into the bitter details, the nine deals on paper simply didn’t come together.

But almost scarier, and three years after successfully launching new homes on land for 2005, my best investment was a $104,000 investment in Moreno Valley, was that at this point I had walked away from at least five or six deals that They were clear and demonstrative. no textbook deals. So the past experience and decision making was there, the discipline was there, the common sense, the balls, and the ruthless Machiavellian ability to walk away from a deal was there, so why didn’t I walk away? Simply put, it’s complicated. And frankly, I’m not sure. It’s like asking a compulsive gambler why he didn’t just get up from the roulette table and walk away, but just gamble his daughter’s college tuition money. Or it’s like asking why an alcoholic gets drunk when he knows the destructive impact it has on his own life and that of his family. As you can guess, a clear explanation is complicated.

However, I know with absolute clarity, and somewhat to my personal disappointment, that I strayed from a successful business plan that had created me substantial wealth in a short period of time. The fact is that new home remodeling was and can be a successful investment strategy for the small real estate investor. And just because my mistakes contributed substantially to my inability to continue selling, does not undermine the validity, soundness, and proven practice of selling new homes for a quick profit.