Friday, November 6, 2009

Do You Have a Plan?

I sold a house Contract for Deed to a young couple early in my career of acquiring properties.  They watched me a buy one house after another.  To them it looked like I was getting rich and it looked so easy from the outside looking in.  After about a year or so, I sold them 5 houses CFD that were ready to be occupied.  They immediately rented them to their friends and family members.  They were raking in the money.  So they bought a new truck and a larger house.  They talked some other people into selling them their properties CFD.  They both quit their jobs.  Then the rent  stopped coming in.  They had a couple of tenants trash their house.  The long and short of it; they were in foreclosure in less than 5 years after they started.  Unfortunately this happens frequently.  What went wrong?
  1. Spent the money before they  had it.
  2. Did not set money aside for emergency situations.
  3. Moved to fast.
  4. Improper screening of tenants.
  5. Shouldn't have both quit their jobs
  6. Borrowed too much money.
  7. Poor management. 
It could have been a thousand little things that all came to a head at once.  I think  Grandpa used to say something like this, "he who fails to plan.......plans to fail".

They should have listened to Grandpa!
Posted by Unknown at 8:56 PM

1 comment:

  1. Tim LovelessNovember 17, 2009 at 12:46 PM

    I'm not Paul Harvey but here is the rest of the story. I got those 5 contracts in the divorce settlement in Oct 2000. The people were just beginning to crash and burn about that time. Over the next year or two they managed to refinance and pay me off on two of the houses which they subsequently defaulted on. I got the other three back and had to spend several thousand dollars completely remodeling each. One small two bedroom house had been rented as a flop house to the illegal Mexicans that staffed the local restaurant. The house was wall to wall mattresses and can you say "El Cockarocha" Whowie zowie that was a cleanup to remember. An interesting side note is that one of the Mexican guys got caught sneaking into the house next door and trying on the lady's underwear. Just when you think you have heard and seen it all, something else comes up.

    Bad management was the people's biggest problem

    Tim Loveless

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