Ventures That Were a Big Bust

One of the 3 people I call "friend" (mentioned him to BNA many times. He also was a prior service Army guy with me at UF, Aerospace grad, VERY senior at GE Aviation now) went through a brutal divorce. During this time, ALL assets were locked up... court wouldn't even let him liquidate positions to cash holdings... he had just short of $400,000 in Lehman... guess what year(s) this was?

My only time getting butchered was my first business venture where one of two partners was embezzling from us (and investors) from Day One... he went to federal prison for 5 years, I was just over $400,000 in debt/losses.

Not exactly a bust but a stupid decision that I've never stopped kicking myself for.

Back about 13 years ago, before the big real estate crash, I decided I was going to invest some of the money I had made after cashing out some stock options I received from a company I had gone to work for pre-IPO. Since all of my investments were in equities I wanted to look into seeing if I could diversify and make some money in real estate. I knew I didn't have the time, handyman abilities nor desire to either flip houses or become a landlord. Real estate prices at the time were sky rocketing so I figured since land was finite and desirable land was even more finite and rare that I might look to put some money there.

I know the Central Florida area very well having traveled almost every major road through the years. I tried to find an area that was not yet developed but soon would be. I figured the prices would be a little lower and I could wait for the development to catch up. And as I said I wanted to find someplace that was very desirable and rare. So I settled on an area in Seminole County that was at the time considered a little far out but wouldn't be for long. It was in a new custom home development that was to have homes starting at 4000 square feet and up and had lots ranging from 2 acres to 20 acres and it was situated on a really nice spring fed ski lake. There were only going to be around 20 homes or so in the whole development and construction had already been started on one that was going to be 9,000 freakin' feet! Anyway, I decided on a 2 1/2 acre beautiful lakefront lot that was selling for $335K. A huge sum at that time and an amount that made me a little queasy thinking about. My plan was not to build on the lot but to hold it for a while and flip it when the time was right. Because of that it would have to be a cash deal since we weren't interested in a construction loan. So I put down a refundable deposit of 10K to hold it for 2 weeks while my wife and I figured out the best way to finance the extra $80K we would need to buy it.

While we were talking about getting the money, how long we thought we might have to hold on to the lot and the taxes we'd have to pay etc. we started thinking about other ways we might invest the money instead. Eventually we (stupidly) decided that we would invest it in something that we (stupidly) thought we could use and enjoy and possibly offer a money stream and equity growth at the same time. So we ended up getting our deposit back and buying a condo on the beach.

Long story short, that lot was bought 2 weeks after I gave back the deposit and was resold about a year later for $790,000.

Easy come...easy go! I've lost - I wouldn't say "a lot"...but yes, a lot of money on stupid sh*t...over the years.

In fact, I just sold a lakefront lot last year near Charlottesville, VA. It was in a small community and I didn't do my homework. I bought it for $20K (it was .79 acres). My plan was to put a small house on it and rent it or sell. After visiting the lot a few times I realized the next door neighbor was a complete white trash piece of sh*t. I mildly noticed it when I looked at the lot initially, but didn't think much of it - I think I was blinded by the lot itself and what I could do with it. Long story short, I held onto it for 4+ years, paid the annual taxes (about $200) and the annual HOA (another $200)....and sold it for $6000 after having it up for sale for 2 years and lowering the price several times, minus closing costs: net loss of about $15,500. I'm trying to claim it on my taxes this year (2018 tax year).

I've lost on speculative tech and bio-medical stocks....but I have made a few dollars on some of them. No home runs though.

I bought a rental property in 2005 for $240K....rented it for several years at a loss....and I sold it through the Army Corps of Engineers program for military members who bought during the bubble and moved more than 50 miles away - it was called Homeowners Assistance Program (HAP), for military. Basically, I did a short sale and the ACOE paid the difference: it sold for $127K (that dude made out!) and I had to pay $3k at the closing. I was just happy to get out. I recently checked on zillow and it's still not worth $240k (I think it was estimated at $205k). With the down payment, upgrades (I put in hardwood floors, tile in the bathrooms and foyer, new blinds, paint, etc), the loss I took on the rent, closing costs, etc I estimate I lost close to $40k.

I sold my Florida condo last year when the market started to peak. Owned it since 2000. It was worth around $240K in 2005 and I decided (foolishly) to hold onto it. It's 1/4 mile to the beach, so it always rented well so that was good. It was less than 5 years from being paid off. I sold it for $204k last year....but could have sold it for $36k more 13 years ago!

me......I married up this time

bradgator2 said:

Ex-wives dont count.

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Shame both of my ex's were big busted...

bradgator2 said:

I have another horror story, although it was not a "bust venture".

When we got married, my wife has about $35,000 in college loan debt. Not great, but not terrible. Make the 1st payment as combined finances. I think was $350. The next month, the bill is still $35,000. That's weird, make the 2nd payment. The next month, the bill is still $35,000. Ok, what the fuk. I ask her and get the, "hell if I know, I have been making that payment for years". So I get on the horn with Regions Bank, the loan holder. Refused to produce the loan paperwork or even give me the conditions of the loan, or the term of the loan, or even when the final payment was scheduled to be. I went to the feds. I cant remember which agency handled it, although I have a massive file on it tucked away.

Apparently, she signed some sort of loan where she was not even paying the full month's interest. So the loan balance was actually growing, although that new balance was not reported on the monthly bill. After 10 years of making her payment, her balance would have magically had a balloon addition of $10,000.

Bottom line, the feds took over the loan and handed it Sallie Mae which obviously had very well defined normal loan details.

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WTF? I can't believe Regions were such a bunch of $h!ts. Sounds like some kind of scam that should be illegal.

bradgator2 said:

Yeah man, I was freaking livid. The conversations with Regions were mind blowing.

Me: Why didnt the balance come down? Even like 50 cents?
Regions: Payment came in after the grace period.
Me: Was the payment late?
Regions: no
Me: What about the 2nd payment.
Regions: That one too.
Me: I assume you know how a loan works. How do I pay off a loan if the balance never decreases?
Regions: Um.
Me: Fine, just mail me the amortization schedule for this loan.
Regions: We dont do that.
Me: Ok, what are the conditions of the loan.
Regions: You should have that paperwork.
Etc, etc, etc

The people that resolved this for me were the Federal Reserve Bank of Atlanta.

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Best... episode... ever!

I bought a mobile home in 2007 with a 2 year plan. We didn't move out until 2015 and still own it because it didn't sell. Reluctant landlords. Thanks, 2008.

Detroitgator said:

Best... episode... ever!

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Slightly off topic but this episode always cracks me up!

bradgator2 said:

BMF's alternative thread got me thinking about this one. Got any situations where you lost your ass? Stocks you rode to zero?

Ex-wives dont count.

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williston_gator said:

I bought a mobile home in 2007 with a 2 year plan. We didn't move out until 2015 and still own it because it didn't sell. Reluctant landlords. Thanks, 2008.

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You didn't make money renting the mobile home? I've read many stories of mobile home park landlords making a killing.

BMF said:

You didn't make money renting the mobile home? I've read many stories of mobile home park landlords making a killing.

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I had a string of bad renters who gave sob stories on why they couldn't pay over and over again. One family gave me a two week move out notice a few months into their contract. The ones in there now are a godsend though.

williston_gator said:

I had a string of bad renters who gave sob stories on why they couldn't pay over and over again. One family gave me a two week move out notice a few months into their contract. The ones in there now are a godsend though.

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Damn. I had a rental for 18 years, sold it last year. I had to evict once; it was two single girls who were a trainwreck. Otherwise, it wasn't bad. Pretty much paid off 75% of the mortgage for me and I made 104% profit when I sold it last year (I'm still waiting for my accountant to finish my taxes so I know how much I owe). Good luck w/ it, I hope you at least turn a small profit!