There's a lot of suffering to go around these days with real estate--maybe you're trying to refinance your adjustable rate mortgage before it resets to three times your current payment, or your home equity line of credit has been capped due to your declining home value, or you just escaped your first real estate "flip" deal with $5 profit (which was better than losing your shirt). My firm is retaining a lot more bankruptcy clients these days, who got in over their heads with loans they didn't understand and credit card debt they could never hope to repay.
One person out there makes most of those problems look entirely manageable: Casey Serin. You may have heard of him, but if not, he's a 24-year-old community college dropout (he figured education was beneath him) who had some modest internet fame (or infamy) after his plan to fix and flip 10 homes and make huge profits instead left him with $2 million in debt and a lot of foreclosures. His ingenious plan involved borrowing more than the houses were worth, at rates of up to 14%, and then resell the homes at huge profits. Instead, he lost some money to unscrupulous contractors, spent $30,000 on get-rich-quick seminars, went to Hawaii, and lost the homes to foreclosure. OK, he did sell one, for a modest profit, whose buyer then actually upgraded the home and made the profit Casey was expecting to make. Where did he go wrong? There are a lot of factors, including his laziness (he considered himself an "ideas guy" who could direct others to make his ideas reality), lack of any business plan, geographic problems (the houses were spread out over several states), lack of experience and hubris. And, had he done the buying even a year or two earlier, the market may have continued rising enough to at least covered his losses.
Once he realized he was not the entrepreneur he thought he was, he started blogging at http://www.iamfacingforeclosure.com. I credit him with opening himself up to the criticism he received, especially because some people on the internet use the cloak of anonymity to say incredibly cruel things. He's gone quiet now, and sold the blog (I'm not sure how much, but maybe around $30,000, so he's still deep in the hole). He also didn't seem to be learning as quick as he should, as his last posts dealt with his plans to make big money in penny stocks and look for investors for new real estate purchases. If you'd like to know more about him, just try a Google search on his name--he inspired a lot of writing and even a Dr. Phil appearance.
I mention Casey 1) to make you feel better about your own real estate investments or lack thereof, and 2) consider your current estate plan. Just as someone reminded us years ago that we all have a little Elvis in us, I'd say we all have a little Casey in us too.
So, how much Casey is in your successor trustee? Some of the things I've seen trustees lose colossal amounts of money on include restaurants, real estate, technology stocks and loans to "friends." Consider a more prudent person as trustee, or a professional trustee.
How much Casey is in your beneficiaries? Many of them have big plans for the money, with no experience to guide them. I've seen many benes lose their inheritance to cars, bad business deals, overleveraged real estate and even the Nigerian scams. Giving them the income while keeping the principal in trust may be a good idea, or at least breaking up the distributions over time to allow them to learn life's hard lessons with a little money instead of a lot.
How much Casey is in your beneficiary's spouse? How strong is your beneficiary when it comes to saying no to their spouse's bad financial ideas/fabulous home expansion plans/72% annualized return investments? Remember, Casey's (now ex-) wife is also on the hook for his dreams-turned-$2 million debt.
No comments:
Post a Comment