Casey Serin is a 24-year-old Sacramento man who bought seven properties in four states within the first three months of 2006. Even after selling a home in Utah a few weeks ago, he's $2.2 million in debt and will be four months behind on all of his mortgages come October.
He started a blog to tell people about his experiences and his mistakes as a novice investor - it's called iamfacingforeclosure.com.
I talked to Serin this afternoon and he told me he first got into real estate as a 19-year-old in 2002, buying a condo as his residence in Sacramento. Originally from Uzbekistan, Serin and his family immigrated to the United States 14 years ago. His parents own their home in the Sacramento area, but haven't invested in any other real estate.
He sold that first condo in 2003 and made about $30,000 in profit, he said.
"That was kind of my first experience," he said. "This real estate is a good business if you do it right."
And, Serin admits, "a rising tide floats all ships" - he knows he was successful then primarily because of the appreciation in the housing market.
But he admits he had no idea what he was getting himself into when he started investing in properties earlier this year. He financed all of the mortgages 100 percent and has been paying only the interest on those loans. (Click here to read my story about the risks involved with those loans and their popularity in San Diego.) He used "stated-income" forms that don't require lenders to do background checks to make sure the borrower actually earns as much as he says he does.
And another reason he was able to get so much financing was that he claimed he'd be living in each of the properties. Normally, only one property in an investor's portfolio can be claimed as "owner-occupied," and it's easier to get financing on that property because it's supposed to be your only property. (Investor property financing often requires much larger down-payments, to avoid cases like this).
"Some lenders told me, it's no big deal, as long as you can say that [living in the property] was your intent," he said. "I just feel that's not right."
Because Serin was applying for financing for properties in California, New Mexico, Texas and Utah within days of each other, the banks couldn't trace the pending loan documents to check up on his story - so it looked like each one really was his only property.
Now he's trying to figure out what to do. He got married two-and-a-half years ago and his wife is in school to get a degree in accounting. They're living with her parents while he sorts out his debt.
"I'm an example of what not to do," he said. "It was a combination of lack of experience and also, buying too much, too fast. I'm kind of an open personality. If my honesty helps somebody, great."
While he characterized his goals in investment as buy-fix-sell, he said he doesn't like to be called a "flipper."
"I don't like the word flipping because it makes it sound like you're doing something illegal," he said.
- KELLY BENNETT