Sometimes It's Better To Be Lucky Than Smart, Or How I Made $30K On My First Deal

[Michael Carbonare]

30 years ago I closed on my first real estate deal. It was a foreclosure, owned by the Resolution Trust Corporation. The RTC was a federal agency created in 1989 to resolve the Savings and Loan Crisis of the 1980s, which resulted in approximately one-third of all US savings and loans failing.
Armed with just enough information to be a danger to myself, I made an offer and much to my surprise it was accepted. But there was a problem. . .the RTC wanted a $19,000 down payment. Nineteen thousand dollars?! I had nineteen dollars. LOL But I did have a credit card with a $20K cash advance available. Off to my bank I went and I cashed out. (Word of advice: don’t ever do this!). Signed the papers, mailed in my money, and I was now the proud owner-to-be. . .but there were unexpected obstacles.
The foreclosed owner remained in the property. Despite multiple on site visits and mailed letters he wasn’t responding. I persisted and much to my surprise one day the door opened a crack and thus began a multi month journey through this man’s personal hell that eventually led to a $30,000 profit.
He owned a local Jamaican bakery that was failing; his marriage was ending and his soon-to-be-ex moved out with their 5 year old daughter; and now he had lost his house. I became his crying shoulder and confidant, stopping by once a week or so with beers and a sandwich. He quickly trusted me enough to let me walk around and check out the house. At one point I noticed a fist sized hole in the wall at about ankle height. When I asked about it, Desmond replied, “I was arguing with my wife, got angry, fired off a round from my shotgun.” Message to self: Desmond has a temper and a shotgun. This friendship lasted several months until he was ready to move on. With the help of two local kids I loaded his personal goods into a rented truck, said goodbye, and thus began phase two of my entry into real estate.
Marketing for a buyer was predominantly done in the print media. Yes, horror of horrors, there was no internet or social media! I forget how long it took, two months perhaps, but I found my buyer. Now, it was a matter of the winding, tedious journey of going from contract to closing. At that time in New York it was about a four month process. Paperwork, lawyers, and bureaucrats, oh my! But we eventually reached the finish line and when we did, when all was said and done, somehow I made a $30,000 profit. I was thrilled, to say the least, and thinking I was now the smartest guy in the room, I jumped into another deal, another foreclosure, but this one had a very different outcome. But that's a story for another day which I will post up soon.

[Michael Carbonare]

I agree with your view regarding inflation and the job market.  Those numbers are as fake as the Kardashian backsides.  It only takes a walk down the cereal aisle of the grocery store to know the government is cooking the books.  $8 for a box of Cheerios??  God help us!  LOL  Whether or not this translates to another housing market crash remains to be seen.  I think the biggest factor in housing is the affordability index, more accurately the unaffordability index.  At current prices and interest rates, many would be buyers remain on the sidelines, the possibility of home ownership a distant reality.  The market would need to shake out about 40% to once again to be affordable for the average two income family.  As a property owner I don't want this to happen, but looking beyond my personal interests I wouldn't be disappointed if it does.  I fear the US will become a nation of renters, with the mega hedge funds owning enormous parcels of single family housing all across the country.  Blackstone just purchased Tricon for $3.8B. 
Answering your question about my investing, I started 30 years ago with lease options, particularly with lease option assignments, (cooperative assignments).  This strategy enabled me to raise cash which was desperately needed at the time.  From there I was able branch into other strategies. . .buy and hold, fix and flip, etc.  But I still fall back on those lease option assignments.  I can do them virtually anywhere in the country.  If you know what you're doing  they are risk free and minimal cash out of pocket.