$196 Million Chapter 11 Bankruptcy Story

[Johnson H.]

I see a lot of new investors on BP and I wanted to share this story of a very prominent investor, hard money lender, developer, well known in the community that filed for bankruptcy during the financial crisis. He was very successful until the music stopped. 

http://www.northbaybiz.com/General_Articles/General_Articles/When_the_Music_Stopped.php

I know that real estate investing is exciting and can make people a lot of money in a short amount of time which is why so many new investors are coming out to the site. However, people should be aware that anybody can lose money, even someone as successful as this investor. Everyone should be careful with whom their dealing with and the leverage they are employing. The real estate market operates in cycles, don't get stuck during the next downturn without the proper risk migrants such as excess cash flows, reserves and other streams of income. Finally, think twice about that next cash out refi, it might not be the most prudent thing to do.