Casey Serin of I Am Facing Foreclosure recently held a two-hour conference call to take questions from readers and to explain his situation. I didn’t hear the call, but I did read the entire transcript (part one, part two).
For those of you unfamiliar with him, Casey Serin is the Napoleon Dynamite of real estate investing. He took real estate seminars from Russ Whitney and read books by Carleton Sheets. He bought into the “get rich quick” mentality. In October, the San Francisco Gate wrote:
After spending a year and upward of $15,000 (borrowed on credit cards) going to real estate seminars and buying home education courses from everyone from Russ Whitney to Bruce Norris and, of course, the aforementioned Robert “Rich Dad, Poor Dad” Kiyosaki, Serin embarked on his brilliant career as a real estate flopper, er, flipper. “I wanted to move toward financial independence,” he told me by phone from his home in Sacramento, referring to “passive income,” a key tenet of the “Rich Dad, Poor Dad” scriptures (“Don’t work for money, allow money to work for you”).
Most people take these seminars and read these books but never do anything. Serin heeded the advice of these gurus. In his own words, he “bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip.” He bought these houses between October 2005 and May 2006, after the U.S. real estate market had already begun to decline. He ended up $2.2 million in debt, and he’s been blogging about it ever since.
Serin’s story bugs a lot of people. He made many mistakes. He lied on his loan applications (and continues to rationalize this by saying it’s “industry standard policy”). He exhibits no regret. He continues to live a normal (even lavish) lifestyle despite being deep in debt. He refuses to pay anything on his debt because he doesn’t think it’ll make any difference. He refuses to take a job. He doesn’t take any action to improve his situation. He seems to be a publicity whore. Despite his failures, he believes that he can still get rich quick in real estate if he only finds some sweet deals.
I don’t get angry at Serin. I just think he’s dumb. He continues to pursue a way of life that is just not tenable. He’s trying to bypass the “hard work” portion of the American Dream. I consider his story a stark counterpoint to my message of “get rich slowly”. (Trivia: Casey went to high school with Ramit of I Will Teach You to Be Rich. The former tried to get rich quickly and failed. The latter teaches sensible entrepreneurship and personal finance advice, and has succeeded.)
As I said, I read the entire transcript of Serin’s two-hour conference call. It’s an amazing glimpse into the mind of a young man who wants wealth now. Since I know most people don’t have the time to wade through the entire thing, I’ve culled the best parts to share here.
The first thing that strikes you when reading Serin’s stuff is that he doesn’t seem to have learned his lesson. He’s two million dollars in debt, but he’s still convinced that there’s a quick fix for this mess.
Besides real estate, I’m also looking at other opportunities. With this exposure I’ve had, I’ve made a lot of interesting contacts in different industries, not just real estate. I’m talking with a gentleman in Southern California who’s a silver broker, for example. The silver and gold and precious metal market right now is on the rise, and whenever there’s turbulence, or any kind of a war, or anything crazy with the economy, that’s a good place to put your money. I’m definitely looking at that. I’m looking at stocks, but individual stocks, not mutual funds — the performers, the companies that are about to take off, that you’re able to make some money; for example, with penny stocks.
I want to mail Serin a box of personal finance books. I want to send him Dave Ramsey, Your Money or Your Life, the words of John Bogle. I want him to read real personal finance advice that works. But I’m afraid the books would go unread. (Does anyone have his address or know how to get it? Maybe I really will send him some personal finance books.)
At times Serin seems to have learned something. Regarding “no money down” deals, he says:
If I was putting my own cash down, I would have been a lot more careful. That’s what happens when you have a real down payment. Anybody out there who’s looking to do a no money down deal, I say, you have to be careful. Don’t treat the no money down as just a free deal for you.
But other times it seems he hasn’t learned a thing:
I love those no doc loans, they’re the best because you’re never stating anything so no one can ever go back and say you were lying on your application.
One caller tried to explain the concept of “buy low, sell high” to Serin, but he didn’t want to hear it.
CS: Well, you know, if you’re going to do flipping in a down market, here’s the biggest thing. Buying is going to be easy. There’s tons of people giving houses away, including myself. You come to me; I’ll give you my houses away. Just take them over, or whatever; save me from foreclosure. So, buying is not going to be the hard part. Selling is the tough part. You have to get really good at selling your properties, and in a down market, you probably don’t want to buy anything that’s not a first-time-buyer home.
SC2K2: I just can’t handle how brainwashed you’ve been by all those seminars.
CS: Oh, yeah?
SC2K2: The way you make money in a down market, is you wait for the prices to bottom; you buy in paying very little; and then you sell when they’ve gone way up. Yeah, your Rich Dad probably —
CS: That’s the long-term strategy. Are you saying you can’t do quick flips on the way down?
SC2K2: You know, Casey, there’s no way you would be able to handle quick flips.
Serin isn’t interested in a long-term strategy. He wants his money now. He doesn’t see that this is precisely where he’s going wrong. While he’s focused on quick riches, he’s neglecting basic personal finance. For example:
I thought at the beginning it would be such an awesome story, a comeback story and show so much success to be able to pay everything back, but at the same time I think I had a bit of a wishful thinking going on, because I didn’t realize when I first started what kind of a hole I was in. The hole’s so big that at this point, I’m really out of options.
Yeah, but here’s what’s going to happen. I pay a credit card — even fifty bucks — that doesn’t do anything to the collection process. Here’s what happens: it’s going to go and get discharged, and then they’re going to try to sue me and try to get that money. So that fifty bucks could have been used better in something where I can actually make money, perhaps doing another deal —
GDS: What’s your FICO now?
CS: I actually don’t know because I haven’t logged into Washington Mutual in a while and I probably should have done that before this call, but last time I checked it was in the high 400’s, 490 I believe or something along those lines. It might be lower now because I’m going to have two official foreclosures showing up on my record any time.
GDS: Well, it doesn’t go below 450, so it doesn’t get much –
CS: It might be interesting to see if I might be a person that actually gets a 450 FICO score. I might be one of the few amongst some of my friends. I’m hoping other people don’t do the same thing I did.
The end of the conference call is the best part. A caller named Nacho tries to push Serin to think about his situation, about the things he’s done.
CS: Not everyone’s going to be successful and self-employed. But don’t you know self-employed doctors or lawyers or successful realtors or anybody who doesn’t have a W-2 but still makes money? It’s not like W-2’s the only…
NACHO: But you haven’t been successful! So isn’t it time to try something else? Supplement your side jobs with a real job.
CS: Well, you know, I never said I’m not going to get one. I’m definitely considering that, and since I do still have money coming in through some of those other sources, it allows me to stay flexible so I can still kind of be in real estate a little bit, and other opportunities.
NACHO: Do you understand that the real estate market is tanking? Do you have a grasp of that?
CS: Oh, yeah. That’s why I’m looking at other investing opportunities, not just real estate.
NACHO: And do you understand that you bought in at the worst possible time? You do understand that, right?
CS: It’s not like you can’t make money in a down market. My local Rich Dad, he made his fortune in the last downturn in California. But of course he had a lot more experience.
NACHO: Did he have decent credit? Was he able to secure loans?
CS: Well, he could secure loans. He had money partners. He had mentors. See, I kind of started off without any mentors guiding me, and that’s kind of one of my problems. And I didn’t have any construction experience.
NACHO: You know what, Casey? I don’t think mentors is your problem. I think you’ve got enough with these guru mentors. I think that that’s the last thing you need. What you need is a swift kick in the ass, from somebody who’s going to tell you the truth. Seriously. Someone who’s going to tell you the truth.
CS: I appreciate you being upfront and giving me a little dose of reality, as you said.
NACHO: Well, that’s how I roll. I’m always trying to keep it real. I’m just trying to let you know, man, that you need to start looking at things differently. You’ve been going a certain way and it’s not working out for you, and you really need to change the way you’re viewing life.
CS: Well, I appreciate it.
NACHO: Because everybody that you owe money to is going to get shafted, and then, in turn, taxpayers are going to have to pay — you know, foot the bill.
NACHO: Are you worried about going to jail?
CS: I’ve already kind of addressed it, but the thing is, if I live my life in fear, what good is that going to do?
NACHO: And you don’t think that you deserve to go? You don’t think that what you did was basic thievery?
CS: Well, the thing is I wasn’t out to rob banks, I was out to make a business, and I screwed up.
NACHO: But Casey, you got everything fraudulently. Come on, you knew in your heart that that was the wrong thing to do.
CS: Part of me was thinking that maybe I shouldn’t be doing stated income loans, because even though everyone seems to be OKAY with it, I had a little bit of a gut instinct. I should have listened to it; you’re right.
NACHO: And you understand that when you do things wrong like that, sometimes you have to pay the piper?
CS: Oh, yeah. And do you think I’m paying the piper?
NACHO: No, not yet. Not by any means, no.
CS: You don’t think that all the financial stress and the issues I’m going through is not enough?
NACHO: Absolutely not, Casey. I think you should be out there working your ass off — two jobs if necessary — paying five bucks a month on every single bill if that’s what it takes to pay this stuff down. I think you should be calling your creditors and making some sort of payment arrangement for you to —
CS: You know what? Check this out; put yourself in my shoes. Even if I get three or five or ten jobs right now I’m not going to be able to catch all my loans up, so they’re going to go to collections, and they’re going to start suing me. So if the only good thing I can really do right now is bankruptcy protection or refinance all those loans.
NACHO: If you pay five dollars a month on any bill, they can’t send it to collection, Casey, do you understand that?
CS: Sure, they can.
NACHO: No, they can’t.
CS: If I don’t pay the full monthly payment — I can’t just keep letting them go… That means I can just pay a dollar on all my loans and they’ll just keeping indefinitely. They’re not going to do that.
NACHO: I’m not talking about the foreclosure loans, I’m talking about the credit card bills.
CS: Even the credit cards.
NACHO: Casey, you have to do something to try and right this wrong. Who’s the guy who has the blog – I am [$334,442 in unsecured debt. I am 23. Will I make it ?] dollars, whatever the hell it is, in debt.
CS: Yeah, the guy eating Ramen and stuff. Yeah, he’s eating Top Ramen; he’s doing all this other stuff.
NACHO: He’s doing the right things. If you would do those things, people would be behind you. People would be giving you suggestions and telling you what to do. Do you understand that?
CS: Well, you might have a good point there. But I wonder if that guy’s really for real, though. Do you think a person can survive on Top Ramen for six months?
NACHO: Oh, yeah. Sure.
CS: Do you think he can eat that crap and still be healthy and still be safe?
NACHO: Yeah, throw some vegetables in there. Casey, the last thing you need to worry about right now, seriously, is eating your vegan — your mildly vegan — seriously, you throw some vegetables and a little bit of whatever, some chicken in the Top Ramen, and it’s fine. Have some beans and rice; that’s fine. Buy a big-ass bag of beans and a big-ass bag of rice and cook it up. Have oatmeal for breakfast —
Casey Serin may or may not be a good guy. I can’t tell. He seems likeable enough. But he has succumbed to the idea that the best way to make money is through tricks and games. I’m not saying that you have to be a wage slave all your life in order to get money to save for retirement. But there are clear, safe paths to wealth and happiness. They take time. They take effort. My goal is explore these paths with you. It’s too bad Casey’s not along for the journey.