Pt 1 – The Rise and Fall of My Empire…and How I Struck Back

*** This is post is 1 of a 3 part series.  This first post will discuss the rise, the second the fall, and the third my recovery.  I hope you’ll stick around to check them out and possibly learn from my mistakes. 😉 ***

In 2010 I had it all. I was newly married and settling into the house I had I always wanted, with the garden I had always wanted, and the kitchen I had always wanted (apparently I wanted a lot).  I had a great job, a home improvement blog that I loved to write, and 3 rental properties fully occupied.  From the outside looking in, life was good….but from the inside looking out, I was suffering a debilitating financial tragedy wondering how had I gotten here?  To figure it out, I had to go back to the start of my love affair with real estate…

Not mine but close!

I have always prided myself on being financially responsible.  I was financially independent of my parents at 18, I never used credit cards (unless they were paid off each month), I never skipped a bill, and my FICO score regularly hovered around 820.  I loved me some Suze Orman and read everything I could about personal finance.  I was 24, living with my boyfriend in a two-flat that his brothers Realtor girlfriend owned (she lived on the first floor and us on the second).  After a year or so, my boyfriend and I decided to part ways (something about him wanting to throw all of my belongings on the front yard may have been the catalyst), so I packed up and moved out.

That break up was a sad one for me and, for the first time in my life, I started to feel dependent.  What was happening?  Me??  The girl who couldn’t wait to get out from under the parental thumb so badly that she moved all the way to Oregon at 18 just to be free!  And now she was back in her mother’s home searching for solace.  Though my mom was welcoming (and super excited to have me there) I hated that feeling and I did the worst thing I could do at that stage – I started to make decisions out of desperation.

It was about this time that the Realtor girlfriend of my now ex-boyfriends brother decided to sink her teeth into me.  We had become friends over the past year of being neighbors and I was in awe of her tenacity.  She was good at what she did and had something tangible to show for it – the two flat.  Then there was me…I was essentially homeless (staying at my mom’s until I could find a place), the housing market was booming, and I had a new career with a decent paycheck.  I was a Realtor’s dream.  She praised the benefits of owning a home instead of renting one.  I had never even thought of owning a property!  It wasn’t even on my radar.  But that didn’t matter.  I was seeking shelter both physically and emotionally.   She brought me to her boyfriend’s mortgage office (yes, the brother of my ex) and had him run my numbers to see what I could afford.  The number?  $150k.


Though I don’t remember my exact income in early 2004, I can tell you without a doubt that I could not afford whatever payment 150k loan would strap me with.  I didn’t want to be house poor.  When we began to look at places I told her I wanted to look at condos around 100k so I could maintain a buffer in my expenses.  And, like all good Realtors, she instead showed me condos in the 150+ range.  After showing me 5 properties she demanded that I pick one and, when I refused, she became annoyed.  I was a first time home buyer!  I knew nothing about interest rates, assessments, property taxes.  All I knew was 150k was a lot of money.  She gave me her login info to the MLS and let me do my own searching.  It was then that I found the condo I had been looking for.  It was a one bedroom one bath property in a working-class area near the forest preserve with the price tag of 107k.  We put in an offer and soon I was signing a billion papers that would tie me to this property for the next 30 years…or not.Soon after I looked back on my experience and decided that perhaps my realtor wasn’t the best at what she did.  Maybe, as a first-time buyer, I needed more hand-holding than she intended to give.  Maybe I could do a better job for future buyers.  With that in mind, I signed up for classes and became a Realtor myself.  Here begins the addiction…

6 months after getting my real estate license, I made my first sale – my own condo.  I had only lived there a year but already I was itching to move on.  My feet were wet in the real estate game and the city was calling.  I purchased a new-to-me condo in Chicago and a few months later, I purchased another in the same building.  I figured if I was buying a studio, buying a second would be like buying a 2 bedroom unit and having a roommate but this way I didn’t have to actually live with the roommate.  Logical, right?  I put 20% down on each and immediately found a tenant for the investment unit.  I was officially a landlord.

A year later, December 2007, I decided the studio I was living in was too small for me, my dog, and the boyfriend that had moved in a few months earlier.  It was time for an upgrade.  I bought a newly converted 1 bedroom condo in a different (worse) part of the city and off we went while a new tenant moved into my studio.  Now I had 2 rental units!!!  Yippee!!!

Again, this was December of 2007…see where this is going?

Yeah – I should have seen the writing on the wall at this point.  That last condo had been very difficult to purchase.  Proof of employment.  Letters to lenders.  Income reports on the other two properties (rent was not covering the mortgages).  But even with all of that, I forged on.  I put 20% down toward the new place even though my lender was telling me not to.  He also told me my interest rate would be lower than the interest rate that greeted me at the table on the day I signed the mortgage…a whole point difference.  When I asked about the good faith estimate he babbled and blubbered some explanation and, being I was already there, I signed the papers anyway.

Image result for crying while doing homework
Mortgage is wrong?  Sure, I’ll sign!  ~via~

A few months into living in the new place, I met my soon to be husband, E.  I was working from home and making great money but I needed some adult interaction.  A restaurant was opening across the street so I decided to get a job waiting tables.  E turned out to be one of the owners and a few months later the boyfriend and I split making room for my future husband to occupy his space.  A few months after that, I packed up, once again, and moved to E’s townhouse.  It was now winter of 2008 and the 1 bedroom condo became another rental bringing the total number of investment properties to three.  Three properties purchased within three years in the soon to be worst market crash that my generation had ever seen.  But I still didn’t get it…Living in the burbs with E was refreshing.  There was always parking, the dog could hang outside, and there were a ton of grocery stores and shopping nearby…not that I shopped (unless it was for properties!) but it was nice to know I could if I wanted to.  The only thing that wasn’t so nice, was sharing the 2 bedroom/1 bath townhouse with E’s mom and uncle.  Though they weren’t full-time residents, when they came to visit from overseas they tended to stay for months.  1 bathroom was not enough for 4 adults.  I began to get the itch again.  We started looking for houses.

In January 2010, E and I bought our lovely 3 bed/1.5 bath house.  We had looked and looked and saw that the market was beginning to turn.  We knew that prices were dropping and we were trying to time it just right so we could get in at the bottom.  I was completely oblivious to what the upside of buying during the market crash meant for my own depreciating rentals.  The hard downside was soon to come.

Let’s pause here to go back to the dates and numbers of these properties:

2004 107k 1/27/2005 115k
2005 100k
2006 100k
12/28/2007 159k
1/6/2010 204k

Just to reiterate – I put 20% down on each of these properties (for the house I put the money down and E paid me back over a year) plus closing costs and all the money that goes along with moving.  Over 130K in down payments alone.  But why stop there?

The new house was a fixer-upper.  We tore out a wall, completely rehabbed the kitchen and bathroom, built an office in the basement, got all new appliances for the laundry room and kitchen, had a front porch built, added drainage tile to the entire outside of the house, and, of course, custom-built all my square foot gardening boxes for my 18 x 24 foot organic vegetable garden…with custom organic soil that mixed myself ($1500 for soil alone).  All in all, I would guess we put 40-50k into the house after we purchased it.  Half of which was mine.

Pretty sure the soil made all the difference…if you look real close you can almost see flecks of cash in the soil.

Totally worth it!!  But seriously, to put it simply…


Before we get to the fall of this cautionary tale, l ask you, why didn’t anyone slap me???  Why didn’t anyone tell me to slow down??  Why didn’t anyone cauterize the bleed of cash that was flowing from our bank accounts directly into the house (and garden)??  Well…I know why.  Because my family was proud of me.  They were excited for me.  They thought I was being smart with my money…and so did I.

Next up in the series…What happens when you are mortgaged out the hoo-ha, your tenant’s bail, and a divorce is brewing?  Shit’s about to get real…

Until next time…

28 thoughts on “Pt 1 – The Rise and Fall of My Empire…and How I Struck Back

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  6. I guess that’s one reason to hate debt. What a tough pill to swallow. At least, hopefully, as I go through your series, we will be able to say that you learned from these lessons. Do you still enjoy being a realtor? Or did you give it up?


    1. Hi Steve!

      Yes, a tough pill indeed. Like one of those horse size pills with a dry mouth and no water!! 😉 I gave up my license shortly after the downturn of the market. I was in survival mode and the fees and lack of sales were killing me. I always think I will do it again someday, but for now I like the flexibility of my schedule…maybe in retirement. 🙂

      Thanks for stopping by!! 🙂

      Liked by 1 person

  7. Miss Mazuma,
    I enjoyed your post, isn’t it crazy how life gets in the way of all our plans? I must admit that nothing gives me a bigger headache than trying to figure out whether to invest in real estate or not. I also got stung by the market crash, though I have held on to the apartment and now it may even have a little equity in it.
    But I always tend towards the feeling that real estate is still at a peak, given the declining working demographics, the ultra-low interest rates, the lack of supply (in some countries anyway), the fact that every man and his dog is throwing their hand in the game, and the insane prices that bear no relation to peoples earnings. Thus…I put all my money into other investments such as mutual funds and stocks.
    I guess only time will prove me right or wrong!



    1. Hey Paulie!

      Sorry to hear you got stung as well but good for you for hanging in there! I wish my circumstances had been different so I could at least keep the first city one I had. I am with you – it seems there are a lot of investors out there and it is hard to get a good deal now. The unit I currently live in was a steal!! I will definitely hold out on buying again until I can either buy in cash or get an extraordinary deal. The rest is all in the same spots as yours. 🙂

      Thanks for taking the time to comment!!


  8. Exciting story! I am impressed that you bought so many condos in proper days back to back. Was your income very high at the time?

    I bought a vacation property in Lake Tahoe into thousand seven. I thought I was getting a deal because it was 15% cheaper than the previous year. And then the bottom fell out. Still own the place and go to visit. But what a bad time to buy.

    Hopefully things are recovered nine years later. They have here in San Francisco and are beginning to recover and Lake Tahoe as well.

    Great storytelling!


    Liked by 1 person

    1. Hi Sam – I wish my income was higher than it was! 🙂 I think because I was willing to put 20% down I got away with a lot more than I should have. Buying the first in the city was fine, the second I bought as an investment and it was a good rental market so that one was easy. After that, the last one I bought I was able to show rental income from the first two on top of my actual income from work…that was the one I probably shouldn’t have been approved for. And buying our house shortly after…we jumped through A LOT of hoops to get that loan due to my other three properties. In hindsight, my husband should of been the only one on that loan…hindsight is everything!

      Glad to hear Lake Tahoe is recovering. You would think a resort area like that wouldn’t be hit as hard but those vacation homes are usually the first to go! The only safe place in a recession is owning a bar… Hmmm – good plan for the future maybe?

      Thank you so much for taking the time to comment – I’m a huge fan of your site!


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  10. The scary thing is… People still don’t get it. If you started buying up property again, leveraging debt, had 3 investment properties and owned your own home – you’d still have people proud of you, which is shocking considering all that the worlds economy has been through, nobody has learned the lesson.. so it will happen again.

    We know people who are itching to get into property and have mentioned a few times about using the equity of the first property, to buy the second.. etc.. People are still eager to gobble up debt to leverage investing – it’ll never end! But it’s not true wealth, negative networth is only a disaster waiting to happen – I wish people realised that though.



    1. I know!! And, I’ll tell you – I get it now. Honestly, I probably should never have qualified for those properties with what I was making. I KNOW I shouldn’t have qualified for the house.

      I don’t kid when I say it felt like an addiction…I was buying whatever I could get my hands on. Building wealth is a topic we talk about often in the FI world. Some do frugal to an obsessive nature hoping to squeeze out one less day of their working life. I was staking properties hoping to squeeze months out. I can’t say I don’t still feel the allure of real estate – I do. I just know I will never take on multiple loans like that again!! Once was enough!!

      Liked by 1 person

  11. Wow, incredible story you have brewing here.

    I’m interested in building rental income with real estate as part of our plan…dividends and side business as the other 2 legs. But, I am taking my time with the real estate trying to read and listen to everything I can to be better informed. I know some have done really well with real estate and others have been burned pretty bad. I am in no rush.

    The house we live in we bought a little over 5 years ago as a short sale and got a really great deal on it. We are debating on relocating to a different state to be closer to family and will most likely become renters…leaving us with a good bit of equity in this house to put to use somewhere.

    Looking forward to the rest of the story! Thanks for sharing.



    1. You are smart to take your time. I wish I had done the same!! 🙂 Good for you on buying when the timing was right. I wound up buying again (pt 3) and this time I used cash. There is no better feeling than walking away from the closing table with keys and NO MORTGAGE!!

      Thanks for stopping by and please stay tuned…


  12. Stories like yours are what make me hesitate with pursuing real estate again. I bought in 2010 and unloaded it in 2015.

    Was I smart or just lucky? I couldn’t tell you.


    1. Both!! If I had paid attention to the signs I would have held back on units 2 and 3…well, at least the third. If I had not spread myself so thin just to make those down payments I may have ben able to make things work. But we aren’t privy to the future when we make these decisions. I was possessed by something bigger than me. I wanted to be successful and that idea blinded any and all signs telling me I was leveraging my financial soul to the devils (the banks).

      I learned a lot in the 9 years it took me to gain and lose it all. Today I am well off with a healthy retirement fund and a paid off studio (in the same building that I lost two others). I guess you never know how which way the road takes you if you don’t look out the window. 🙂


        1. Posting the downfall tomorrow. Man – I started writing this series in July!! I kept stopping because it got too long, or painful, or seemed too complicated. I am so happy I finally finished!! Still tweaking a bit here and there (trying to be nice to my ex!) but once they have posted I hope I never have to look back on this time in this much detail again. 🙂 Stay tuned!


  13. Whew!!! I’ve been a renter my whole life so this is fascinating! I almost bought a condo in Seattle once and with that market it could have been very lucrative, but I was nervous and inexperienced and I didn’t want to get into something I didn’t full understand, so I think it was OK. Looking forward to the next installment.


    1. Girl – just wait until Wednesdays post…You’ll never want to own again! Just kidding. 😉

      As you know, I have fully recovered from this debacle but when I was knee deep in the shit storm I wanted nothing more than to take off for Mexico and never look back. I could be drinking Coronas on a beach somewhere talking about the mogul I used to be!


  14. We bought our first house right at the peak of the market in our area, summer of 2008. While it was a forced work move to new jobs, we still realized that we would have been way better off just renting for the 5 or so years we were there. Our job covered the loss up to 90% of the purchase price, so at least there was that. It still sold for less than that, and we put in a back patio ~$3k, landscaping ~$1k, new floors throughout ~$2.5k, and random upgrades throughout, ~$2k.

    So, yeah. We would’ve come out ahead with a rental for sure. 🙂

    I’m excited to see where the rest of the story goes on your end though.


    1. Hi Mr. SSC

      That sounds awful. Not only did you have to move to buy the place, then you lost it all plus your upgrades! Ugh!! As I used to tell my clients (because it was taught to me), “There is no crystal ball in real estate”. Well, that doesn’t help anyone!! I was so naive and completely misguided and I hate to think of my clients who listened to that crap to put them at ease.

      Now, if I could go back and do it all over again, would !? You bet. All that build up with each purchase was so fricking exciting! I really thought I was going to win the game of real estate and I learned some VERY valuable lessons. But I also consider the famous quote from Steve Jobs, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future.”.

      I am in such a better space mentally and financially than I was back then. Yes, I lost a TON of cash, and to be honest, going back to write about it sucks…but I have moved on and can already see the dots ahead of me coming into focus.

      Thanks for taking the time to comment! 🙂

      Liked by 1 person

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