An investor's $204,000 mistake (PART 1)

"Learn from the mistakes of others. You can't live long enough to make them all yourself"

              -Eleanor Roosevelt US diplomat & reformer  (1884 - 1962)

" In the stock market, history repeats itself. This is because human nature rarely changes"

               - William J. O'Neil (Founder of Investor's Business Daily)

Learning from others has not always been a strong point in the early part of my life. I was (and sometimes still is) the type of person who makes rash decisions based on emotions -maybe because I  have always been a very passionate and emotional human being. So naturally it trickled into my decision-making.

I am not saying that being passionate & emotional is necessarily bad for us but as I have 'aged' I have learned that 'There is a time for everything', There is a time to be aggressive and go against all odds, and there is a time to back off. A time to be 'super' pro-active  And a time to be sit still and not do, literally, anything- "Wisdom is to know the difference on what to do in a particular situation"

Asking and listening to the wisdom of people who have 'been there,done that' have saved me a 2 tons of heartaches. "We can't live long enough to make them all yourself".

Here is the personal story of the author of the book,  "Timing The Real Estate Market" ( a book that found me). He talks about the mistakes he made while investing in the San Diego Real Estate. Later on in the book he will also talk about 'lessons learned'  and the solutions he discovered through that experience.

  While reading it, I couldn't help but nod my head and agree to the things he said in this book.  Many of his mistakes were also my mistakes and much of what he described about the events that took place in the booming San  Diego real estate market also happened in the Reno-Sparks market.

Note: I am not in any way connected to Robert Campbell or any of his products. I am simply an avid fan of the principles he laid out in his book.
 
This is an excerpt from his book- pages 42-48

                                                        Good houses, Bad timing
                                                                         By : Robert Campbell

With a successful background as a real estate broker.investor and homebuilder since 1972, I was building an eight-home subdivision in San Diego. The year was 1989 and the real estate market was going like gangbusters. Home prices climbed by 20% in 1988 and were doing even better in 1989. Speculation was rampant. Prospective buyers for new homes often camped out for days-sometimes weeks- in front of builder sales offices for the 'opportunity' to buy a home. Some people camped out so they could sell their positions in line for $5,000 to $10,000 to even more eager homebuyers.

This new home development looked like it was going to be my most profitable real estate investment ever. By all appearances, I was in the right place at the right time with the right product to sell. If everything went perfectly, I was going to make a killing.

But things did not go perfectly. Times were good... but times change.

Instead of a big winner, my eight-home real estate development turned into a big loser. The market was booming, but as history shows us over and over again, a pin lies in wait for every market bubble. San Diego real estate prices peaked out in 1989 and started a rapid downhill slide. "The boom of the 1980's"   turned into the   "Bust of the 1990's."

A relentless five to six year downtrend in property values brought on deflated hopes, failed dreams and new realities for almost everyone who owned real estate in California.  Instead of making a killing, I got killed.  The 'bigger fool' theory was over. How bad was it? let's put it this way: If it were a fight, somebody would have stopped it.

And I found little consolation in the fact that self-help books told me it is your failures-not your successes- that make you strong.  While I am sure there is some truth to this, given the choice, I would rather skip this method of education.  Frankly, I believe it is smarter and less expensive to learn from people's mistakes and failures.  It is devastating to lose a lot of money.  And for 44-year-old Robert Campbell- with a wife, two children, a dog and a home with a big mortgage- this was no ordinary failure. It was an extraordinary one.

To be continued..

Resource: 'Timing the Real Estate Market' By: Robert Campbell pages 42-48