You know how to make a small fortune in real estate, right? Start with a large fortune.
This is a story of someone with a decent fortune who managed to lose it all, by buying can’t-lose inflation-proof real estate. Let’s see how well that went. Thanks to Burbed reader nomadic for sharing this modern morality play.
By GERALDINE FABRIKANT
Published: November 25, 2010
WAMEGO, Kan. — Grateful to have found work in this tough economy, Nick Martin teaches grape growing and winemaking each Saturday to a class of seven students in a simple metal building here at a satellite campus of Highland Community College. (photo, right)
Then he drives 14 miles in an 11-year-old Ford Explorer to a sparsely furnished tract house that he rents for $900 a month on a dead-end street in McFarland, a smaller town. Just across the backyard is a shed that a neighbor uses to make cartridges for shooting the prairie dogs that infest the adjacent fields. (photo, below)
It is a far cry from the life that Mr. Martin and his family enjoyed until recently at their Adirondacks waterfront camp at Tupper Lake, N.Y. Their garage held three stylish cars, including a yellow Aston Martin; they owned three horses, one that cost $173,000; and Mr. Martin treated his wife, Kate, to a birthday weekend at the Waldorf-Astoria, with dinner at the “21” Club and a $7,000 mink coat.
That luxurious world was fueled by a check Mr. Martin received in 1998 for $14 million, his share of the $600 million sale of Martin Media, an outdoor advertising business begun by his father in California in the 1950s. After taxes, he kept about $10 million.
Photos: Steve Hebert, New York Times
In some ways, this story is similar to many sympathetic treatments of less wealthy people losing their homes due to not understanding the basics of finance. If you owe more than you own, you’re not moving in the right direction. And if you sign papers you don’t understand, you’re setting yourself up for a world of hurt.
What’s amazing is how Nick Martin still seems to think what happened to him is somehow somebody else’s fault, maybe multiple somebody elses. Unlike the numerous victims of manufactured documents and hard-sell subprime Pay Option ARMs, Martin seems to have sought out what became his undoing.
I do recommend you read the article, but here’s the shorter Nick Martin: He bought a bunch of crap he couldn’t afford, so now he’s broke. That’s a fairly common story, it’s just most of them don’t start with getting a phone call asking where you want your $14 million deposited.
Please share your advice for Nick Martin, or for anyone about to enter the exciting world of buying and selling real estate. How would he have fared if he’d bought in the Real Bay Area instead?