The Perils of Real Estate Leveraging: A Case Study

by Silicon Valley Blogger on 2011-09-1528

It’s been a while since the wobbly real estate market took center stage. There were a few infamous celebrities that came out of that period. Someone who may sound familiar to you is a fellow named Casey Serin, who gained notoriety for pulling a few crazy stunts during the real estate mania and subsequent collapse. He was a controversial blogger who bought 8 houses in 8 months to cash in on the real estate boom. All with no money down! Over time, he had a debt worth over $2 million due to overleveraging and shady deals. This guy was a mere 24 years old when all this happened.

For a while, things looked good for him. But eventually, he was devoured by the collapsing real estate market, and was labeled its poster child. He’s no victim though, because it was soon revealed that he participated in real estate fraud.


What was strange was how he attracted his share of sympathizers along with angry detractors. Even I gave him the benefit of the doubt a while ago, when I described him as “bold, gutsy, shameless, enterprising, sharp and most importantly, YOUNG.” When you’re young, you can afford to be more aggressive than most people, but it is no excuse for breaking the rules (like Casey did). I thought he would simply dust himself off, make amends, learn from the experience, and try again. I didn’t count on him participating in questionable endeavors that all but dried up his support base and cost him his marriage.

Serin  SerinHouse
Casey Serin and one of several foreclosed homes he once owned.

If you ever had the chance to read Casey’s posts in his once notorious site IAmFacingForeclosure.com (before it changed hands), you may be surprised to hear that he attended the same school (and may have been in the same classes) as another well-respected financial blogger and businessman named Ramit Sethi, who runs the site IWillTeachYouToBeRich.com. From their stories and profiles, you may discover that money or the pursuit thereof can be viewed quite differently by individuals who share many things in common, such as youth, ambition, talent, smarts and the entrepreneurial drive. And through the highly popular blogs of these two men, one can see just how financial strategies, experiences and values can lead to vastly divergent destinies.

I appreciate how open and honest these two bloggers were about their business views and financial accounts and stories. I took away some realizations — that among the things more valuable than money are reputation and trust: once tarnished, earning these back could be almost impossible.

Did The Lending Industry Learn Its Lesson?

But do you ever wonder just how short a memory the financial industry has, when it comes to forgiving the “players” in the past crisis? Many people of authority looked the other way when things were crumbling, so why wouldn’t I expect symptoms of collective amnesia in this group to take hold over time?

My feeling is that lenders and credit card companies will always love a guy like Casey because of the kind of business they provide the industry. And as they say, the more you play, the more you strike out, but that homer can just be around the corner. Did this kid push the boundaries a little too much and therefore, did he get himself caught in a “system” that blew up? Or do you think that history can repeat itself, with someone like this eventually making the Trump Honor Roll again one day, when we once more reward aggressive risk and greed? Could it just be a matter of time when we witness (once more) the rise of wannabe moguls fueled by credit card applications and financing schemes?

With Casey, it’s too bad that interest rates got him before he could unload. And it isn’t entirely his fault this happened. Blame the system too — the kid was 24 YEARS OLD with no job and nothing to his name and yet the system still managed to help him build a mini real estate empire. Knowing what we do now, with the financial crisis supposedly behind us, would you say that current regulations in place for our credit, lending and investment industries are sufficient and satisfactory enough to prevent consumers from doing this much financial damage to themselves? After all, anyone could have predicted this disaster from the point of its inception.

As we jump from one debt crisis to another, Casey’s story remains a riveting, historical case study, a financial soap opera that was a rags-to-riches-to-rags tale that served us a lot of cautionary lessons. But I’m sure this won’t be the last time you’ll hear about some guy who tried to get rich quick in such a dramatic and colorful fashion.

Created October 28, 2006. Updated September 15, 2011. Copyright © 2011 The Digerati Life. All Rights Reserved.

{ 28 comments… read them below or add one }

Ravi November 15, 2006 at 5:49 pm

I saw the article about Casey on the cover of the USA Today a few weeks ago. Pretty amazing how much amibition that guy has. Hope he turns his situation around.

Benjamin December 19, 2006 at 4:40 pm

With all due respect… this is entirely his fault. He falsified loan applications, stating that he made lots of money, so that the lenders would lend him money. He broke several Federal laws, and may be facing jail time. You can hear him explain his story at this link:
http://www.wisebread.com/must-watch-video-for-new-real-estate-investors

Benjamin @ benjaminbach.com

BadBoyBill December 20, 2006 at 5:38 pm

Casey Serin will be going to prison soon for mortgage fraud. Learn Karate asap dude so you do not have problems with the booty bandits. My condolences.

Silicon Valley Blogger December 20, 2006 at 5:41 pm

Hi Benjamin,
I agree with you. He’s put all this upon himself and is now paying for it. But since the man is already down, I’m guessing he already knows what a swift kick already feels like. Definitely no sympathy deserved here. I wonder if he’ll learn as this thing drags on?

Robert January 19, 2007 at 5:50 pm

I heard about this. It’s really not that unusual. It’s too easy to buy houses with no money and no credit. So easy in fact many end up buying houses they probably shouldn’t and before you know it they have multiple mortgages they can’t pay.

Darin Frantz May 17, 2007 at 5:51 pm

Casey is not the bad guy people make him out to be. He did not buy these properties to start his blog. His story is not the only one where someone has gotten in over his head with property investments. Hopefully Casey will be able to counsel other home owners and give them some help to stop their foreclosures.

EnTrust September 21, 2007 at 11:07 am

I believe Casey has since sold his website.

EnTrust September 21, 2007 at 5:51 pm

Well I believe he was just a bit over-anxious and too aggressive. We do learn from our mistakes though.

theoriginaldjransoom November 20, 2007 at 5:52 pm

I always warn clients about over-stretching themselves when it comes to property investments. Just as this is happening in the USA, the UK is quickly following suit; so I think there will be a few more cases like Casey’s that we’ll hear of.

Richard Geller February 17, 2008 at 9:00 am

Well, it’s still an instructive story about foreclosure that is written well. Things work out one way or another.

–Richard

Real Estate Guru March 11, 2008 at 3:58 pm

I wish Casey all the best and hope that it doesn’t end in foreclosure.

Silicon Valley Blogger March 11, 2008 at 4:39 pm

@EnTrust
You are right, his web site is kaput. Thanks for pointing it out.

@Real Estate Guru,
Unfortunately, Casey already foreclosed on all his properties and is facing a massive debt nightmare. Wish him luck.

cassiano travareli October 9, 2008 at 10:06 am

Well Casey has to watch out, he is not aware of the danger he is in. The way our economy is, he is not the only one falling! I hope he can make a quick turn around. He has worked so hard hopefully he has the skill to rebound from this crisis.

Dean November 15, 2008 at 5:54 pm

Casey’s story is definitely something that will stick in my mind as an investor. The key to real estate investing is choosing the right income producing properties in the right place at the right time. Now is perhaps a buyer’s market, but count on a good few years of waiting to resell the property before making a big profit.

JGVFinance November 24, 2008 at 5:43 pm

How can these banks and or lenders lend money to Mr Serin? Is this one those schemes won on TV or the Mr. Kiyosaki type of deal?

Anyways, I would like to imitate what this guy did only if it’s legal. With very low interest rates now probably an ARM type mortgage loan can do some favors for anyone.

But if he broke some laws then it’s a different story.
Thanks
JGVFinance

irenehoughtaling January 6, 2009 at 1:16 pm

The bailout is for the banks not for the people. The people should have received the bailout. If your credit is no good no one is going to give you a loan. They do not care!

Pete October 25, 2009 at 5:54 pm

I wonder how Casey is doing right now. Anyone have any updates on him? By the end of the day, it’s the decisions he made that shaped the outcome of his life. There is no right or wrong. There are only good or bad decisions in one’s life and the lesson here is that we need to be responsible for our mistakes and learn from them.

Silicon Valley Blogger October 25, 2009 at 5:55 pm

Casey is on Facebook and as far as I know, he’s behind a few (strange) online projects. He’s still doing his thing… just not sure exactly what he’s involved in. Yes, let’s all learn some lessons from his experience: it was a bitter pill he had to swallow, being the poster child of foreclosures. That label will be stuck with him forever and will be hard to shake off.

Foreclosure Timelines November 21, 2009 at 5:55 pm

I read an article about this guy. It’s amazing how much success and failure he has endured in such a short time. Must be like a roller coaster ride of emotions. He seems like a person with good intentions, I hope his financial situation turns around soon.

courtney April 8, 2010 at 5:43 pm

i feel bad for him :( but he is really cute :) .

Silicon Valley Blogger December 3, 2010 at 5:47 pm

Looks like my prediction for Casey turned out to be true in some ways, when I said: it won’t be long before he’ll be back making his mint on hard assets. I’m being sarcastic though, as he ended up investing in gold mining stocks including GSPG (GoldSpring). He didn’t do well with this position (in fact, I’m not sure what it’s done since) and there were rumors that Casey was involved in a “pump and dump” scheme involving the stock. Ironically, gold, as an asset, has been doing well though!

This fellow and money don’t seem to mix too well, and it doesn’t look like he’ll redeem himself anytime soon. He seems to be attracted to the worst type of investments in the world, and seems to enjoy being in the spotlight for the wrong reasons. Is it just foolishness or something else?

krantcents September 15, 2011 at 7:00 pm

Although the mortgage industry has some responsibility for this guy’s plight, he over leveraged himself. In addition, this guy was the poster boy for for bad lending. If he was unemployed why would you loan any money to him? When I owned rental property (34 units & shopping center) , I had a track record and bankers were not exactly lining up to loan me money. I never had a problem getting a mortgage, but they wanted equity in the property.

The Biz of LIfe September 15, 2011 at 7:10 pm

Casey seems like the next generation of financial con artists. Sooner of later he will be hawking get rich quick schemes in infomercials. When you play with fire often enough you’ll get burned.

Ben - BankAim September 16, 2011 at 12:35 pm

Never heard about this story until now. Sad how a young guy could screw up so badly. Worst of all it cost him his marriage. Any idea how long he will be put away for?

Silicon Valley Blogger September 16, 2011 at 12:57 pm

@Ben,
He’s not in jail, he’s doing new projects in fact! He just got into some trouble with foreclosure and many people thought he was doing a bunch of questionable things. However, Casey has managed to test the boundaries without really going over. You can check up on him in Caseypedia.com, which is a wiki for the guy, if you can believe it!

Ben - BankAim September 16, 2011 at 9:30 pm

wow.. that’s cool though. At least he won’t make the same mistakes twice. Thanks for the link

Portland Realtor Charles Ramsay September 21, 2011 at 2:51 am

Casey was bold in the boom but the cost outweighed the justification he had to use to commit fraud.

Ted Thomas Tax Lien Certificates September 28, 2011 at 9:32 am

I think we’re going to see an increase in these types of scams especially now that the economy is hurting. People are desperate. One needs to proceed with caution always and do their due diligence….just my 2 cents.

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