Confessions of a Real Estate Schmuk

schmuk (shmŭk) A clumsy or stupid person; an oaf.

In 2005, I bought a $96,000 Mercedes Benz E55 AMG sedan, a $62,000 Correct Craft Pro Air Nautique ski boat, a $400,000 second home located in the cool pines south of Flagstaff, a $350,000 lot on a water ski lake west of Phoenix and an $8,000 Rolex watch.  Of course, I can’t leave out all the first class airline flights I took, the Ritz-Carlton hotel stays in San Francisco and Chicago and the Phoenix Country Club membership.  Yes, I thought I had earned it all. 

In the three years leading up to this I had knocked on more than a 1000 doors and had purchased and sold more than 60 properties.  I had net more than $280,000 in profit on one real estate deal in 2005.  By January of 2006, I owned $16,000,000 in real estate with over $8,000,000 in equity.  I had reached my goal.  If I had sold off a portion of my real estate portfolio I could have owned my own home free and clear, along with 10 rental properties and our second home.  My passive income would have exceeded $10,000 a month.

But I got greedy.  I was a real estate schmuk.  Consumed with the status that came with being a wealthy real estate investor I kept on buying houses after the music had stopped.  By August of 2007, the market had completely collapsed and I lost it all.  Even though I was buying houses for 70% of retail value it wasn’t enough.  The market would eventually correct itself by more than 50% in some areas.

With all of this failure you would think I would have sworn off of real estate.  Actually, I’m more certain now that real estate is the BEST way to accumulate wealth and achieve financial freedom than I have ever been. 

The funny thing about failure is that you learn from it.  I have learned far more through my failures the past two years than from any of my five years of success.  If I could build a $16,000,000 real estate business in arguably the hottest real estate market this country has ever seen, then couldn’t I do the same now that prices and interest rates are historically low?

At Sun Valley Community Church this past Sunday Chad Moore, our teaching pastor, discussed how arrogance and ignorance are intertwined, as are maturity and humility.  For me, success brought the arrogance and ignorance.  The failures brought me maturity and humility.  As I rebuild my business my primary focus is now God, my wife and my daughters. 

Don’t get me wrong.  I still love the finer things in life.  I’d much rather have a Mercedes than the 1995 Honda Accord I’m currently driving.  The difference now is that I understand the possessions didn’t make me a schmuk; it was the love of the possessions.

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8 Comments

Filed under Business Development, Investing

8 responses to “Confessions of a Real Estate Schmuk

  1. Actually, I believe the correct spelling is “schmuck” and in addition to your definition, it refers to a part of male anatomy.

  2. freerealestateeducation

    Jenet,

    I found it on Wordnik spelled this way, http://www.wordnik.com/words/schmuk. It appears as though there are multiple ways to spell it. As for the second part of your comment, I acted like one of those too.

    Thank you for reading.

    Marty

  3. Hey Marty! We just did a cross sale together. I represented the buyer on one of your flips. With your attitude and professionalism, I can see how you got to the number you did. Thank you!!! I will definitely seek out your properties again. I enjoy learning a little bit more about the man behind the voice on the phone. It takes someone special to say what you did. I appreciate your words of wisdom and will enjoy watching you achieve your goals once again.
    All the best to you!!

  4. freerealestateeducation

    Karen,

    It was a pleasure working with you too. I have a friend that likes to say, “swallow your pride, it’s non-fattening.” It took me a while to realize this but I discovered that I can connect better with investors and clients if I’m honest and up front about my success AND failures.

    Thanks for reading! I look forward to working with you again soon.

    Marty

  5. Hey Marty,

    Great article that I am sure a lot of people can relate too. I would say one of the silver linings to a tough economic climate is that most of us have really learned to appreciate what’s truly important. Personally, I think less “STUFF” usually leads to a more fulfilling life.

    That being said, it sure would fun to have all those toys just for a little while… 🙂

    Thanks for sharing your story

    • freerealestateeducation

      Kristin,

      I’ve heard it said that money talks. All mine ever says is goodbye. Next time around I plan to keep it (and give a lot of it away too.)

      Thanks for reading!

      Marty

  6. Very interesting Marty… Agents quickly forget to think logically when things get a bit… carried away. At the same time,”Success consists of getting up just one more time than you fall.”

    Most of those agents are now out of the business doing who knows what. At least you fell and got back up.

    • freerealestateeducation

      Neil,

      Congrats on being chosen to guest blog on FOREM in December. I’m really enjoying all the guest posts and I’ll be looking forward to reading yours too. I checked out your blog. Great stuff!

      Thanks for reading!

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