What was your biggest failure?

[rogercbryan]

What was your biggest failure?

I see a lot of positives from people on YE. It’s always good to be able to talk about our successes but it is equally important to remember our failures. It can be humbling to admit to others your failures. An education is not cheap so here are some of my ‘expenses’ in education.

My first house (Age 20)
When I was still serving as an active duty Marine back in 1999 I decided to go in with a partner and buy a house in Temecula, CA (suburb of San Diego – sort of). Anyone who knows the history of the housing market in this part of the country you may already see where this story is going. I bought the 4BR, 3BA 1600sqft house with a beautiful pool for $175,000.

My first mistake was that I used a broker/agent who ‘handled’ all my paperwork for me with getting any third party advice. I say ‘handled’ because they got me for an extra $5K in closing costs that I never should have paid. Lesson Learned: Seek out advice as it is often free and it can save you big time.

I was making a little under $30K at the time so I decided to buy the house with another Marine. We both had two years left on our contracts so we figured we could split the mortgage payment ($1560) and have a nice ‘pimp pad’. Everything was fine and dandy until he got deployed a month after we bought the place. Now I was stuck with the whole payment. This lead to crappy roommates and even worse part time jobs. Lesson Learned: Expect the unexpected and never do a deal that you aren’t capitalized well enough to stick with even in bad times.

A year passed and I managed to hold onto the house. After all the shitty roommates destroyed the place my business partner came back from his deployment to find the house in shambles and the bills piling up. I was completely burnt out from working three jobs in order just to stay afloat. We decided to have the house appraised just to see if we could get out from under the mess that we created. The house was appraised at $210K which sounds great, but that was if the house was in one piece. The pool was disgusting, the carpet was worse. Needless to say the house needed a ton of work before we could sell it. I decided to sell out my half of the house for $10K in cash. At the time it seemed like a life saving event. Lesson Learned: Don’t be an idiot! $210K - $175K = $35K… my $10K was way too little!

Now the story gets worse. I signed a quitclaim deed thinking that I was all done. What I didn’t realize was that I was still on the mortgage. Even though my partner made all the payments for the next 2 years my credit was completely tied up. Lesson Learned: Know what you are signing and what you are getting yourself into.

Now to end the story I have to warn you this is a little heart breaking. My partner sold the house in 2002 for $235K. Not a bad turn around for him. Then in 2005 the house sold for $515K. Yes, you are reading that correctly. Now I do find some solace in fact that the house has since settled to a price around $400K. It’s hard not to think about how much different things would have been had I held the house until 2005 and took the $340K in profits. Lesson Learned: Don’t rush into things and don’t rush out of them either.

After all this I can now laugh at this situation. My dad tells me that very few people get this type of ‘education’ in life. I used to spend hours thinking about how this deal screwed me for a few years. Luckily I’ve gotten past it and did a much better job on my second rental property. Lesson Learned: Looking back only helps if you are going to use the experience to look forward.

I’m sure some of you have stories about your failures. Post them! You never know who is out there about to make the same mistakes. I have other failed ventures that I’ll post later if you all post a few.