Deacon Hayes – Nearly Lost it All Buying Two Condos
Deacon Hayes is the founder of https://wellkeptwallet.com/ (WellKeptWallet.com), which reaches over 1,000,000 people per month. He has been a contributor for the US News & World Report, https://www.investopedia.com/ (Investopedia), Clark Howard and more. He is also the author of the book, You Can Retire Early! Everything You Need to Achieve Financial Independence When You Want It. “Opportunities are like buses, there’s always another one coming.” Deacon Hayes My Worst Investment Ever Life before the devastating investment Hayes lived and worked in Phoenix, Arizona before his big fall and his subsequent rise from the ashes. Like most Americans, he had his fair share of debt but had so far managed to find a balance with his income. However, he loved his job and his life and lived by his philosophy of following his passions. Until he came across the opportunity that changed his whole life. Real estate fad covers country in early 2000s The early 2000s were times of great financial stability. It was a time of prosperity and growth in the world of finance with all markets from the stock market to currency exchange achieving record highs. The real estate market, in particular, was doing really well, with that being described as the age of the real estate boom. With emotions running high, Hayes decided to take a risk on the market. Investing for him meant the possibility of having a debt-free life, and it was too good an opportunity to pass. So having done his homework he decided to buy not one but two condos. Investor gives in to ARM loans’ allure The first mistake that Hayes made was taking a huge risk on multiple investments without being fully informed about the real estate market. He had a payment option ARM (adjustable rate mortgage) plan. In a nutshell, this would allow him to make a small minimum investment with variable interests which seemed like a good idea. In retrospect, giving in to this allure is the worst mistake he made given how much he ended up losing. Financial crisis begins in 2007, put all his net worth at risk Between 2007 and 2008, half of the U.S. suffered the worst market crash in real estate history. For a number of reasons, property values plummeted while interest rates shot through the roof. Hayes, alongside many other Americans, felt this major blow. And as a result of his poor risk management, he was at risk of losing not just his two condos but a majority of his net worth. When it rains, it pours So here was Hayes, in his early 20s, hundreds of thousands of dollars in debt and had lost up to 95% of his net worth. Sounds pretty bad huh? Well, it got worse for him. See the land that his two troubled condos were built on was on a lease that ran out soon after the market crash. This meant that his Homeowners Associated (HOA) fee payments would go up. And boy did they go up; by more than 300% to be exact. Struggling to stay afloat while drowning in debt For the next several years (a decade to be exact), it was an uphill battle to keep financially afloat. Despite having double income through his wife and some investments in the stock market, he did not have enough money to rescue let alone sustain his properties. He was also in constant conflict between dumping the seemingly rotten investments and finding ways to save them. He tried everything from cutting costs to paying off the loans to finding multiple tenants for the property. Unfortunately, it wasn’t enough. He lost one condo a few years after the crash through foreclosure after failing to find someone to buy it. The other one went soon after, and despite finding a buyer and escaping bankruptcy, he ended up selling it at a loss of $40,000. Ten years later, Hayes is finally free. It was a rough several years, and he lost a lot; there is no doubt. But he also learned a lot from his experiences on risk management and how to avoid loss. Lessons learned Here are some of his lessons so you too can avoid making bad
