We got a silent partner who was an attorney. We moved a few houses on to vacant lots and sold them. We bought a Victorian House and old barn on an acre of highway commercial property for $45,000. Fixed up the house and rented it out and sold the property for $90,000 for a Pancake House. In the antiques, we went to London 12 times and bought antiques and had them shipped in containers to Charleston, SC and trucked to Myrtle Beach. After 5 years, we sold the shop property and decided to sell all the inventory to another antique importer.
We bought an old beach house for $55,000 that was on a commercial lot and spent $30,000 remodeling it and adding a commercial kitchen on the back and it was a beautiful restaurant. That year it won the City Beautification Award for existing
buildings. We leased the restaurant.
A couple of years later, we bought a small 12 unit motel across the street for $125,000 and turned it around and after a slow summer rented the rooms on a weekly or monthly basis to businessmen, students, etc. It was grossing about $36,000 and we sold it for $242,000. I got my real estate brokers license and sold real estate for 3 years.
My brother and I bought 3 residential lots, sold one and moved a house on each of the remaining 2 lots.
These we leased out after remodeling.
I moved to Chapel Hill, NC. I bought a small 2 bedroom house for $$35,000 and moved in and worked on it.
I bought 4 large 4,000 to 5,000 sq. ft houses close to Duke's East Campus. They were all on the National Register of Historic Properties. I furnished them with antiques and used furniture and leased those to Duke Grad Students for double the prevailing rental rate for homes. At that time, I owned 5 houses plus 2 houses with my brother and a half of a restaurant property.
One week I called my banker in Chapel Hill and told him I was looking at a house a few blocks from the campus of UNC.
He asked me which house, and he said he knew that house. The asking price was $180,000. He approved the loan over the phone right then. He said you can borrow the full price, do your remodeling with your dollar and sweat equity, and leasing to
students. I was happy with my self-employed work, working when I could. I was saving old homes, furnishing them nicely with antiques which I could buy cheaper than new furniture, providing nice housing for great students, and building equity.
The next week, a guy calls me from the bank and tells me all my loans are classified and I need to pay them all back as soon as possible and when I sold one property all the equity must go to pay off the existing loan and any excess would go to pay down my other loans. I made a big mistake having all my loans in North Carolina with one bank. What happened was
the Savings and Loan Crisis in the late 1980's. What was not well known then was the banks were in danger of failing next.
The Feds stepped in to save the banks. I asked the bank to reduce all my loans to the going rate which was 8%. I was paying 12% and they said they could not do that. I was breaking even with the houses in North Carolina. If the bank had adjusted
the interest rate I would have been cash flowing $3000 per month.
The Triangle, Raleigh, Durham and Chapel Hill with the Research Triangle Park in the middle was thought to be recession proof.
This was the first time in decades when a recession caused a downturn in real estate. The largest residential developer in Chapel Hill went bankrupt. A man in Raleigh who had built thousands of houses in 50 years went bankrupt.
I held on for 2 more years by maintaining 100% occupancy and doing all the plumbing, electrical, etc. repairs myself.
Finally, I went to a bankruptcy lawyer for advice. After that, I met with the bank and told them
I was going to file bankruptcy and ask the judge to lower the interest rates on my loans. In a few days, the bank called me back and asked me to wait. Please do not file bankruptcy. We can work something out. If I had only known to threaten them with bankruptcy 2 years before. That was the only thing that got their attention and motivated them to negotiate.
Alas, I had gone back into the antique business, doing antique shows out of town. I had not been on top of re-leasing the houses that spring for a new group of students because of graduation in June. That year, there were drug/gang wars in Durham and there had been shootings in front of the 4 houses in Durham. I was having trouble getting tenants because I waited a month or two too long to secure the new leases and because of less demand. There were a few other problems.
I was depressed from all the stress and loss, it was impossible to sell any houses except the small one in Chapel Hill, for $55,000. The recession was still on.
The bank asked for deeds in lieu of foreclosure and would seek no recourse. I decided to go that route.
I deeded my half of the two houses with my brother to my brother in order to pay off a $13,000 loan from him.
I ended up losing all the properties except the restaurant.
I never had to pay much in income taxes or social security because all the laws were/are set up to give real estate owners deductions, tax credits for investing in properties over 25 years old, historic property rehab tax credits, depreciation, etc.
deductions, tax credits. I was 39 years old. That was the end of that chapter.
to be continued
.