I think the number one lesson is never, ever, ever buy negative amortization loans. NEVER. They didn't even make sense to me during the buying frenzies. These loans allow you to pay less than the full amount of interest every month. Whatever you don't pay is tacked on to the principal amount. They are used when you are betting on a quick and large appreciation, which is never a guarantee when you buy real estate. Due to the neg-am loans, this man can't even hold on to a house with 40% down.
If you read between the lines of the article, you'll also notice that he was buying in areas that could never break even or cash flow. We looked at Palm Springs long before 2006, and it didn't make sense as a solid investment back then. Yet, he's buying there at the height of the market. For him to use $800,000 to buy nine houses, while placing 10-40% down on each, tells me that he was investing in very expensive properties. If there was never any hope of recouping his payments and expenses with the rent, he had no business buying there, unless he was made of money to float the houses during good times and bad.
I'm glad that he's maintaining a positive attitude because he will be able to find many good things to come out of his losses. But the whole, "I knew the market was going to go soft" makes no sense to me. I think he's trying to minimize his score on the stupid scale by stating this, but it only makes him look more like a fool. Why would he buy properties with loans based on their anticipated appreciation value in a soft market? The only answer is that he thought the prices were headed north.
As for missing the little "nuances" of the market that indicated a decline because he was too busy at work, how about the headlines blaring, "HOUSING DOWNTURN" or "FORECLOSURE RATES INCREASING AT RECORD LEVELS"?
