Hattip John. From the Washington Post:
Thai flipped houses. He gathered investors to buy a high-end home from a builder before ground was even broken. When the house was completed, he sold it for a hefty profit.
Thai deferred the taxes on the sale of the investment property by channeling that profit into three new homes with adjustable-rate mortgages. He rented those homes to families for about $3,000 to $3,500 a month, while the interest was at 1 percent. The rent on each house was about $200 a month less than the mortgage, but at the time, Thai said, he could afford it.
After about a year, he would sell a house and repeat the process.
At the height of his investing, as home prices continued to skyrocket, Thai owned 15 homes in Northern Virginia. He later sold four, and of the remainder, nine were valued at about $1 million.
But in 2006, homes values stopped rising. The housing bubble was deflating. When interest on Thai's adjustable-rate mortgages jumped as much as 11 percent, he took the equity out of the homes to pay the deficit and keep his investments alive.
"I hang on and I say, 'Okay, bad time. When it's over I can sell it back,' " he said.
The market never improved. Builders lowered the prices on new homes, making it impossible to sell back his investments to break even. In just six months, Thai spent his entire savings. The bank barred all his short sale attempts.
As the mortgage crisis unraveled, so did his marriage. Today, Thai is homeless and nearly bankrupt. For the past three months, he's been staying with friends and applying for engineering jobs. So far, no luck.
"This time last year," Thai said, "I was happy."
An interesting quote from the same article:
Real estate agents said this was only the beginning for luxury home foreclosures.
"'We're going to be back to the prices we were at 15 years ago,' said Bill Milletary, an agent with Century 21 Redwood Realty".