Reporter Mike Freeman at the Union-Tribune had this excellent story yesterday. (I found the story online yesterday, posted at 8:20 a.m., and haven’t been able to find it in a print edition.)
Freeman revisited a San Diego family, Robert and Yvonne Cromer and their two daughters, who were profiled in this CNN Money magazine article in its “Tycoon in the Making” series in May 2004. The Cromers, who lived off of Robert’s hotel manager $50,000 salary, had taken out a $3,000 cash advance on a credit card and negotiated $4,000 kicked in from the sellers of a College Area home in order to qualify for a Federal Housing Administration loan.
That was their first home. They were so broke when they bought it that they converted the master bedroom suite into a monthly rental. From that story:
“We were broke,” said Robert, now 35. The couple was so broke, that Robert used his vacation to compete in a roller-coaster riding contest that promised $50,000 to the person who could last the longest. After 70 days with an unpaid leave of absence from work, he split the prize with four other people.
“It wasn’t a financially smart move,” said Yvonne, 30. Fortunately, the house was.
Soon, the Cromers began leveraging the equity in their first house to buy a second house, then leveraging their second house to buy a third, and so on. In all, they have acquired eight properties in three different states with an estimated value of $3.4 million.
The strategy requires a strong stomach for risk, not to mention a strong housing market.
Who has a guess about what happened when the housing market grew weak?
The U-T‘s Freeman has the update and an interesting examination of other real estate investors who’ve lost multiple properties. Many of them worked in real estate themselves:
But today’s severe real estate bust has exposed cracks in the foundation of the Cromers’ property empire. Since October, they have lost three homes in San Diego County to foreclosure — homes they bought for a combined $2.6 million, according to county deed records. They have lost three homes in other states to lenders, Yvonne Cromer said. …
Their appetite helped fuel an already frenzied market, driving up prices. And now, like the thousands of individual homeowners swept up in the wave of foreclosures, more investors are being caught in the repossession riptide. …
Besides losing two homes in Chula Vista and one in San Diego, the Cromers also lost homes in Nevada, Texas and Florida, Yvonne Cromer said.
“It was the most trying time of our lives,” Yvonne said. “We leveraged more than we ever would again.”
Today, both are still working in real estate. Yvonne has joined Ashlon Realty, which specializes in foreclosure properties.