Everyone thinks they can build a house

[Steven Hockstein]

I was chatting with one of the window dealers that occasionally drops by my office. He told me that about two years ago he knew the real estate market was in trouble when a woman came into his showroom to buy windows for a house she was building. She told him that now that her kids are in school all day she had some free time and decided to become a real estate developer.

She saw how many old homes were being razed and replaced with new houses and figured that the builders were getting rich. She convinced her husband to borrow the money using the equity in their home to buy an old house (in a neighborhoood where knockdowns were a million dollars) and build a spec house on the property. She was the General Contractor between PTA meetings.

Fast forward---the old house is knocked down, the new house is half-built and sitting with no buyer, they had to sell the house they were living in to pay debt and they are now living in a rental apartment. OOPS!

At least the spec house is not owned by the bank (yet).

[Jim Katen]

She never learned the first rule of real estate development: use other people's money. (OPM)

[Ben H]

She never learned the first rule of real estate development: use other people's money. (OPM)

Yup.