Thursday, November 8, 2007

A Real Estate Speculator Goes From Boom to Bust

ST. CHARLES, Mo. — The place foreclosure concern was very good to Sir Alexander Robertus Todd Haupt. He started buying and flipping foreclosed houses in 1994, when he was 20, and by 2000 he graduated to edifice homes. Multimedia

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Mark Schiefelbein for The New House Of York Times

A vacant batch in A half-completed subdivision near Troy, Mo., a suburbia of St. Louis, is now owned by a bank.

At 32, with just one semester of community college, he owned a , a Corvette and a 5,000-square-foot house worth $1.2 million. He was a creative activity of the boom. "I was on top of the world," Mr. Haupt said recently.

Then, last May, the existent estate marketplace stopped booming.

Now Mr. Haupt's house is in the custody of his creditors, as are the cars, three little business office edifices and 89 tons he bought in a subdivision in neighbour Abraham Lincoln County.

He owes about $6 million in personal and concern debt, and as Mr. Haupt's lucks soured, so have got those of plumbers, electricians, framers, landscapers, supply supplies and others that relied on his business, which he estimated at $300,000 per month.

"And that's just small bitty me," he said.

Mr. Haupt is one of one thousands of Americans who jumped into the raging lodging marketplace of the last decade, which was heralded in narratives of neighbors' gravies and world telecasting shows like "Flip That House," "Flip This House" and "Flipping Out."

Driving past times his empty house recently, Mr. Haupt considered how things had crashed so fast.

"I experience like, yes, I overextended myself," he said. "But when make you cognize not to overextend yourself? If I had a crystal ball, I never would have got built my house. But when make you know? That's why we're speculators."

He added, "If the Banks had a crystal ball, they might not be in this messiness either."

St. Prince Charles County, an affluent, fast-growing neighbour of St. Louis, was a natural brooder for speculators like Mr. Haupt, with a building roar that doubled the population from 1980 to 2001.

Subdivisions with name calling like Red Meadows, Spring Factory and Barton Creek, pushed the suburban frontier ever farther from St. Louis. For a immature builder, the low terms of recognition drove down the costs of edifice and drove up the homes' sale prices.

As long as the marketplace kept going, Mr. Haupt felt he could not lose.

His million-dollar house now sit downs desolate and unattended, a dead topographic point in an expensive subdivision that was once all cornfields. Asked to place the architectural style, he said, "I name it 'Bank Repossession' now."

He now leases a little house for $1,275 a month. He became a born-again Christian in February, after his concern and his matrimony collapsed.

Mr. Haupt, whose parents work for a local supermarket, got into the existent estate concern after attending a seminar on how to purchase place with no money down.

At 20, taking a mortgage that needed no income bank check (also called a declared income or prevaricator loan), he bought a house for $20,000, then flipped it for a speedy net income of $4,000 or $5,000.

It was less than he had hoped, but more than than he was making at UPS. He was hooked. By 2000, he was carrying as many as 25 foreclosed houses at a time, renovating them and merchandising at a net income of $10,000 to $15,000 each. With his success, he was able to set up lines of recognition with eight commercial banks. He never thought about the householders who had lost the houses that he flipped.

"It's a mulct line," he said. "You're making money off what they lost. Are that wrong? Now that I'm in that place today, losing my house, I see that it's just business."

As the terms of foreclosed houses rose, reducing his profits, Mr. Haupt shifted to edifice houses in subdivisions in Abraham Lincoln County, a less affluent country slightly farther from St. Louis. That needed heavier adoption but brought higher profits.

For the terms of a longer commute to work, purchasers got new places that promised to travel up in value as development continued around them. By last May Mr. Haupt owned 65 tons and had a contract to purchase 20 more, for about $650,000.

Then gasolene terms spiked, and the longer commute became a deal-breaker.

Mr. Haupt had never questioned the ability of purchasers to afford the increasingly expensive homes, or how far the roar could continue. "I never did any prep on the place buyers; I just built the houses," he said. "My feeling was, if they're approved, they're approved, I'm going to construct them a house." 1

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