During my final few months teaching at Jenkins, real estate prices just kept going up, which isn’t too surprising, as spring is normally the hottest sales time of the year. At the market’s peak, my house would have been worth a full $30,000 above my final sale price. In theory, at least. The boom’s endless energy was finally running out, and few homes sold at all. But even as the stagnant real estate market entered the slower summer months, buyers and sellers remained in a standoff like two cowboys in an old western. Sellers couldn’t accept that their properties were worth less, so they refused to lower the prices. Buyers, meanwhile, awaited a correction. I ran into Phil one afternoon sitting in a cafe with little work to do; sales volumes had ground to a halt.
Eventually, banks resolved the standoff, but not in their favor. Years of writing shaky mortgages finally came back to haunt them. To make the loans more affordable, banks wrote these mortgages with two years of sub-prime interest. At the end of those two years, interest rates jumped dramatically, and so did monthly payments. Defaults went through the roof, which led to foreclosures, which led to banks suddenly owning real estate.
Banks aren’t in the real estate business, so unlike the pool of sellers holding onto their properties waiting for prices to rise again, banks sold foreclosures for whatever they could get. By the time fall came around, enough sellers feared the longer they held to their guns, the more value they’d lose, and the selloff began in earnest.
It didn’t take long before property values sank enough for buyers to want to get back in the game. By Thanksgiving, the slide could have been over. But banks that had no problem lending money when the market was roaring now clammed up. You’d think they’d want to end the slide as fast as possible, but by rejecting so many loan applications, the pool of buyers couldn’t grow large enough to stop the downturn.
I watched with giddiness the entire time. The market’s fall meant I could get back into real estate, the area I felt most comfortable investing. The combination of my higher earnings and the $240,000 in cash I’d be getting back from my CD (slightly higher than the $235,000 I put in), meant I’d be well-positioned for a mortgage, even with the stingiest of banks.
Or so I thought. For as Vinny had warned me, the real estate and stock markets that had risen together also fell together. The nation’s economic confidence deflated like a giant balloon. Spending slowed. Decreased spending led to layoffs. The stock market took a huge hit just as the holidays approached, a time when money is generally tight even when the economy is booming.
Just when I thought I’d be sitting pretty to take advantage of the downturn, the financial crisis hit closer to home. The phone rang. It was Stacey. “I’m sorry, Amber. I don’t want to ruin your holidays, but I thought it better not to wait to deliver bad news.”
I closed the book I was reading and sank into the couch. “What’s wrong?”
“I had three clients cancel this week alone, and my online ads have been so ineffective the past few months they’re not worth paying for. Everyone is tightening their belts, and many consider us a luxury.”
“But look at our results—.”
“The results are tremendous, but $100 an hour is steep, especially compared to the free education these kids get in school. With our current demand, we only have enough clients to keep one of us busy. I need the clients myself, and I can’t afford to spread them too thin.” Stacey sighed. “I’m afraid I’m going to have to let you go.”
I felt like I’d been punched in the stomach. Stacey had encouraged me to leave Jenkins elementary, and now she was cutting me out? “What about the clients I brought in the door?”
“I pay the parent company a monthly licensing fee for each person I keep on my staff.”
“But I’m technically not even an employee.”
“It doesn’t matter. I still pay a fee for you. When I stop paying for you, I’ll have to take your clients under my caseload. But you’re right, you deserve something for your leads. So I’ll pay you a 20% commission on any referral you’ve brought in.”
That 20% was enough to cover my utility bills but not much more. “Do I get severance or something?”
“I’m afraid not. As you said, you’re not even an employee. I’m sorry, Amber. New referrals have dropped over 50% in recent months. Everyone’s panicking. Hopefully, it will turn around, and then I’d love to take you back. But for now, I’m not sure how I’m even going to keep the doors open myself. I’m so sorry.”
Is there a more appropriate time to take stock than New Years?
Kyle and Libby hosted a party at their house, and Libby pushed me to come and meet some guy. I didn’t have it in me to go through that again. So, while my friends were out partying, I sat alone on my couch. Well, not quite alone. A fire burnt in my awesome fireplace, and a paper mâché Amber doll sat beside me. It wasn’t as beautiful as the one Dylan had made the year before, but at least it was slimmer in the nether regions.
I brought out a pad and pen and got to work. I drew a line down the middle of the page. On the left-hand side, I put liabilities. Where was I? I was unemployed. I was single. I had no car (my lease had just run out, and I couldn’t bring myself to buy a new one until I knew where I stood financially). The economy was in the toilet and tanking fast, so my job prospects were slim.
There was one clear answer to my problems. Since my apartment lease was about to expire anyway, I could pack my bags and follow Dylan to Ecuador. I could lay low down there and spend next to nothing until the economy turned around. But if I ever did return to Dylan, I wanted it to be from a place of strength, not crawling back because my life had fallen apart.
“OK,” I told myself, “get a grip, Amber. All is not lost. Let’s look at what is working.” I wrote assets on the right-hand side of the sheet. What did I have? Well, I had a lump sum of $240,000 about to fall in my lap when my CD matured. That gave me options. The other thing I had in abundance was time, the great benefit of being unemployed. Time and money and a down economy. Vinny would call that a recipe for success.
I thought of calling my greasy Italian friend and asking him for a play-by-play of what to do. But just like I didn’t buy oil wells when real estate was high, I questioned whether I’d execute whatever crazy plan he suggested during the economic decline. I couldn’t bring myself to call Dylan either, but I knew he’d tell me to learn whatever I needed to know to pull myself out of this. Every time Dylan said that, he’d been right.
Time and money and a down economy. What else did a girl need? I caught a glance at the clock and saw it was 11:59. I smiled at the memory of the widows dancing in drag on the streets the year before. I turned on the TV just in time for the final countdown: 10. 9. 8. 7. 6. 5. 4. 3. 2. 1.
I had to kiss someone, so I kissed the back of my hand. I turned off the TV, picked up my paper mâché Amber doll and threw it in the fire. I watched the doll burn up, much slower here than it had in the giant bonfires in Ecuador. As it burned, I pictured it destroying my poor decisions from the past, wiping out regret, negativity, stuckness, and the great big lie that I was a victim of my circumstances and couldn’t work this out.
I watched until the doll was nothing but ash. Then it was time to get cracking.
The first thing I did was get on the substitute list for teaching. I hated living off of savings, and what was more, I had a huge bill coming due in a few months. I had spent more money than I should have when it was coming in easily during the summer, and I made the critical mistake of not taking anything out for taxes. Not only did I have the largest bill of my life waiting for me, I hadn’t set aside anything to cover it. I was reminded of that first day I met Vinny, when the speaker John said the big mistake self-employed people make is not planning for taxes. Vinny had argued the smarter path was to plan not to pay taxes. But I hadn’t followed either John’s or Vinny’s advice, and I left myself exposed as a result.
The next thing I did was get myself a cheap set of wheels. All the desperation had driven used car prices down, and I got myself a six-year-old Mazda with 78,000 miles on it for $4000 (and yes, it was red, thank you very much).
But my home was a far bigger hit to my pocketbook than my car. I thought about calling Phil (I loved working with Phil), but given that I was unemployed with a quickly eroding nest egg, every dollar counted. I trusted Phil to find me good deals, but I wanted great deals. Any house he brought me would have realtor fees built-in, plus, they’d be on the open market.
The one thing I had going for me was cash. If I bought low enough, I didn’t need a mortgage at all, which put me in position to purchase a wholesale deal. As much as I dreaded doing it, I rang up Jade.
“Never thought I’d hear from you again.”
Me neither. “I’m back in the market for a house.”
“Last I recall, you were only half in the market.”
I bit back the desire to get uppity and defensive. “I’m fully in this time.”
“What are you looking for?”
“A house hack. Same as last time.”
“Cash or charge?”
“I can go up to $240,000 in cash if need be.”
“Well, well, well, look who’s moving up in the world. Neighborhood?”
It felt good to not only understand Jade’s jargon but to have quick answers. “C or above.”
“Still need to be a quad?”
“I care less about the layout and more about the cash flow.”
“You know, girl, we might just make an investor out of you yet.”
I couldn’t help but sit taller. “Do you also do foreclosures?”
“Foreclosures, pre-foreclosures, short sales, you name it. Some of these get complicated, but there’s always a work around.”
There went my expertise in real estate jargon. I pulled out my notebook and turned to my glossary section. “What’s a pre-foreclosure?”
“Sellers hate being foreclosed on.”
“I bet. It must suck to get thrown out of your home.”
“Getting thrown out isn’t the worst of it. The smart ones realize they’re getting thrown out anyway, and know a foreclosure will wreck their credit rating and mean five years before they’ll can get another mortgage.”
“So they sell before the bank forecloses.”
“Exactly. If they have any equity in the property, they’re eager to sell.”
“And a short sale?”
“Those are more complicated. The seller’s got to get the bank to agree to take less than the amount they’re due. In this economy, you’ll get more of those ‘cause banks realize they’ll get screwed either way and foreclosing’s an expense and a bureaucratic hassle.”
“But why does the seller care? If they owe more than the house is worth, they wouldn’t get any money out of the sale anyway.”
“The black mark on their credit score doesn’t sting as much from a short sale.”
“Banks allow you to wholesale these deals?”
“Technically no, but if I cared about technicalities, I wouldn’t be in this business. Banks won’t allow me to assign the contract to someone else. So I form an LLC, sign the contract in the company’s name, and you buy the company from me. No biggie. But I prefer pre-foreclosures anyway.”
“Why’s that?”
“I’ve never clicked with suits. I’ll do some digging and let you know what I find.”
Having all this time on my hands was good. In theory. In practice, I lounged around a lot, unsure what to do with myself. Even knowing I needed to move, I left the hunt to Jade. For a girl trying to get herself out of a financial jam, I read more pop literature than I care to admit. I was halfway through some trashy romance when my phone rang.
Dylan’s name appeared on the screen for the first time since he’d asked me to bike through Europe with him the previous summer.
“I’m back, Amber.”
“Let me guess, you’re hoping I’m going to leap into your arms as if you hadn’t disappeared on me all this time?” That wasn’t fair, given that I was the one who dumped him, and my condition for getting back together was him moving halfway across the world. Still, the heroine in my romance novel had just been dumped by her arrogant, stockbroker boyfriend, and I was feeling particularly indignant at the moment.
“I’m not interested in going back to the way things were.”
Oh. I’d been looking forward to hearing him beg. “Then what do you want?”
“Come outside.”
Outside? Was he stalking me now? I stepped out onto the porch of my rental house, and saw it filled with daisies, my favorite flower. In the middle of the array stood Dylan, wearing a suit and tie. As soon as he saw me, he dropped to one knee. He opened a jewelry box, and there, from the guy who told me he’d never buy me one, was a diamond ring.
“I know you’ve always wanted one of these,” he said with a wink. “Will you marry me, Amber?”
“Marry you?” Just who did he think he was? “No, I won’t marry you. Get up off your knee, you fool.” I crossed my arms. “You can’t just show up on my porch, after all this time, and propose to me on the spot. For all you know, I could be living with someone, or dating, or…”
“Or run off with a lesbian biker gang?” Dylan stood, and a tingle ran up my spine. “You could have done any of those things, but you didn’t.”
I uncrossed my arms then crossed them again. “I’m going to kill Libby. She told you I was still alone, didn’t she?”
“It’s not like no one was interested. She told me about all the hearts you’ve broken. You’ve been alone for the same reason I have. Because you’ve never found anyone you like as much as me, just as I’ve never found anyone I like as much as you.” Dylan stepped so close, I could feel his breath on my face. “We’ve both been alone for too long. Let’s end this already.”
I shifted from one foot to the other, too jittery to stand still. “That’s your big romantic proposal. Let’s end this?”
“Yes, let’s end our suffering of trying to be apart.”
“You can’t just show up here like this and ask me to marry you.”
Dylan’s smile grew. “Apparently, I can.”
My indignation melted as I looked into those deep, sincere eyes of his. “Well, my answer is still no. But you can come in if you like.”
“I would like that.”
He followed me into the house. I, of course, went straight to the kitchen. Dylan’s presence always made me want to cook. “How about a glass of hot chocolate?”
“I thought you couldn’t drink the American stuff after Ecuador?”
“I can’t.” I opened the cupboard and pulled out a tissue-wrapped disk. “This is Mexican. Interested?”
Dylan leaned against the counter with that smirk still plastered on his face. He was enjoying making me all flustered. “I’d love some.”
I put the kettle on. “You bought me a diamond?”
“You told me you wanted one.”
“You do realize those stones aren’t even rare, don’t you? Their value is artificially inflated.”
Dylan lifted the ring from its notch in the box and twirled it between his fingers. “And like so many things that are artificially inflated, when prices come crashing down, they crash down hard. Especially the resale value. People are taking whatever they can get for them these days.”
My eyes narrowed. “You didn’t get me a used diamond, did you?”
“These things are millions of years old, Amber. Their value doesn’t slide just because someone else has worn them.”
“You did. What, did you get it on eBay or something?”
“It’s not used, it’s an heirloom.”
I laughed in spite of myself. “What a load of crap.”
“You were the one who told me I needed to learn spin.”
“I swear, Dylan, you know less than nothing about romance.”
“You sure you don’t want it? I can get my money back for another two weeks.”
“Get your money back.” It was only then that I realized I’d been crying. “I’m just happy to have you back.”
I stepped forward and fell into his chest. He wrapped those strong arms around me. I never felt as safe as I did in Dylan’s arms. He might say and do all the wrong things, but he knew how to hold me in a way which said, ‘don’t worry, we’ll weather the storm together, you and me.’
I whispered in his ear, “You really are back, aren’t you?”
“I’m back. For good this time.” He kissed my forehead. “And I’m going to propose to you once a month until you give in and say yes.”
“Yeah?” I grinned and wiped my eyes. “You’ll just keep coming back here with bigger and bigger diamonds until you finally win my heart?”
“Oh, no. Smaller and smaller gems. As this market shows, when people expect more in the future, they hold out. But when they fear loss, they sell for whatever they can get.”
I pulled back and shot him a narrow gaze. “So that’s what you’re here to do? To instill in me the fear I’ll be left with nothing?”
“No, I’m here to buy.” Dylan’s lips brushed my ear as he breathed, “In a big way.”
“What are you buying?”
His voice sent chills down my neck, which made the next thing he said all the more surprising. “I’m hunting for something that used to be as rare as Bigfoot sightings. 2% rule properties.”
Dylan took me out for dinner that night. At a restaurant with tablecloths and everything. This guy was getting classy. Later that evening, we headed to the beach and built a bonfire. He’d learned all about stargazing in Ecuador and wanted to share the night sky with me. It was frigid out, so he wrapped us in a pair of alpaca blankets he’d brought back.
“What’s the 2% rule?” I asked, warming myself by the fire.
“That’s when monthly rent exceeds 2% a property’s purchase price.”
“You used to tell me that 1% was good.” I skewered a marshmallow and held it over the blaze.
“It was. I used to get that no problem when starting out. Then purchase prices skyrocketed.” His hand shot up. “But rental prices didn’t keep up, and they dropped to less than half a percent of my properties’ value. That’s when I gave up and moved to Ecuador.”
“So now you’re back and getting 2%?”
“I’m trying to.”
“What type of neighborhoods?” I pulled the marshmallow out of the fire and blew on it.
“Even in this market, I can’t do it in A neighborhoods. I might get lucky and find some in B. They definitely exist in D, but I won’t go there.” Dylan yanked a piece off my marshmallow.
“You’ve no desire to buy in a war zone?”
“None. I want my investments to eliminate headaches, not multiply them.”
I bit right into the burning hot goo. “So you’re aiming for C?”
“You got it. Good, inexpensive, working-class neighborhoods.”
“And how will you find them?”
“There’s a ton of foreclosures on auction.”
“Have you ever done auctions before?”
“No, I was always afraid of them because you have to buy sight unseen.”
I skewered another marshmallow. “What’s changed?”
“My financial position. Before, I only had enough cash to buy one property at a time, and if that didn’t turn out well, I’d be screwed. Now I can tolerate far more risk.” Dylan took the marshmallow stick from me and held it over the fire. As much as I loved my marshmallows golden brown, in my impatience, I almost always burned them. But Dylan held the marshmallows far enough away and kept rotating the stick, allowing them to brown evenly.
“You’re really here for good?”
Dylan nodded, his eyes fixed on the fire.
“You’re not going to buy a few homes and go running back to Ecuador?”
“There’s no need. Once I’ve bought and rented out my properties, I’ll no longer need to live in some dumpy basement or a third world country to be financially independent.”
I elbowed Dylan. “Already a couple of years ago, you could have made it work here financially. But you refused to come back with me because there was nothing for you to do here.”
“There wasn’t.”
“What’s different now?”
“Three things. One,” he leaned over and kissed my cheek, “I’m itching to build a family with the woman I love.”
“Don’t go banking on anything, I haven’t said yes yet.”
Dylan ignored my feeble protest. “Two,” he turned my head and kissed the other cheek, “with the market downturn, it’s a great time to reengage.”
“Markets go up and down, that won’t last forever.”
Dylan ignored this as well. “Three,” I waited for him to kiss me again, but this time it didn’t come, “I’ve finally found my passion. Something I can do with my life and not just count down the years to retirement.”
“I thought I was your passion?”
“You’re the one I want to come home to each night. But if I don’t get my butt out of bed and do something meaningful with my days, our passion will be short-lived.”
“What’s this new passion of yours that I suddenly have to compete with for your attention?”
“Believe it or not, education.”
“Education? From Mr. Dropout?”
“Remember Luther’s two conditions?”
“Give to charity and share your knowledge.”
“Exactly. Those two things came together in Ecuador. If you’ll recall, I got involved with building a school in a nearby village. Even once the school was done, I continued to go there to teach English.”
“So that’s what you want to do? Be an English teacher? You’ll need to finally get your degree.”
“English was a big need down there, but up here, every school has English teachers. I want to teach kids to build Cash Machines, teach them about money when they’re young, before they’ve made financial choices they can’t undo.”
“You think schools will pay you to teach about money?”
“They won’t have to. This will be on a strictly volunteer basis.”
“You’re going to teach about money for free? Isn’t that ironic?”
“Just free for schools. I still have private clients, and I’m thinking of giving seminars too. But my biggest passion is reaching kids young. Think schools will have me?”
“If you’re not charging them? Are you kidding? Schools love bringing in meaningful programs; they just rarely have the budget for them.”
“So they’ll say yes?”
“I mean, maybe. If you build your presentation right. You should consult with someone who really understands education to build your curriculum.”
“Like a teacher, perhaps?”
“No, teachers are too busy. An ex-teacher would be ideal.”
“Perhaps someone retired?”
“No one too old. Some of these retired teachers still think the slide-rule is high tech. You want someone younger, who gets kids today.”
Dylan leaned in. “You know anyone?”
“I’ll have to give it some thought.” I lay back on the sand. “You’re really here for good?”
“You’re not getting rid of me so easily this time.” Dylan bent over me. “After all these years, I can now build the life I want. The life we want. Right here.”
I finally got my third kiss. After that, there was no more to say.
