What's the Craziest Thing Someone has Done with Their Money?

[james.hendrickson]

So, people are super irrational. And they do irrational things with their money and their assets. So, I'm wondering...whats the craziest thing you've ever heard of someone doing with their money?

I'll start.

My dad was a division head in the Oregon Department of Senior and Disabled Services about 20 years ago. He had an applicant who for an IT position with his division. The applicant had a felony conviction, but my dad wanted to hire him because his IT skills were sharp. So my dad asked him what happened.

It turned out that the applicant was getting a divorce, and instead of splitting the house with his ex wife - he set fire to the place and burned it down. My dad didn't think that was all that bad, as it was after all, his property and he was free to destroy it if he wanted to. But the prosecutor didn't see it that way, so he got convicted.

And here is a fire (not the one in question), but its a good example to give you a favor of what happened:

Image source: Albert Straub, via Flickr.

I think maybe the lesson here is: don't burn your real estate down.

[kork13]

Oh, have I got a story for you ..... My dad made a series of wildly irrational money choices (also real estate related) back in ~2010. The really strange bit was that he's normally very careful & conservative about money.

Back then, my parents moved outside of Miami for my dad's new job at the Nat'l Hurricane Center. They obviously needed a place to live, so after renting a place for a bit, they decided to find a house to buy. My dad, ever the discount deal-seeker, came across the county's real estate tax auctions ... and he went nuts. He started bidding on probably a dozen different houses, sight unseen. The first time he won an auction, he was thrilled -- "I got this whole house for just $12k at the county auction!!!" So he continued, and won a second auctioned house .... then, realizing that neither of them were in the school district they wanted for my youngest brother, he targeted & picked up a third condo the same way. In the middle of this process, he was also trying to talk me into going in on more of them to hold as rentals/investment properties -- I was a young, unmarried, and eager Lieutenant living in Japan & flush with a higher income than I knew what to do with, having ~$25k-$50k stashed away in taxable investments at the time (I know -- high roller). Gratefully, I was wary enough to recognize that it all seemed "too good to be true" ... because oh boy, was it.

The trick is ... when you "buy" houses at the county tax auctions like that, you're not actually buying them free-and-clear. Remember that this was in the aftermath of the real estate crash in 2006-2009 ... so people quit their houses, their mortgages, and the taxes that came with them. These auctions only buying out the county's tax lien on the house, which the county foreclosed upon. My dear father, bless his heart, didn't realize this fact, nor the fact that he was only the 2nd lien-holder (at best) for these homes, behind the mortgage-holding bank, and in one case, even behind the HOA who had placed a lien for unpaid HOA dues. He never received a clean title to any of the homes, ignorant of his legal standing in the homes. But no, my dad just assumed they were his free & clear, and started living in one, renting the condo, and worked on getting the foreclosed-upon owners evicted from the third. He went through the eviction process with the county sheriff, and unsurprisingly, it was a rather contentious situation. So in the middle of that process, the owners (now "squatters") utterly demolished the house, in every way you can imagine. Think sledgehammers to walls & pipes, "excrement" smeared everywhere, and general other mayhem. I'm sure it was quite cathartic for them. But they ultimately left, and my dad saw it as a win ... until he saw the damage. Long story short, this one also had the HOA lien on it, and the HOA was hounding him for settlement of the unpaid dues (5-figure $$ amount). He insisted that the dues weren't his problem, but ultimately just gave up on the house & let the HOA claim it so that he could be rid of the destruction. Back to the other two ... the rented one actually seemed to be somewhat working out! It stayed rented & he got a bit of income off of it until my brother graduated high school, at which point my dad disposed of the condo ... because the mortgage company came calling around the same time, looking for him to pay off the previous owner's mortgage (mid-6 $$ figures). His response to them was "NOPE! It's yours." You've probably figured out how this is going by now ... for the third house, they actually did move in & live there for something like 7-8 years. He had learned from the first disaster that he needed to at least keep up with the HOA fees & county taxes ... but he staunchly ignored the outstanding mortgage (again, mid-6 $$ figure). Meanwhile, the mortgage company was not ignoring him. They sued to evict him & claim foreclosure ownership something like a dozen times over the intervening years. My dad lawyered up, and because the bank's representative never (literally never) showed up to court (but my dad's lawyer did), the court tossed the bank's lawsuits every time. Meanwhile, my parents basically lived in the house, became a part of the neighborhood, and mostly ignored the legal issues his lawyer was handling. Eventually, my mother died in 2014 and a subsequent short-lived marriage cracked in ~2016ish, the bank made a low-5-figure $$ offer for him to just leave the house (without destroying it) & abandon his now-very-real squatter's rights claim that he had established over the intervening years. He took the deal so that he could move out to central FL (Sebring) ahead of his subsequent retirement from the National Weather Service. And that, my friends, was the short-and-dirty of my father's bonkers foray into tax-auction real estate.

I think my dad basically got enthralled with the idea of the "cheap" real estate, went off the deep end without knowing enough about how to do it properly, and basically got caught up in his own mess. He may have roughly come out ahead, given the rent he got on the one, plus the handful of years he went mortgage-free (while effectively squatting in the house), and the ultimate payoff for him to leave ... But man, what a mess it truly was.

[LivingAlmostLarge]

Oh, have I got a story for you ..... My dad made a series of wildly irrational money choices (also real estate related) back in ~2010. The really strange bit was that he's normally very careful & conservative about money.

Back then, my parents moved outside of Miami for my dad's new job at the Nat'l Hurricane Center. They obviously needed a place to live, so after renting a place for a bit, they decided to find a house to buy. My dad, ever the discount deal-seeker, came across the county's real estate tax auctions ... and he went nuts. He started bidding on probably a dozen different houses, sight unseen. The first time he won an auction, he was thrilled -- "I got this whole house for just $12k at the county auction!!!" So he continued, and won a second auctioned house .... then, realizing that neither of them were in the school district they wanted for my youngest brother, he targeted & picked up a third condo the same way. In the middle of this process, he was also trying to talk me into going in on more of them to hold as rentals/investment properties -- I was a young, unmarried, and eager Lieutenant living in Japan & flush with a higher income than I knew what to do with, having ~$25k-$50k stashed away in taxable investments at the time (I know -- high roller). Gratefully, I was wary enough to recognize that it all seemed "too good to be true" ... because oh boy, was it.

The trick is ... when you "buy" houses at the county tax auctions like that, you're not actually buying them free-and-clear. Remember that this was in the aftermath of the real estate crash in 2006-2009 ... so people quit their houses, their mortgages, and the taxes that came with them. These auctions only buying out the county's tax lien on the house, which the county foreclosed upon. My dear father, bless his heart, didn't realize this fact, nor the fact that he was only the 2nd lien-holder (at best) for these homes, behind the mortgage-holding bank, and in one case, even behind the HOA who had placed a lien for unpaid HOA dues. He never received a clean title to any of the homes, ignorant of his legal standing in the homes. But no, my dad just assumed they were his free & clear, and started living in one, renting the condo, and worked on getting the foreclosed-upon owners evicted from the third. He went through the eviction process with the county sheriff, and unsurprisingly, it was a rather contentious situation. So in the middle of that process, the owners (now "squatters") utterly demolished the house, in every way you can imagine. Think sledgehammers to walls & pipes, "excrement" smeared everywhere, and general other mayhem. I'm sure it was quite cathartic for them. But they ultimately left, and my dad saw it as a win ... until he saw the damage. Long story short, this one also had the HOA lien on it, and the HOA was hounding him for settlement of the unpaid dues (5-figure $$ amount). He insisted that the dues weren't his problem, but ultimately just gave up on the house & let the HOA claim it so that he could be rid of the destruction. Back to the other two ... the rented one actually seemed to be somewhat working out! It stayed rented & he got a bit of income off of it until my brother graduated high school, at which point my dad disposed of the condo ... because the mortgage company came calling around the same time, looking for him to pay off the previous owner's mortgage (mid-6 $$ figures). His response to them was "NOPE! It's yours." You've probably figured out how this is going by now ... for the third house, they actually did move in & live there for something like 7-8 years. He had learned from the first disaster that he needed to at least keep up with the HOA fees & county taxes ... but he staunchly ignored the outstanding mortgage (again, mid-6 $$ figure). Meanwhile, the mortgage company was not ignoring him. They sued to evict him & claim foreclosure ownership something like a dozen times over the intervening years. My dad lawyered up, and because the bank's representative never (literally never) showed up to court (but my dad's lawyer did), the court tossed the bank's lawsuits every time. Meanwhile, my parents basically lived in the house, became a part of the neighborhood, and mostly ignored the legal issues his lawyer was handling. Eventually, my mother died in 2014 and a subsequent short-lived marriage cracked in ~2016ish, the bank made a low-5-figure $$ offer for him to just leave the house (without destroying it) & abandon his now-very-real squatter's rights claim that he had established over the intervening years. He took the deal so that he could move out to central FL (Sebring) ahead of his subsequent retirement from the National Weather Service. And that, my friends, was the short-and-dirty of my father's bonkers foray into tax-auction real estate.

I think my dad basically got enthralled with the idea of the "cheap" real estate, went off the deep end without knowing enough about how to do it properly, and basically got caught up in his own mess. He may have roughly come out ahead, given the rent he got on the one, plus the handful of years he went mortgage-free (while effectively squatting in the house), and the ultimate payoff for him to leave ... But man, what a mess it truly was.

wow i had no idea that's how it worked. Wow. How much did he buy each house for?

[LivingAlmostLarge]

I recently helped a couple who were 58 and 59 years old realize they had $10m dollars. He was laid off in 12/2023 from his job and she had a part-time job. Anyway they were squeaking by with severance, unemployment, her work, etc. Cutting everything to the bone. They came to ask me for help. I was doing their taxes and asked where is all this dividend money coming from? They said they had no idea. His old job at micrsoft from the 90s. Well I said can you login and see what's going on. They did and there was $6m in the account. So i said "uh do you know you have $6M in that one account?" The couple said they had no idea. They had no idea they they had in total $10m. They were worried about paying their bills next month june 2025 and had no idea they had this money.

I just stared at them in shock. It was wild. They kept saying they didn't understand where it came from. And why they owed so much every year in taxes. I could not believe anyone could actually sit there and not know the balance of an account. But apparently it can happen. They started crying in shock. They literally thought they had $50k in the bank and that was it. It was wild.

[james.hendrickson]

Oh, have I got a story for you ..... My dad made a series of wildly irrational money choices (also real estate related) back in ~2010. The really strange bit was that he's normally very careful & conservative about money.

I think my dad basically got enthralled with the idea of the "cheap" real estate, went off the deep end without knowing enough about how to do it properly, and basically got caught up in his own mess. He may have roughly come out ahead, given the rent he got on the one, plus the handful of years he went mortgage-free (while effectively squatting in the house), and the ultimate payoff for him to leave ... But man, what a mess it truly was.

Wow Kork, I think the lesson here is "look before you leap".

[ua_guy]

I recently helped a couple who were 58 and 59 years old realize they had $10m dollars. He was laid off in 12/2023 from his job and she had a part-time job. Anyway they were squeaking by with severance, unemployment, her work, etc. Cutting everything to the bone. They came to ask me for help. I was doing their taxes and asked where is all this dividend money coming from? They said they had no idea. His old job at micrsoft from the 90s. Well I said can you login and see what's going on. They did and there was $6m in the account. So i said "uh do you know you have $6M in that one account?" The couple said they had no idea. They had no idea they they had in total $10m. They were worried about paying their bills next month june 2025 and had no idea they had this money.

I just stared at them in shock. It was wild. They kept saying they didn't understand where it came from. And why they owed so much every year in taxes. I could not believe anyone could actually sit there and not know the balance of an account. But apparently it can happen. They started crying in shock. They literally thought they had $50k in the bank and that was it. It was wild.

That's pretty amazing. You'd think they would have looked into why their tax bill was so high!

[kork13]

wow i had no idea that's how it worked. Wow. How much did he buy each house for?

I don't recall the details, but it was something in the range of $10k-$20k apiece. The county just had to recover the overdue taxes, and then basically transferred their piddly 2nd/3rd-holder lien over to his name. And these were properties ordinarily worth $400k - $600k (south of Miami). So yeah, he got a bit (dramatically) over-eager, right up until the mortgaging banks said "pay us the remaining $300k+ on the mortgage and it's all yours".

[LivingAlmostLarge]

I don't recall the details, but it was something in the range of $10k-$20k apiece. The county just had to recover the overdue taxes, and then basically transferred their piddly 2nd/3rd-holder lien over to his name. And these were properties ordinarily worth $400k - $600k (south of Miami). So yeah, he got a bit (dramatically) over-eager, right up until the mortgaging banks said "pay us the remaining $300k+ on the mortgage and it's all yours".

that is a crazy story