Zac McDorrA friend of mine in Oklahoma is a real estate investor who owns about 140 properties. His first investment was a house he bought at auction for $14,000. Once the excitement of bidding was over, he remembered that he had no money. Only a last-minute loan from his mother saved him from disaster.

Arthur Spear, candy store owner, committed a similar (but much larger) blunder in 1923 when he bought the entire brick neighborhood in the north end of Bath for $112,000, plus fees. At the time, he had $37,000 in the bank.

According to his book, “I Bought a White Elephant in Maine,” he first approached two banks in Bath for a mortgage. “I found they looked upon me as an ass, a fool, or a misguided person who had bitten off more than he could chew.”

He had no more luck with Portland banks, or the larger institutions in New York. Finally, he secured short-term financing from the U.S. Shipping Board, which had sold him the property.

Selling the houses would be no picnic. WWI was over, and Bath industry had collapsed. The brick neighborhood had been built to house shipyard workers, but every shipyard in the city had gone out of business. A hired salesman sold a few units to retirees, but soon departed for Florida.

The houses needed lots of maintenance, too. Over the next 20 years, Spears’ maintenance man applied 1,000 gallons of paint and 90,000 rolls of wallpaper to the units. With sales extremely slow at $2,500 per house, Spear was forced to be a landlord.

As he observed: “There are no good tenants … they are all bad, in two classes: Those who don’t pay, and those who do but expect so much there is no profit.”

After 20 years of misery, Spear finally sold the last house in “Sunset Park” in 1943.

Source: “I Bought a White Elephant in Maine,” Arthur G. Spear

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