Ken Leib was a winner in the quick-money game of Westside real estate speculation and development. But then the game changed.
"Now I'm broke," he says. "Basically, I lost it all, in the recession."
Leib, an accountant by trade, saw so many of his clients getting rich in Westside real estate in the mid-1980s that he jumped in too, with both feet.
With the market so hot, and with his financial acumen, Leib figured he couldn't lose. He started buying 40-year-old houses, mostly West Los Angeles fixer-uppers. He stripped them down to the two-by-fours, doubled their size, and then put them up for sale.
The properties usually sold within the month, for anywhere from $50,000 to $150,000 in profit apiece, Leib says. Not bad for a few months' work.
"I did extremely well," acknowledges Leib, a wiry, bespectacled 42-year-old who lives alone in a rented West Los Angeles house.
Leib remodeled eight houses that way. By the late 1980s, his business was booming, just like the Westside residential real estate market in general.
When the market started to soften in 1989, Leib had four houses that he was rebuilding. All the wheeling and dealing suddenly stopped before he could get out. He tried, but he just couldn't sell the houses and break even, he says.
"It was like someone shut the faucet off," Leib says. "Everybody stopped buying, and you couldn't sell at any price. I got caught in the wrong spot of the cycle."
Leib did finally get rid of the homes, but only after he took a beating, selling them for less than he paid for them, not including remodeling time and expenses. Four people, he says, got steals on houses, thanks to his bad luck and timing, and the downturn in the economy.
In a way, Leib considers himself lucky. He says that he knows many other developers, particularly in areas like Pacific Palisades, Brentwood and Malibu, who are far worse off. Many are deep in debt and in foreclosure on major developments, after buying land, building houses and then not being able to sell them to recoup their investments.
"You can only hold out so long before your profits evaporate, and then your principal goes," he says. "That's happened to a lot of guys."
Leib is now trying to rebuild his West Washington Boulevard accounting business, and he's finding that the recession has hit that field hard as well. Few people can afford to hire accountants, he says, and there is intense competition for what work is out there.
But Leib is positive of one thing: He'll never venture into the real estate speculation and development business again. All the fun and profit at the beginning wasn't worth all the stress, pain and heartache at the end.
"It was a very big roller-coaster ride," he says. "It went up very quick, and the drop was quicker."