Arbitrage.
A word you don’t hear often. But it leads to the best purchases ever made.
Viva Las Vegas
It was the spring of 2009. I was coming back to Las Vegas from a deployment in Afghanistan.
What a way to ride out the Great Financial Crisis…
I didn’t have much time before I left to do more than unload my car full of household goods into a storage unit.
No place to stay. Which meant I came back with no base to start from.
But that also meant I had no commitments. And being overseas for 6 months with minimal expenses left me a lot of room to save.
Meanwhile, Las Vegas was in the middle of 8 consecutive quarters of 25% or more gambling revenue decline.
That meant everyone who scrambled to buy on the way up now couldn’t afford to pay their overpriced adjustable rate mortgages.
The ones holding the bag lost half the value on their homes.
Houses foreclosed all over. Strip malls that exploded on every street sat half empty. And you could actually find parking on The Strip.
In the middle of it all, I needed a place to live.
I had a choice. Rent like a lot of my colleagues (one offered me his condo for $1300/month). Or find a place of my own.
The Search Begins
Before I got to Vegas, I had only heard stories of people walking away from mortgages.
It was a completely different experience to walk through the houses where it happened.
Some houses were completely abandoned in place. Clothes strewn all over the floor and furniture intermixed with cat feces. Chicken still thawing in water in the sink, affixed with a loving sticky note.
There was no love lost between the prior owners and the bank.
But after 20-30 houses and a month of searching, I found the perfect house.
Corner lot. Two master bedroom suites separated by a loft upstairs. Maple cabinets and fixtures. Less than 15 minutes away from work.
Sold.
My mortgage was just over $800. Way better than renting.
Starting right
That purchase set up a strong base to build on.
And not just saving hundreds of dollars every month on the mortgage.
It gave me a home to welcome my girlfriend into after I made her my wife.
It gave me a place to invite friends and family so we could strengthen our bonds.
It gave me freedom to look for the right job for five months after I left the Navy.
And the market picking back up gave me the down payment on a top MBA program when I sold it four years later.
History still rhymes
You can say I got lucky.
I did.
I hope that situation never happens again.
(Spoiler: it will)
Because 2009 wasn’t the last crash in my lifetime. In the past six years, we’ve had market collapses from lockdowns, rising interest rates, tariffs, and two international wars.
And, by the way, have you noticed how markets can’t break highs no matter how good the news this week?
Collapses that were followed by rebounds.
The people who stayed invested made out ok. But those who got coming up of the bottom did a lot better.
Plenty of opportunity
On the other side of things, there’s been more than one labor boom that rewarded those who could jump in.
Since the Great Financial Crisis, that’s been fracking, coding, remote services, data centers, and now skilled trades.
The ones who hopped in were rewarded disproportionately for the time it lasted.
Those situations keep coming up. It’s up to you to chase them and make the most of them.
Because if you put in the work, and put yourself in the right position, you can find your own arbitrage.
Affiliate Corner
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