Longform

Like the housing industry, real estate “guru” Mark Bosworth is in crash mode

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He described the technique that led to his riches in one of the "Investors Corner" columns he wrote for his advertisements. In the column, which appeared on one of his Web sites in April, Bosworth claimed he owns 147 homes, $40 million in property.

Bosworth's boast of personal-property investments expands in recent GoRenter.com ads from $20 million to as much as $70 million.

For years, he wrote on the Web site, he bought properties for as little up-front money as possible, fixing them up and flipping them at a small profit. Some he would rent out, and on those, he discovered something "magical": The value of the houses he didn't sell right away went up dramatically.

He had stumbled into one of the greatest real estate booms in Arizona history. As housing prices mushroomed in the 1990s, he bought more and more homes, often using money obtained in refinance loans as capital.

The way it worked: When the home went up in value, an owner used extra equity (which is the difference between the estimated home price and what is owed) by borrowing against it. The bank figured if the owner defaulted on the loan, its risk was covered because it could sell the home at the higher price.

Bosworth would then sink the money from refinancing into down payments on other homes, and a few years later, refinance those homes and buy more homes, which would then go up in value. In his Web site article, he gave the example of a Glendale home that he used to fund the purchase of eight more homes in just six years, all through the "magic" of refinancing in boom times.

Bosworth's wife became a partner in Property Masters, a property-management company, in 1997.

Not only did Property Masters help find renters for the Bosworths' investment homes, it serviced about 300 other homes for a clientele of small-time landlords. The Bosworths bought out the partner two years later and, in 2001, changed the name to Home America.

The company grew to manage more than 2,000 homes. Bosworth began teaching seminars on how to invest in the Arizona real estate market by buying and renting homes. And he and his employees found eager investors to purchase homes through Bosworth's companies, which, conveniently, would manage rentals for the properties.

Bosworth didn't feel he needed a real estate or broker's license — he hired others with the proper credentials to do the deals. (Arizona's real estate department would later state in its April order against him that a license was, in fact, required for what he did.)

The plan worked well for a while, but he and many of his investors were devastated when property values started to take a dive in 2006.

One former investor in Bosworth's companies is Larry Hutchinson, a 53-year-old computer programmer and musician from Thousand Oaks, California.

Hutchinson tells New Times he met Mark Bosworth in December 2005 and came to invest nearly all his savings — about $700,000 — in 11 Arizona houses he bought through Home America.

"I lost everything in a year and a half," Hutchinson says bitterly.

Although the bad timing of the purchases seems obvious in retrospect (considering the market plunge that occurred soon thereafter), Hutchinson says he wouldn't have bought the property if Bosworth's employees hadn't lied to him about the strength of the investments.

Three years ago, Hutchinson had wanted to get into the red-hot Phoenix-area real estate market, but he didn't know the best way to go about it. He says a friend who lived here told him about Bosworth, who "had gotten a lot of press, a lot of visibility. He seemed to be one of the big ones [in the Phoenix area]."

His friend talked to Bosworth, and Bos­worth hooked Hutchinson up with Steve Van Campen, a top property manager for Bosworth's firm. Hutchinson says he was given the royal treatment — at first.

"Not only did they have the Escalade for driving clients around town, but they'd give you a tour of Bosworth's [fleet of] cars," Hutchinson says.

Van Campen, a private pilot, flew Hutchinson and his wife over the Valley in a small plane, pointing out Bosworth's mansion.

"So you're thinking, okay, Mark's been in this business since the '90s and has made millions of dollars, so this is the way we're going to go," Hutchinson says.

He laments that he didn't heed the advice of his wife, who believed from the beginning that something was amiss about Bosworth. He invested in the homes, though she persuaded him not to risk his 401(k) savings or their own home in the deal, which he had been leaning toward doing.

"Both Mark and Steve were recommending that," he says.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.