Before the wedding gifts, the Rolex, the luxury clothing and the loans, there was the real estate bubble.

Gov. Bob McDonnell invested heavily in real estate in 2005, as property values were still rising, and in 2006 and early 2007, as they began to plummet.

Often with his sisters as partners, McDonnell bought stakes in four residential properties — two in Virginia Beach, one in Henrico County and one at the Wintergreen resort in Nelson County — all purchased for a total of $3.8 million. Today, the properties are assessed at about $3.2 million.

Mortgages on two properties have been refinanced this year, and a slew of activity on the mortgage loans has taken place over the years.

McDonnell’s real estate holdings were thrust to the center of the gubernatorial gift scandal after The Washington Post revealed last week that Jonnie Williams Sr., the donor at the center of the scandal, gave $70,000 to MoBo Real Estate Partners, a limited-liability corporation owned by the governor and his sister. McDonnell’s wife, Maureen G. McDonnell, also received a $50,000 check from Williams. The Post reported that Bob McDonnell viewed the payments as loans rather than gifts.

In his financial disclosures, McDonnell has listed MoBo as owning two Virginia Beach rental properties that make up the bulk of his residential real estate holdings. They bring in $50,001 to $250,000 in gross income a year, according to his disclosure.

A Virginia Beach office building purchased for $3.15 million in 2004 by Racehorse Properties — an entity in which McDonnell has an interest — generates $50,001 to $250,000 in gross income a year. It is unclear how much interest McDonnell has in the building, which houses the law firm where he worked as managing partner before being elected attorney general.

That property has increased in value. It is assessed at $4.65 million.

Real estate prices here and nationwide peaked in mid-2006, leading to the collapse in the housing market.

In general, home prices throughout most of Virginia have rebounded to 2005 levels, but not in all cases, real estate experts say. People who bought houses from 2006 to 2008, when prices were unsustainably high, probably owe more than their houses are worth, the experts say.

RealtyTrac, an online research firm, reported that 16,546 properties in Virginia Beach were underwater in June, meaning the loan balances on the properties exceed the values.

Many of McDonnell’s real estate transactions occurred as he won statewide office and moved his family from Virginia Beach to the Richmond area. He was elected attorney general in November 2005 and took office in January 2006.

In May 2005, as prices were still rising, the McDonnells and one of the governor’s sisters, Maureen C. McDonnell, bought a 5,653-square-foot house in the 3100 block of Sandfiddler Road in Virginia Beach for $1.15 million, according to court documents. The property is assessed now for $837,700.

They took out an adjustable-rate mortgage loan of $920,000 on the property and, a few months later, a revolving line of credit on the property for $249,990, essentially receiving 100 percent financing on the property.

A second mortgage loan for $350,000 on the property was issued to McDonnell and his sister in January 2006, according to court records. It’s unclear whether the three loans were outstanding at the time or if the equity line was paid and closed.

In March 2006, McDonnell, his wife and his sister bought a 1,232-square-foot beachfront house across the street for $850,000. Like the other house on Sandfiddler, the McDonnells own one half and the sister owns the other half.

The owners have a first mortgage loan of $562,500 and a second mortgage loan of $142,500 for a total of $705,000 against the house. It is assessed now at $740,000.

The small house on Sandfiddler Road with three bedrooms and one bath rents for $1,150 to $3,995 a week, depending on the season, and the big house with 11 bedrooms and nine baths rents for $3,000 to $10,475 a week, according to rental websites.

In addition to buying rental properties, the McDonnells sold their longtime residence in Virginia Beach. In December 2006, they sold their home in the 2500 block of Woods Hole Court for $572,000. They paid $193,200 for the house in 1992.

Earlier that year, in June, McDonnell and his wife bought a 5,099-square-foot house in Henrico County’s Wyndham neighborhood for $835,000. They took out a $650,000 mortgage, according to county records.

They refinanced the Henrico house several times to take advantage of lower interest rates, most recently this spring. In April, they refinanced into an adjustable-rate mortgage on $696,000 with an interest rate of 2.625 percent for the first five years. The house is assessed at $651,077, meaning they are underwater.

It’s difficult to calculate what the payments on the three properties would be without knowing all the details.

However, $696,000 at 2.625 percent would be about $2,800 a month. The payment on a $920,000 adjustable-rate mortgage, if it was issued at the market interest rate of 3.5 percent, would be about $4,100 per month. Too little is known about the two loans totaling $705,000 on the smaller beach rental to calculate monthly payments.

In February 2007, the McDonnells went in on a $1 million purchase of a 3,164-square-foot ridge-top house at Wintergreen along with two of the governor’s sisters and their spouses. The Wintergreen house, located in the 700 block of Devils Knob Loop, was purchased with an $800,000 mortgage.

Under the initial arrangement, the governor and his wife had a 40 percent stake while Maureen C. McDonnell had 40 percent with her husband. Another sister, Eileen McDonnell Reinaman, had a 20 percent stake.

This spring, the mortgage was refinanced for $750,000 and the first family reduced its stake to 20 percent, making $44,000 for selling 10 percent ownership each to the other two investors, according to court records.

The Wintergreen property, which McDonnell disclosed as generating $50,000 or less in income, is currently assessed at a little more than $1 million.

gmoomaw@timesdispatch.com

(804) 649-6839

Twitter: @gmoomaw

chazard@timesdispatch.com

(804) 775-8023

Staff writers Nancy Madsen and

Ted Strong contributed to this report.