Posted on 02/16/2006 11:12:27 AM PST by ex-Texan
"But one is not vulnerable to that sort unless laziness, ignorance and greed are factors on the 'victims' side. This is why charlatans prey upon certain old ladies who are themselves looking to make a quick buck without bothering to do the research or ask too many questions.
My sympathy goes only so far.
"
You're right, to a point. However, I'd estimate that only around 10% of consumers can decipher a loan agreement and really understand what they're getting themselves into.
Yes, a lot of people are only interested in the immediate payments. That's stupid, of course, but there it is.
In my own code of ethics, taking advantage of someone just because you can just isn't right. I'm a full-disclosure kind of guy, which is why I have done all my real estate transactions without agents. I use the title insurance folks, of course, and I do understand documents.
But, when I sold my home in California, I made absolutely certain that the young couple who bought it knew exactly what they were getting. I concealed none of the house's flaws. I even helped them understand the mortgage they were obtaining. In fact, I had three offers for that house at the price I was asking. I actually advise the couple that they were possibly getting in over their heads. They convinced me that they knew what they were doing, so I went ahead with the sale. I liked them.
We celebrated the purchase agreement by my wife and I having the kids over for a nice dinner.
While the house was in escrow, I discovered a flaw I hadn't known about in the house...a problem with the bath surround. It wasn't visible to the average person, and the home inspector missed it. So, I called the couple up and had them come over. I showed them the problem, and said I'd fix it before closing. I let them pick out the new shower surround, and installed it, after replacing some water-damaged underlayment.
Honesty and fair dealing is the only way to do business. The fact that the customer doesn't understand the situation merely means to me that I must help them to understand it. Deception is simply wrong.
You will lose when the priciple starts coming due and you cna not pay for it. I know several people who got arms and intrest only loans for more house then they could afford and are now hurting because intrest rates are going up.
Good for you.
"If you do choose a repo, try to find out who owned the house before and where they're at now. There have been a few bad stories about people moving into repoed houses and having the disgruntled previous owner giving them trouble."
That happened to one of my tenants in 1992.
My nephew found out who it was, and that he'd gone into the recreational pharmaceuticals business. He paged the guy and left the number of the local narcotics squad. Guy left town, never to return.
It's even scarier buying a repoed car. You can get the "Hey! That's my car!" angry guy coming after you. People are wierd about cars.
People need to learn that if you didn't pay the loan off, it ain't yours.
"People need to learn that if you didn't pay the loan off, it ain't yours."
Lots of things people need to learn, but won't. I wouldn't want my wife to be driving a car and have some ticked-off guy approach her because it used to be his car. I check these things. It's just good sense.
I know who I am. I know who my family and friends are. Strangers, I don't know. I don't automatically trust anyone, especially random strangers. Protecting ourselves and those we care about must be our first job. There are bad folks out there.
It fits. Scientologists are interpersonal fascists.
Funny you would say that - he's from Austria.
Best real estate investment advice I received as a young man was you make your profit when you buy it.
Orlando bottomed in inventory available last April and the supply has surged as of current. Buying a second home/condo as an "investment" today is like buying tech stocks in 1999. In both cases, this is "late stage" buying in an up cycle, or actually at the very peak. Not very smart. Now, stocks are cheap (even more so in late 2002 before the upturn started) and real estate is expensive. Buying high and selling low is not the way to financial wealth.
Good advice from the borrower's perspective, but also remember that each lender has a "loss mitigation" department whose sole purpose is to coordinate workouts to keep a paying borrower in the house as long as possible. A bunch of empty houses doesn't do much for a lender's portfolio.
I never say "what will be up 100%". Never have, never will. I have never promised anybody any type of return in my entire career (that is when dealing with investments subject to risk).
What I DO do is advise on the best strategies based on current trends and projected forcasts, with some taking into account historical patterns.
To me, getting clients into small and mid caps in 2000-2001 and interest rate sensitive issues was a no-brainer. Having a high percent (higher than most others advise) in emerging markets and international was a no-brainer also. This has allowed greater than 100% returns, but I would never promise or assure a 100% gain--I just advise based on sound principles and let the rest do its thing.
Likewise, dumping money into a second home as an "investment" two years ago like this member did was not wise. Some areas have maintained good appreciation in the last two years, but two years ago it was clear that the factors that caused real estate to surge were getting stale and subject to reversal.
The main point I would stress is that most people do not know all the complexities of any investment decision. When 911 occurred, "most" stocks tanked and investors froze. However, few had the insight to gather their thoughts and seek out companies that would PROFIT from 911, e.g., defense stocks, interest sensitive, security, etc. When everybody hears about real estate soaring, many want to jump in and "flip houses" and never spend a second studying the impact of the dollar versus the Euro and what trends are occurring there (very important in real estate in the Orlando area. e.g., since Europeans LOVE Orlando), interest rate trends and projections, supply trends in their local market, materials cost and temporary aberrations (like the 2004 hurricanes and Katrina/Rita in 2005) and how that affects real estate, . . .
People not wise in investing usually take a simple approach and don't have a clue about the complex nature of investing. They also often avoid dealing with professionals thinking they can do it alone. Often, trying to save 50 bucks costs them 50 thousand.
Where I am (Calgary) I see a lot of houses being purchased on morgages that are wayyyy out of whack with the earning potential of the owners. $500,000 homes being owned by people in lower middle class occupations.
Even a cursory discussion with these people tends to reveal that they have little if any financial "give" in their budgets, and that even a temporary disruption in income is going to mean a default situation. Even an increase in the interest rate could very easily drop the boom on some people.
Not a financial wizard or investment banker, but I wouldn't throw a thin dime into real estate at present.
If I can not get it with fixed rate mortgage I will not uy it.
You and I know that...but Jim and Jill over there just want a big house. Today.
Sad, but in a few years my wife and I want a big house, and I will be looking at their repos.
Wise choice. I don't like to get involved in any sort of long term loan arrangement unless I can see what's coming on the horizon.
People who don't know what they are doing should not speculate in real estate. This talk about a market crash is also absurd. The appreciation will just slow down. Foreclosures are up because home ownership is higher than ever, and it has been very easy to get a loan in recent years.
And that is it. Only idiots would get any other loan, that and extended warrantees.
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