jakob
Posts:473
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| 09/10/2008 6:01 PM |
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I stole this from piggington but it is too good not to post here.
The gist of the article is a woman sold her inherited Santa Cruz parking lot for $3MM, did a 1031 exchange into twenty(!) SFHs in Reno putting 40% down on each with pick-a-payment option ARMs in 2004. Now the payments are resetting, she's negative $7000 a month, the houses are worth maybe half, and she's screaming for someone to help.
"I'm about ready to become the Cindy Sheehan of real estate; this is just making me so angry."
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/04/BU2F12NEBN.DTL
My take: She made a bone-headed investment with her inheritance, and now is blaming everyone but herself!
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LoonyQT
Posts:894
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| 09/10/2008 6:18 PM |
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ooo ooo ooo, please, please let's help this poor woman out.
here's my take - "I don't like the mortgages I signed up for. Let's renegotiate now that the market hasn't gone where I expected it to. What? You don't want to lower my interest by just 2 points? Weeeeelllll , you're just going to have to deal with 16 foreclosures and all the poor people that YOU are displacing by being unreasonable".
So, if the market really appreciated instead, should the bank come up to her and say, "hey, the market went up more than we expected, why don't you pay us 2 more percentage points in interest"? |
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Brian
Posts:2210
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| 09/10/2008 7:31 PM |
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And that woman is a professor. She must have a PhD in stupidity.
That shows you how emotional and raving crazy people will get over real estate. She invested and she lost. Too bad! |
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airplanedad
Posts:131
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| 09/10/2008 7:49 PM |
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If she could afford to put 40% down on 20 "investment" properties, why could she NOT afford to get nearly record low fixed interest rates?????
Stupid, stupid, stupid. Greed, greed, greed. Hardship my %**. |
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LoonyQT
Posts:894
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| 09/10/2008 8:29 PM |
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| oh, and what about a lesson in diversification? Maybe some gold or oil purchases or even real estate in different areas... 20 flipping houses in 1 flipping area? Idiot. |
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Brian
Posts:2210
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| 09/10/2008 9:33 PM |
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Also, 40% down and can't make money? What kind of proforma analysis did she do prior to the investment?
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UnsureBuyer
Posts:211
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| 09/10/2008 10:49 PM |
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| So let's do a little simple math here... 40% of 20 properties = 100% of how many properties? 8 properties. I guess with property tax, vacancy rates, etc. the cash-flow wouldn't be positive enough for a $3M investment eh? Too bad it's going back to the bank now. |
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TotoMMB66
Posts:98
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| 09/10/2008 11:39 PM |
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| I wouldn't want 1 house in Reno, forget another 19. It doesn't matter what the market did, she could have found better locales to burn her money in. |
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92101Resident
Posts:140
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| 09/11/2008 7:09 AM |
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Reno has no real economy and it's become a run down city with a few cheezy casinos. So not sure why this professor at St Mary's (if you can afford to, try to send your daughters here) was too blind to see it.
This woman reminds me of a gold fish - she just couldn't say no and now she's about to go belly up! I feel bad for her and family but it's no different than someone going to vegas and gambling away the 3 mil and then expecting the casino to return part of it! She deserves NOT an ounce of rate reduction, afterall she's someone who should be able to read/undertstand the contracts (that's what teachers/professors do: teach lessons so that the students can learn and understand for themselves). |
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ElPato
Posts:350
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| 09/11/2008 7:20 AM |
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>> What kind of proforma analysis did she do prior to the investment?
Multiple episodes of Flip that House? |
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Brian
Posts:2210
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Andrew Jensen
Posts:68
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| 09/11/2008 9:10 AM |
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| It's greed. She could have bought 10 houses with 80% down. |
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PolarBearKing
Posts:161
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| 09/11/2008 9:10 AM |
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Posted By LoonyQT on 09/10/2008 6:18 PM
So, if the market really appreciated instead, should the bank come up to her and say, "hey, the market went up more than we expected, why don't you pay us 2 more percentage points in interest"?
So she's an idoit (agreed) but all of the big banks are different. That doesn't make sense, but it is how the U.S. works. What about the taxpayers? We're bailing out all of the big banks and Wall St is happy, but wihat about all of the profits they pocketed over the last five years before the collaspe? You didn't see them "giving back". I can't say I blame her for screaming for help (she gets no sympothy from me) but I certainly see here point of view.
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Brian
Posts:2210
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| 09/11/2008 11:07 AM |
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Well, the banks are giving back their earnings through the collapse in their share prices.
But, yeah, the executives got golden parachutes and fat individual bank accounts.
It's trickle down economics. The banks got their rate reduction but they are only passing on a small portion of it (if any) on to the consumers. |
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lonnyzone
Posts:56
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| 09/11/2008 8:18 PM |
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| She inherited the money. She is feeding it back into the economy. Real Estate is pure Darwinism. If not for "savvy" investors like this assoc prof, wealth would stay in one family too long without getting passed around. |
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lonnyzone
Posts:56
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| 09/11/2008 8:22 PM |
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| Brian.... It is going to trickle back. The fat cat executives will die, leaving the money to their college edjumacted kids who will buy 20 houses in Reno, putting the money back into the system.. It works...Just gotta think longer term. |
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airplanedad
Posts:131
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| 09/11/2008 8:28 PM |
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Posted By lonnyzone on 09/11/2008 8:22 PM
Brian.... It is going to trickle back. The fat cat executives will die, leaving the money to their college edjumacted kids who will buy 20 houses in Reno, putting the money back into the system.. It works...Just gotta think longer term.
HA. too true, me thinks |
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billyboy
Posts:10
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| 10/01/2008 11:50 AM |
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| The poor professor. I am not a heartless ba%^ard but at the same time if people get themselves into a financial bind, tough luck. I don’t feel sorry for a one of these people that drove RE process sky high. I don’t feel sorry for anyone of them that used their home to buy a Hummer, BMW, Lexus, etc., I don’t pity the person in foreclosure that bought more home than they can afford or the ones that use their home as an ATM for vacations or to keep up with the Joneses. Us logical thinkers that can manage money will suffer because of them so we take it on the chin. I just don’t want to hear how I have to keep them in a home they (nor I) can afford. (as a side note, I am gainfully employed and doing well, so don’t get the idea I am bitter about the haves) |
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