Speculators In “Double Bind”: Florida
The Herald Tribune reports from Florida. “Over the past few years, Chris Fountain and her husband bought 10 small parcels in the largely undeveloped eastern section of North Port, part of the couple’s plan to dabble in Florida real estate. Like other speculators in North Port real estate, they now find themselves in a double bind.”
“As the value of their property rose so did their tax bills. Now, people like Fountain and her husband are facing their highest tax bills ever in a market where selling would likely mean taking a loss.”
“In 2005, 2,100 lots sold in North Port. Last year, 380 sold.”
“Fountain’s lots are uncleared, lie along badly worn roads, and nine of the 10 don’t have city water or sewer service. Yet the properties will cost Fountain and her husband, Guy Padhaisky, almost $8,000 this year in taxes. Combined with what they will pay for their residence, the couple will give almost one third of their income to various government bodies this year.”
“‘The middle class is just being wiped out,’ Fountain said of small-time land speculators in a city with more than 60,000 empty home lots. ‘We could sell all our lots and still not make any money,’ said Padhaisky, noting that years of taxes already paid and a buyers’ market that is driving prices down would likely lead to a loss if he decided to sell.”
“Jeff Berman and his father, Herb, own more than 200 lots in North Port. In business for more than a decade, the Bermans sold an all-time low four properties last year. Meanwhile they have tax bills totaling $140,000.”
“‘It’s the first year we’ve ever been negative,’ Jeff Berman said. So the Bermans have decided they won’t pay the taxes on about one third of their lots. And they are not alone.”
“‘I’m not going to pay all my taxes,’ said Lanie Campion, a retired man who lives in Sarasota and owns more than 100 lots in North Port. His tax bill for those lots is about $100,000.”
“The only hope for people like Fountain and Padhaisky could be some form of property tax relief. Even if that happens this year, it’s not going to affect Padhaisky’s 2006 tax bills. ‘What is the county of Sarasota doing for me?’ he said, standing on one of the couple’s wooded lots in an area so deserted people dump debris on his land.”
“The loan crisis between Construction Compliance Inc. and Coast Bank of Florida is wider than one bank or one geographic area. A CCI customer who immigrated recently from China and some of his friends have a total of seven CCI homes with construction at a standstill.”
“Another CCI customer from Pennsylvania, Steve Hatch, has seen $110,000 drawn from his Coast Bank loan with only a slab to show for it. That, too, is a story fairly common to CCI customers. But Hatch’s property is in Sebring, not Charlotte County or North Port.”
“Some of the properties of Caijun Sun and his colleagues were not financed by Coast, but by Ohio-based National City Mortgage. On Wednesday he retained Sarasota attorney Alan E. Tannenbaum, a construction law and real estate specialist who represents other CCI home buyers.”
“In September 2005, he contracted with CCI to build a home in the Charlotte County community of Rotonda. Sun made a $17,500 deposit and got a construction loan from Coast Bank.”
“Including his deposits, Sun is now on the hook for $95,000 and says his credit has been trashed. ‘How can something like this happen?’ he asked.”
“Hatch, a Millersville, Pa., resident, is asking himself the same thing. Hatch agreed to invest in another speculative property, one that CCI was supposed to build in Sebring’s Sun ‘n Lakes Estates. That golf resort is owned and operated by National Recreation Properties, the Irvine, Calif.-based company whose TV spokesman is former ‘CHiPS’ star Erik Estrada.”
“Hatch signed the $265,000 contract for the Sebring home on Dec. 20, 2005, and made a $5,000 downpayment. He was stunned to find in December that his account at Coast was drawn down by $110,000. ‘I was freaking out,’ said Hatch, describing himself as ‘having a mental block accepting’ what had happened.”
“‘I will be damned if I take a $110,000 loan for a $30,000 lot,’ Hatch said Wednesday. ‘I’ll walk away, let the bank foreclose and take the hit to my credit.’”
“A visit to the site today revealed that property consists of only a concrete slab. A spokeswoman for the Highlands County Building Department said the slab has yet to be inspected, and because the permit for the work is more than six months old and the site is apparently inactive, more impact fees would be levied against the homeowner.”
“Susan Matyi, a Jacksonville, Fla., retiree, has spent six months trying to sell her four-bedroom, two-bath ranch-style home. She has reduced the price to below appraisal in an attempt to sell it more quickly.”
“‘In this market, you do have to market your house well and have a reasonable price,’ Matyi says. ‘We had a good offer on our house three days after we put it on the market. We didn’t take it, but we should have.’”
‘Roy Bush, director of the nonprofit Consumer Credit Counseling Service in Melbourne, said his office has seen a recent increase in the number people coming in for help with overwhelming debt, including some on the verge of defaulting on their home mortgages and filing for bankruptcy protection. ‘I think a lot of people bought homes that they thought they would be able to afford. And, at the time, it was affordable. But insurance and taxes have gone up since then,’ Bush said.’
‘A permit to build a home or business in Lee County will cost you three times as much starting today, but this effort to raise money to build roads might fail because of a slow real-estate market. The county could come up short for its projects. Loveland estimated last March the county would collect $40.9 million in impact fees from October through September of this year. During the first three months, the county has taken in $5.2 million as the housing market has slowed.’
‘It’s going to be hard to get to $40.9 million,’ Loveland said. ‘Maybe the rate increase will make up the difference.’
‘I’d like to make a comment in regards to your Monday article, ‘The buzz around downtown,’ about the noise level in downtown Fort Lauderdale and how it is affecting the residents of the new condos there.’
‘Those who are complaining about noise and music coming from the bars should take a reality check. They want the ‘chic’ condo smack-dab in the city close to the fancy restaurants and art galleries, but they want the entire area to tiptoe around after 10 p.m. so that they won’t be disturbed. What would you expect when buying housing in the middle of a metropolitan district?’
I used to live in the downtown district of WPB (CityPlace, for those who know the area). You would hear the very few other people who lived there (probably under 50% occupied) complaining all the time about noise from the clubs/bars on the weekends. And the foot traffic was relatively light (many businesses leaving).
What the hell did you move to the middle of the city for? Its not my fault some developer sold you on this “retire to the middle of the city” idea! Look at it this way, your 50 steps from the trendiest clubs in WPB. Oh, wait, your 80 years old.. Hmm..
Good thing the baby boomers are coming to buy all those condos built on the top of clubs!
Downtown WPB is not for retirees. Just go a couple of blocks from downtown and you’re not in a very desireable area. It’s all flippers stuck there right now. We have a long way to go until the young professionals that those condos were designed for actually occupy them.
Exact same thing happened years ago in Key West when they built “luxury” condos adjacent to Mallory Square and along the Duval Crawl district. Key West was a fishing and party town, open ALL NIGHT for the locals…………..not anymore.
That golf resort is owned and operated by National Recreation Properties, the Irvine, Calif.-based company whose TV spokesman is former ‘CHiPS’ star Erik Estrada.”
Wasn’t that all the warning a prudent person needed?
Those National Recreational Properties deals are not unlike a buy-here/pay-here car lot.
The downpayment they show on TV basically covers the cost NRP paid for the lot. The monthly payments are icing on the cake. Eventually, when the “buyer” defaults, NRP gets the property back, and they’re free to sell it to the next sucker.
Heck, NRP doesn’t even have to go through a messy foreclosure process, since the loans aren’t even real mortgages. They’re just land contracts that aren’t even filed at the clerk’s office.
Why am I not surprised that Coast Bank and CCI’s names are mentioned in the same news story as NRP?
How many of their seminars have you been to? LOL
Familiarity is of utmost importance…
Sam Waterston: (fake DA) hawking investments
Kenny Rogers:(wrote a song about gambling) as a indian casino shill
Got any others?
Got any others?”
Donald trump, RE tycoon “you can be too!”
Good Conmen are very good actors…
HELLO!
Tell me about it. $265,000 for a house in Sebring, Florida. LMFAO. Does that guy have any idea where Sebring is? Has he ever been there?
When I hear about these out-of-state speculators I’m amazed at how easily they were duped into overpaying. Somebody once wrote here that all these people needed to hear was the word “Florida” and they were in.
Sounds like 1926 all over again………………….
Sure… He knew about the area…
They gave him brochures and everything….
Geez
‘A spokeswoman for the Highlands County Building Department said the slab has yet to be inspected, and because the permit for the work is more than six months old and the site is apparently inactive, more impact fees would be levied against the homeowner.’
Isn’t Hatch more of a slab-owner?
‘As the value of their property rose — in some cases more than 40 times the purchase price — so did their tax bills. Now, people like Fountain and her husband are facing their highest tax bills ever in a market where selling would likely mean taking a loss.’
Amazing that even with such on-paper gains, they still end up with a loss.
Yeah, I was trying to figure that one out. How can a short term tax bill hike wipe out such large value gains????
Is a HELOC on land even possible?
There were no gains. This greedy pig decided that after 500, 1000 and sometimes 2000 percent increases they were not quite ready to sell. Those vacant lots will be worth what they were before the run up. 2 or 3 thousand. Think off all the lots that will be available at the tax sales with 60,000 vacant. I think thats bigger than the popoulation.
Sure, it’s just a checkbook. They have no idea what you’re buying. Shit, you can buy a whole nother house on a HELOC and then proceed to underinsure it against winds, floods and hurricanes. Frightening huh? Back in the day if you got a home equity loan you had to prove what you were going to spend the money on AND get approval. Now they make the fraud so easy even a dead person can engage in it.
“Isn’t Hatch more of a slab-owner?”
No! Its the ultimate in open floor plan housing.
“Isn’t Hatch more of a slab-owner?”
Actually, everything old in new again..The original Seminole indian inhabitants would build a Chickee, which basically was a slab with four posts and a thatched roof….
This guys literally bought swamp land in Florida, and they didn’t see it coming…
Time to dust off that Bridge in ……… I wonder if one of Trump’s kids is available as a spokesperson….
I hate to kick a guy when he’s down….Unless he is lying on a concrete slab, of course
“… more impact fees would be levied against the homeowner.’
Isn’t Hatch more of a slab-owner?”
LOL — Good one Ben.
‘What is the county of Sarasota doing for me?’
Trying to fund something like the public services in other states, AND pay for the facilities required for all that population growth, AND cover the growing care needs of an aging population that was very profitable in a tax and public service sense when it first arrived but now requires custodial care. WITHOUT A PERSONAL INCOME TAX.
Not a very Kennedy-esque statement.
Maybe overtaxed FB’s can be soothed by asking “not what my county can do for me, but….”
Since you seem to be sort of pro government, please explain to me why, if 5 years ago local Florida government were solvert (which they have to be by law), then their tax revenues doubled or tripled, what they did with all that extra money?
Do you think that the current elderly population of Sarasota spent their working lives there? Or that the ratio of working people to what you call custodial care people was higher say 20 years ago than it is now? I’d be surprised if that was true.
“‘The middle class is just being wiped out,’ Fountain said of small-time land speculators in a city with more than 60,000 empty home lots.”
Yeah. Wiped out by mass economic suicide.
Yeah the middle class is screwed becuase they were foolish enough to speculate on land in Florida - cue Marx Brothers movie for middle class history lesson.
Blame everyone except their own personal GREED. Had they made $$$ out their a$$ they would be talking about how they were part of the intellectual elite.
“Why a duck?”
Seriously, you have to be a “small-time land speculator” to be part of the middle class now? News to me. Remember when being middle class just meant going to work and saving?
My thoughts exactly.
Like . . . cry me the world’s biggest river about all of these idiots. Why are they “speculating” in raw land w/o utilities? This is all just gimme gimme gimme stuff, logic and common sense thrown out the window in the pursuit of ezee monee. Tough.
This makes me ANGRY. I would love to buy a lot here in VA to build an energy-efficient house. Why should lot holders be rewarded for stupidity? Of course they’re gonna owe taxes on the lots. That’s why land speculation has always been risky. It should be discouraged. It’s HELPFUL for the middle class if speculators are thrown off of lot-grabbing. The true middle class could then buy those lots and put a genuine house on them.
If they’re so pissed about 8K a year, why don’t they grow vegetables or flowers on them and sell them to cover the costs?
As the proverbial saying goes “Boo-Frickin-Hoo”.
Speaking of Proverbs, this reminds of the virtuous wife in Chapter 31. “She considers a field and buys it, and with her earnings plants a vineyard”. Putting the land to considered usefulness rather than putting it to no good use.
Couldn’t agree more TX and Arwen. I have been wanting to purchase land to cultivate it. Not to flip it for dough. It gives me a warm fuzzy feeling to know that these greedheads are taking a financial beating right now. They are adding no value to the land, just hoping for a financial windfall. Unfortunately for me, prices on land in the area where I want to purchase are still going up. Sigh.
Darwinomics?
hoping disney will build another amusement park nearby maybe
crispy: I saw the Marx Bros. clips running through my head as well!
This stupid bit*h, Mrs. Fountain, is getting wiped out only because she bought ten (10!) parcels of swamp dirt which have no water or sewer connections. How anyone could be so ignorant is beyond me. People like this deserve to get screwed deep and hard.
Exactly. If the entire middle class all went to Vegas and lost their money at the tables they’d we wiped out too. I do agree that the middle class is getting squeezed, but this guy is just borrowing the rhetoric to cover his bad bets.
“The middle class is getting wiped out” is music to my ears. They are the ones who voted for the welfare state, now they can go broke paying for it, watching their paper home equity shrink and watch their job get sent abroad. Ha Ha.
‘The middle class is just being wiped out,’
The ‘middle class’ didn’t buy 10 unimproved lots at the (fairly obvious) height of the bubble, you did. The ‘middle class’ isn’t being wiped out, you are. That says more for stupid than it does class.
Thanks to everyone who reacted to the “middle class is being wiped out” whine the same way I did. I’m in middle class. I’m not wiped out. I expect to remain in the middle class, along with most of you.
instead of middle class these people should go to math class.
If you can’t pass a 6th grade arithmetic test–working with fractions and percentages– you should be barred from mortgage apps and car loans. Cash only for you, you little cretins.
How do I describe these people’s attitudes? Pathetic? Ridiculous? I’m at a loss for words. You speculate in land … you get burned … you’re too dumb to sell at the peak … and then you say, “Oh well, my investment didn’t work out. I’m not going to pay my taxes.” Are you freaking kidding me? You played the game, you lost, and now the bill is due. Tough.
“…you’re too dumb to sell at the peak…”
Heck, they BOUGHT at the peak!
The middle class thought they could easily become rich, just like the big boys.
Padhaisky: ‘What is the county of Sarasota doing for me?’
Guy, I think the county is letting you lie in the bed you made.
Or (to paraphrase): Ask not what your county can do for you, but ask what you can do for your county.
This article really brings up an issue that I think a lot of the flippers didn’t consider with their “no money down, churn ‘em and burn ‘em ” strategies - namely that the carrying costs of holding land and/or houses in high-tax states like florida will eat you alive. Particularly if you leverage your “investment” by buying multiple lots or houses. I feel zero sympathy for any of these soon-to-be-impoverished investors because I’m sure the tax and insurance information was out there if they had taken the time to look for it. But I suppose Erik Estrada didn’t cover those elements in his infomercial.
A lot of out-of-state speculators got screwed in part because RE listings here in Florida do not give a hint of the property tax the next owner will pay — they show only the current tax which, more often than not, is very low due to Save Our Homes. At the peak of the feeding frenzy in 2005, it was common for property taxes to increase four- to six-fold for a new owner who bought from a long-time homesteader.
It’s not that complicated. For example in Palm Beach County take the amount your paying, subtract $25,000 if you’re a Florida resident, multiply that by 2.2% and you’ll be close.
SFC — true, but the Yankees didn’t know that and I suspect that a whole lotta agents didn’t tell them.
Maybe all those owners of vacant lots can clear the land, plant corn seed, and sell the corn to ethanol plants. Does corn grow well in Florida?
Reading example after example of FB makes me realize just how broad-based this housing problem is. It is amazing that so many people got caught up in the mania. A guy I work with here in DC bought a pre-construction condo in Miami in 2004. At the time, he used to brag about how much money he was going to make from flipping it. Now he “doesn’t want to talk about it.”
2004? and he can’t make a busk on that !
if we get back to 2003 pricing we’re in a recession-big time
We are already back to 2003 in real prices here in Boston, but no one seems too panicky
“…no one seems too panicky”
Except, perhaps, our old friend Homeowner_MA, from whom we’ve not heard in a long, long time.
Do you all know much about modern farming? You have to have large scales for it to even cover costs these days. I have family members who are farmers. They are talking about getting out of the business because 1500 acres is not large enough to make it profitable anymore. Small farmers can only survive with business savy and niche marketing to the organic crowd — it is very hard work. Trust me, farming is not something amateurs can do easily. If you do not know what you are doing, you are just going to lose your shirt faster.
You mean you can’t make a healthy profit selling 100 ears of corn per year from your .3 acres of swampland? Maybe raising cattle would work….
“After five years of backyard gardening and selling his produce, author Andrew W. Lee took in $36,000 from his one-acre garden.”
(Admittedly, it was hard work).
http://tinyurl.com/3yfjjn
sounds like cheech and chongs garden
I do; I happen to be a farmer. I agree you have to watch your economies of scale very closely. Farmers in general are some of the most astute business people I know. It is hard work with relatively little return for the risks involved. It irritates me to no end how easily these morons obtain suicide financing for McMansions when I have to spend countless hours on paperwork and business projections just get my operating note renewed each year. And I can assure you it is considerably smaller than your average home costs these days.
No, corn does NOT grow well in Florida. In fact, much of Florida’s land is pretty sandy and not suited for lots of things, oranges and (over-fertilized, over-tariff-protected) sugar cane excepted.
I about spit out my Coke when I saw a corn field in Florida but it was in the far north panhandle.
I tried to grow corn in my garden in Tampa. Doesn’t grow worth a damn because the sandy soil requires so much water.
Sweetcorn is grown in Homestead, though it’s mostly a tomato-growing town.
Btw, biggest crop in FL is strawberries, not oranges. Beef cattle and pine (for pulp) are also big industries.
I’m sure you could make decent money on some of those lots growing pine trees, as long as you had half a notion as to what you were doing.
The Brazilian’s turn sugar cane into ethanol, and are now energy independent. Perhaps Florida’s Everglades should be turned into sugar cane fields. This would solve the nations dependence on foreign oil.
Or maybe we should just buy it from Cuba.
My sentiments about all the self-serving bastards on both coasts who are hell bent on selling their own offspring down the river into lifetimes of serfdom and wage slavery:
http://www.youtube.com/watch?v=MdEtjYQyIvg
““In September 2005, he contracted with CCI to build a home in the Charlotte County community of Rotonda. Sun made a $17,500 deposit and got a construction loan from Coast Bank.”
“Including his deposits, Sun is now on the hook for $95,000 and says his credit has been trashed. ‘How can something like this happen?’ he asked.”
“Hatch, a Millersville, Pa., resident, is asking himself the same thing. Hatch agreed to invest in another speculative property blah blah.
Hatch…don’t invest in ‘Speculative’ property.
Gold is approaching $660
Not too late to off your paper and electronic faux money for something real.
A fool and his gold are soon parted.
Gold is money everything else is’nt.
J.P. Morgan
Gold is the new black.
gold might even get back to 1982 prices
Rising gold will discourage the Fed from lowering interest rates to bail out the housing market since rising gold indicates inflation. If the Fed are vigilant about inflation, as they are always claiming, it would be contradictory to lower rates if gold is going up.
The government can print out infinite amounts of money to short oil and gold when needed.
They’re already trying it:
http://jessel.100megsfree3.com/Commodities2.jpg
Yeah, well it’s not working. Gold and silver are both positioned from a technical perspective to test their highs from last year.
I’m bullish on gold, but its price is just as affected by changes in the exchange rate of the USD as by inflation expectations. My gold guy suggested I buy more, about two weeks ago, which was good timing.
Aladinsane,
Just a question…do you hold physical gold or etfs? What’s to stop the gov’t from confiscating gold like they did the last time the US economy went south? Can yo trust any etfs that supposedly hold the physical gold for you not to fail on their promises?
If these questions sound amateurish, they should. I’ve always been leery of gold, figuring the market for it was even more “managed” than other asset classes. Willing to learn, though.
Why anybody would have somebody else hold their gold for them is a puzzling question?
Safe deposit boxes are $40 a year, no biggie.
Gold was never “confiscated”, it’s just a clever tactic to get people to buy numismatic gold coins, (been buying and selling gold bullion and rare coins for 31 years now) by ruthless telemarketer types…
The reason they pitch it so hard?
When FDR outlawed the ownership of gold in bullion form, in 1933, the law was that you could own any gold coins dated before 1933, but not gold in the form of gold bars, (this Byzantine law went away January 1st, 1975) and the crafty telemarketers use this a selling tool, utterly ridiculous, but effective.
Leery?
You should be leery of paper money, which is backed by absolutely nothing, but is still useful. (for now)
They had an IRS agent present upon opening of ALL safety deposit boxes, though. And the coin limit was about $100. Gold coins and gold “notes” were required to be traded for the new paper “money”. Gold clauses in all contracts were voided.
Just reread FDR’s executive order from 1933 and didn’t see anything about safe deposit boxes. Perhaps you drank a bit of the telemarketer’s koolaide?
http://www.gold-eagle.com/editorials_01/seymour062001.html
Read the last quote in here (FDR outlawing private ownership of gold).
It wasn’t in the executive order of 1933, thus, just a fantasy quote, as far as i’m concerned.
Find me something more solid than just a website, making it so, number 1
When FDR outlawed the ownership of gold in bullion form, in 1933, the law was that you could own any gold coins dated before 1933, but not gold in the form of gold bars,
I don’t believe this to be a true statement. It is my understanding that the law allowing ownership of pre-1933 gold coins was not enacted until the late 40’s or sometime later (I don’t have a link for that info though) and mainly because they were allowed for coin collections. Gold was indeed called in and lots of those coins were sent to Europe for safekeeping. The coins that the gov’t stole from the people were consequently melted down and FDR immediately revalued gold to $35/ounce to allow for expansion of the money supply.
Also, safe deposit boxes are questionable as it is rumored that agents will have to be present to open them should a dollar crisis hit and the banks take a “holiday” again.
A person should hold as much physical as they are comfortable with. There are any number of creative ways to hide gold (un-used pipe, in-floor safe, garden, etc) and it shouldn’t be that much of a problem. Should someone want to hold a larger quantity then I would recommend either bullionvault.com or goldmoney.com
I’ve actually used goldmoney.com and found the service good. My only complaint would be that they hold the actual gold in England (company is Isle of man based) whereas Bullionvault holds theirs in Switzerland which is preferable due to their banking laws, IMO.
ETF’s are cash settlement only funds and not a problem if you are just looking for the gains denominated in US $’s. I believe the ETF gains (for bullion only) are taxed differently (at higher rate) but I’m not entirely confident of that statement. You can also consider buying CEF (central fund of Canada) which is a company that holds physical gold and silver. Any gains in this stock would be taxed the same as any other stock.
Gold coins weren’t stolen by the government, you’d receive full cash value for whatever you had, and it was a fair exchange, as a $20.00 Gold Coin, had only about $19.00 worth of gold, in content. The revaluation to $35.00 a Troy Ounce happened later.
I can’t see for the life of me, why anybody would allow somebody else to hold their gold for them?
I can think of quite a few scenarios, where the company holding your precious metals went out of business and you’d have bubkis~
Why take the risk?
Perhaps it’s because most people have no idea how easy it is to buy physical Gold bullion?
The only link I could google was this…
‘…the US Treasury Department recanted on a previous letter to GATA dated December 17 th 2004. In that letter, they stated that they no longer had the power to force the redemption of gold bullion coins at face value. In a 12 th August letter, they admitted the power to confiscate had never left their grasp, it just depended on the political and economic circumstances whether confiscation (”forced redemption or compensation”) would be enacted.’
http://www.safehaven.com/article-3685.htm
The 1933 $20.00 Saint Gaudens Gold Coin is the only U.S. confiscatable coin that i’m aware of. The reason why, is that they were never officially released into circulation. A 1933 $10.00 Indian Head Gold Coin is not in the same category, as they were officially released into circulation.
The one 1933 $20 Saint sold a few years ago for around $7 miilion dollars. A 1933 $10 Indian is worth around $300k.
Unless you are thinking of putting your wealth in a 1933 $20.00, nothing is confiscatible.
Again, the confiscation angle has been quite a tool to upsell people that thought they wanted to buy gold bullion and got talked into numismatic coins, instead. Don’t make this mistake, as the spreads on rare coins tend to be much more, (common buy/sell spread on a 1 oz Gold coin is around $20.00) and as I mentioned earlier, collector coins will not fare well, in bad times…
Just tell em’ you want AE’s, KR’s or CML’s~
Aladinsane said
The 1933 $20.00 Saint Gaudens Gold Coin is the only U.S. confiscatable coin that i’m aware of.
I received a letter from the office of Senator Judd of New Hampshire that disagrees with you.
I wrote him two years ago asking his opinion on asset confiscation, specifically that of gold and silver. I expressed my opinion that such confiscation was unconstitutional and asked him to elaborate his opinion on this issue. His office (I presume a staffer) replied that such confiscation was legal in accordance with two separate presidential orders in the event of a declared emergency (didn’t say who had to “declare” it). This is from a Republican Senator who represents a state whose motto is “live free or die”. Unfortunately I don’t have that letter today (got lost during a recent filecleaning) or I would quote the letter directly. Needless to say I was flabbergasted at the revelation that nothing I “own” is really mine since the state can take it anytime it declares an emergency. Just food for thought.
I agree with your point about confiscation being used as a scare tactic to get folks to overpay for collectibles. I also recommend bullion coins as opposed to the pre-33 coins.
I disagree that the confiscation never happened for coins or that this didn’t constitute theft of the gold from the people. I don’t know what you call a forced sale for a price that is going to be 28% less (which was planned) than the going rate the following year but I believe it to be stealing and we can agree to disagree I suppose.
I agree that gold is money and contrary to the efforts of the treasury and central banks to convince us otherwise. Let’s all agree to re-visit the issue of what is money in 2010. By then I think we’ll have a clearer picture of what holds purchasing power in this country.
senator judd= sen. judd greg
Gold isn’t money anymore. It’s commodity. You may as well buy copper pipe and keep in your basement as a hedge against inflation.
You have industrial commodities and real wealth horribly mixed up.
10 pounds of gold is worth $100k.
How much copper would it take to get there?
Quite a bit more copper, at current prices. Is transportability the key to wealth then? If so, why not buy diamonds. You can carry $100K worth of diamonds in your shirt pocket.
How about all those “investors” who bought gold in 1980. How did that work out for them.
Gold isn’t an investment and it isn’t wealth. It’s a valuable commodity whose price fluctuates quite a bit. If you’re counting on gold to protect when the international currency system collapses, you’d be better off buying bullets and canned goods.
You’ve never seen what hyperinflation can do, i’d suppose.
Let me give you and everybody else a little primer:
I used to travel extensively, all over the world, buying and selling rare coins and I went down to South America a number of times in the early 1980’s, and here’s a tale from Argentina:
I’d stay at a hotel in Buenos Aries for a couple of weeks, and it wasn’t because I liked the hotel so much, it was because hyper inflation was so bad, that if I set the rate for a room and stayed awhile, the rate in U.S. Dollars at the end of the 2 weeks, was around 40 to 60% less, than the day i’d arrived.
I watched store keepers marking up the price of their goods, on a daily basis.
Argentina was one of many countries in the 20th century, that suffered horrribly, because of hyperinflation.
Friends there, that managed to make it through this awful time, did so, because they had wisely put away real wealth, not paper money or stocks…
What makes you think we are so special, that it couldn’t happen to us?
You gold bugs are so silly. Hyperinflation? I suppose it could happen here in the US. It’s not very likely.
If I seriously thought that was going to happen then I’d just buy securities denominated in Euros or Yen or something. Then at least I’d have some real investments, not just cold lumps of metal.
Now let me give you a primer:
Back in the late 70’s people thought the same as you. It was a time of serious upheaval, big inflation and high interest rates. Gold prices were shooting up. Some thought the US dollar would be worthless and they bought gold and silver to protect themselves against inflation…and they all lost money when gold crashed.
Now, here’s a question, why would you think that hyperinflation, which is pretty rare and hasn’t happened in the US since the Civil War, is at all likely and a crash in the price of gold, which has actually happened quite recently, isn’t likely?
Hyperinflation has been as close as our back door…
When I was a kid, there were 8 Mexican Pesos to the Dollar. It went as far as around 10,000 Pesos to the Dollar, by the early 1990’s~
Tell me why hyperinflation can’t happen here?
Fact is there’s always the fools that think it won’t happen here..Gold/silver has been money for 5000 years .Just because the Fed fooled us into thinking it wasn’t in 1935,still dosn’t mean it isn’t. All fiat money schemes have eventually collapsed. You be a fool to have all your money in PM’s, but an idiot not to have a comfortable Ins. policy…
Will the US$ keep going up?, or are we on the verge of a collapse? If you believe the Govt’s. inflation #’s I got a million condo in Miami I can sell you, and can give you my assurance it will continue to appreciate for the near future…
I didn’t say it couldn’t happen. I said it was very unlikely. Name the last major, industrialized, first world nation that experienced hyperinflation. Weimar Germany? Are we planning to lose a war to France anytime soon?
If you don’t know the difference between the economy of Mexico and the economy of the USA, you have no business giving out financial advice to anyone. By the way, Mexico didn’t experience hyperinflation. It’s currency was devalued. I bet you don’t know the difference.
Anyway, have fun buying gold. The haircuts that FBs are taking now are going to seem like nothing compared to the crew cut you’ll take when the price of gold drops.
“It’s currency was devalued”
8 into 10,000 = 1250x
ha
Two things: First off don’t worry yourselves about confiscation. Even if such an order was produced it would fail because people would simply refuse to comply. The great thing about gold as a store of wealth is that it is highly portable and easily hidable.
Secondly, Chuchundra seems fixated on the one time in the last, what, 5000 years when the price of gold spiked up in a bubble-like manner. The bottom line is this: the purchasing power of a dollar has dropped by something like 95% in the last 100 years. The purchasing power of an ounce of gold has been more or less the same over the past 100 years. Now, based on our experiences over the last 100 years, which are you going to trust to preserve a portion of your wealth? Fiat dollars or gold?
And about high quality diamonds, they are a good, portable store of wealth but they aren’t as fungible as gold. Their value depends on the quality of the stone, which must be assessed at the time of sale. Also, the diamond market is much less liquid than the gold market.
And i’d credit the 1980 peak, with it pretty riding the coat tails of Silver, more than anything else. The Hunt Brothers took silver from $6.00 an ounce in early 1979, to $48.00, 8 times it’s value, in less than a year. Gold was like $275.00 in mid 1979, if memory serves. It didn’t even triple in value.
There are factors in play now, such as the Chinese and Russians receiving Dollars for their goods and oil and they both of them were on the other side of the fence in 1980.
The Russians were net sellers (amazing traders in Zurich) and the Chinese? they didn’t have a pot to piss in.
Both of these old worlders aren’t so stupid, believe you me.
And you don’t think China knows a thing or 2 about hyperinflation? Another victim of it, last century.
for owners of precious metals (and stocks), such skepticism re the investment merits of gold should be a welcome sign, and certainly no cause for alarm. when everyone’s a believer…well, *that’s* the time to start looking for the exit.
True enough…
Wall St has hated Gold ever since it rid itself of being yoked to the beast, financially.
I guess if we saw some glowing articles about the curiously beautiful yellow metal’s appeal, in the WSJ, that might be a clue?
No, no, when Time magazine runs a cover “Why we’re GaGa Over Gold” then you know it’s over ….
“As the value of their property rose so did their tax bills. Now, people like Fountain and her husband are facing their highest tax bills ever in a market where selling would likely mean taking a loss.”
I think there was a very insightful thread yesterday about how people can say to themselves, “As long as I don’t sell it, I haven’t taken a loss.” This is sooo “classic denial”, and I’ll bet it drags this collapse out a looong time…..
I hope not. Better for everyone if housing prices get back in line with income by the end of the year.
Well, almost everyone. I guess if the correction is long and drawn out, a few FBs might finds GFs. But once the defaults start rolling in, they’ll have to find GFs who can pay in cash.
“Fountain’s lots are uncleared, lie along badly worn roads, and nine of the 10 don’t have city water or sewer service. Combined with what they will pay for their residence, the couple will give almost one third of their income to various government bodies this year.”
So Chris and her husband decided to “dabble” in real estate and bought not one but ten lots in what appears to be a highly speculative undeveloped area of back ass Florida which is costing a third of their income. Then she claims that “‘The middle class is just being wiped out,”
I’d say the herd is being thinned out.
Yep, most of the middle class we know who are NOT speculators are doing fine, thank you. Stock market up, employment numbers steady, inflation holding at a low rate, federal tax receipts WAY up and the deficit is declining. I saw an article in WSJ today that the feds will probably stop issuing 3-year notes. They don’t need the money!
I feel sorry for those who perpetually see the glass as half empty.
Free Koolaid for everyone!
Half empty or half full who really cares. Just dont take your half a glass and pour it on a pile of dirt.
“I saw an article in WSJ today that the feds will probably stop issuing 3-year notes. They don’t need the money!”
Whoa… They don’t need the money? They certainly do. Now they just crank up the printing presses. Why do you think they stop publishing the M3 money supply numbers last year? We’re flush with cash - that’s the whole problem.
“the feds will probably stop issuing 3-year notes. They don’t need the money!”
The government doesn’t need the money? No more deficit, eh?
Are you insane?
I’m pretty sure that most of the deficit is CAUSED by the paying off of notes, because the notes are an IOU from the government. Their value increases, after all.
Tax receipts, tariffs, etc. are the actual income. When the government sells you a note they have to pay it back PLUS extra (up to double the amount for a savings bond, for example.)
can’t they at least try to log the land? up north they sometimes hire loggers and let them keep a % of the logs they cut and give you money for the rest.
You have obviously never been there. Its not a forest of usable logs. Its scrub palmetto bushes weeds and grass with snakes and scorpions. The lots are generally 80 x 125 which is less than a quarter acre. Seriously there is a $$$$load of vacant houses in northport already.
I can think of a better term than “double bind” but it isn’t PG rated for blogs. LOL
“Some of the properties of Caijun Sun and his colleagues were not financed by Coast, but by Ohio-based National City Mortgage. On Wednesday he retained Sarasota attorney Alan E. Tannenbaum, a construction law and real estate specialist who represents other CCI home buyers.”
Caijun Sun. What a cool name. I hadn’t realized paying property taxes was optional. Oh wait, it’s not. I think maybe Lee County might have a few tax deed sales in the future, that is if you want to live in that geriatric hell-hole called Northport, along with my ex-mother-inlaw. It’s so bad she’s even thinking of bailing. God, I hope she doesn’t come back here.
I’d say the counties are next in line to get what’s coming to them too. Trying to tax vacant land like it’s a gold mine is stupid. When those tax deeds come up for sale no one is going to be stupid enough to pay back taxes that are 5x the real worth of the land. They are going to end up being the new “landowers” as they realize that as the new owners they now are responsible for clearing all the debris it collects.
Sure some of those people were stupid speculators, but some folks just want to own land to camp on, cut firewood or enjoy in it’s natural state. They shouldn’t be screwed out of their property just because the greedy government folks can’t keep their budget in control.
The fellow who will not pay taxes could be shrewd. He doesn’t lose the property for a number of years — the buyer of the certificate just bids a certain percentage return. I think that this would effectively create an option for the owner — if values recovered enough to warrant paying the back taxes and interest, he will do so, otherwise he walks. But he’s not out of the game for quite a while. This assumes, of course, that the property is not mortgaged.
not mortgaged? I’m sure these greedy people mortgaged anything they could because they thought they had the winning lotto ticket.
Sign of things to come??? The only difference in my opinion is that credit is allowing the collapse to be pushed out into the future a bit…
http://biz.yahoo.com/ap/070201/economy.html?.v=8
2006 Personal Savings Drop to 74-Yr. Low
Thursday February 1, 8:57 am ET
By Martin Crutsinger, AP Economics Writer
Personal Savings Rate for 2006 Drops to Negative 1 Percent, the Lowest Level in 74 Years
WASHINGTON (AP) — People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago
I saw this article. It started out talking about how folks are spending more than they make (bad people), but then went on to talk about how our spending ‘rebounded’ and actually increased (good consumers!). Just a little bit of a mixed message here.
Yeah, spending rebounded, but the problem is that alot of the spending was done with money people do not actually have. The negative rates in 1932 and 33 are explainable. This simply astounds the mind, that our country is so reckless. When people party this hard they almost always wake up with a pounding hang over. One little hiccup in the economy and millions of families will be staring down financial ruin. The news just gets bleaker every day.
I saw this stat too and have watched it over the past year and a half-disturbing. The elephant under the rug took a dump and most refuse to believe the nature of the odor.
BTW, attended RE forecast for Northern Colorado on Monday (major pep rally with much Kool-Aid). Number of sales transactions were the lowest since 1999, yet no one mentioned that. Building permits about 37% of peak level in 2002. 50% of homes currently on market are vacant. Foreclosure problem mentioned in passing.
Now for the 2007 Forecast: Record home sales, 10% increase in transactions over 2006, Record high average selling prices. Source: 260 Realtwhores.
Un-freaking-believable!!! Absolutely no basis for their numbers except blind HOPE.
Investors/builders/developers around here are bleeding cash while holding out for wishing prices, just hoping for a strong spring selling season - I don’t see that happening.
Fugly in 2007!!
I was again amazed when I heard this on WTOP in Washington D.C. this morning. And the reporter said people were dipping into their “savings” for the shortfall. Yeah, right!
I’ve got a credit card with $10,000 left to spend on it. Can’t I count that as a savings “equivalent” in the modern financial paradigm? I mean, I haven’t used yet so I must be saving it!
Perfect. I honestly think people believe this is how “money” works. The consumer is doing their patriotic duty, spending every single cent. There is no way in hell this can last, yet wall street is partying like its 1999. Either that or they are partying like Slim Pickens in the final scenes of Dr. Strangelove, riding the a-bomb to oblivion.
And as a born and raised native that left, I like your handle because Santa Cruz does suck in so many ways. Would never move back.
Sorry, that’s not “savings”; it’s unrealized “income”.
This is why I’m now selling the “junk” in our basement on ebay. I figure the money to buy it is out there now, but might not be later.
“This is why I’m now selling the “junk” in our basement on ebay. I figure the money to buy it is out there now, but might not be later.”
Good point.
I have been divesting myself of my inventory of collector coins, via eBay for a few years now and putting every last Cent into Gold Bullion…
Around 80% of my sales are paid via PayPal, (i.e. credit card)
and if I had to hazzard a guess how sharply my sales would drop, if folks had to pay with cash or a check, i’d guess sales would go down around 75%
You dont have to be a speculator to be in a bind from abusive property taxes in Fla. I have owned some raw land that is too small for an ag exemption that I planned to retire on and watch the critters from my screen porch. I was gonna put a small singlewide on it this year. It is beautifully wooded property but it is down a bumpy, private dirt road that gets no county services.
Well the property taxes abruptly tripled on it this year. And the county mafia now says I gotta pay an impact fee of ten grand just to live on my own property.
Meanwhile the county routinely wastes the taxpayers money by the bucket on feel good projects and their employees get medical benifits and pensions that are not available for most of the tax payers.
And the money that is used to pay for their lavish benifits is forcibly extorted from those in the private sector who must pay or lose their land that they have worked years to pay for.
Florida needs a property tax relief referendum like Prop 13 in Calif.
Those tax pigs in the county mafias need to tighten their belts like everyone else facing lean times and quit screaming that the sky will fall if the property taxes are reduced and reformed.
There is a tax relief referendum like Prop 13… But unfortunate for you it only applies to a permenant residency.
If you have a permenant residency in FL your taxes can only be raised 3% maximum per year and you get a $25,000 discount on your property value that the taxes are assessed on…
So if you have lived in FL and in a house for many years, you are now in your privately owned FL jail… If you are new to the area you are screwed… If you grew up in FL and stayed in FL for your career after going to college, your screwed…
Oh what a wonderful idea FL Save our Homes was and has proved to be!!!! or maybe not…
You must live in Alachua County?
omg, I was thinking the same thing…
tho’, frankly, I work for City of Gainesville, and the bennies are way better than the county.
I guess it sucks but this sort of shit is inevitable when lots of families with young children move in, and all this sprawl into the county occurs. If more people lived in towns/cities, there would be less pressure on county taxes… but there are so many people who want “city” services for county tax rates. Eventually, something has to give. You’re the victim of rampant development and other people’s greed.
Incidently, I live in the city and am happy to pay city rates b/c of what I get for it. I guess I don’t understand the subtle joys of hard well water, septic systems, sh*tty internet, and paying buckets in insurance, gas, taxes, and maintenance on a friggin’ car.
I made that point just a bit ago. People are so anxious to see speculators go they’re willing to bury anyone who happens to own property as well. Sorry, but I’m not falling for that one. Bad decisions don’t need help from greedy governments to fail.
There is nothing wrong with buying land and holding on to it for whatever reason.
I’m no more tolerant of predatory taxing than I am of predatory lending. Some of these government folks looked the other way on appraisal fraud and poor lending just so that they could increase their tax revenues. It’s pathetic.
“Well the property taxes abruptly tripled on it this year. And the county mafia now says I gotta pay an impact fee of ten grand just to live on my own property.”
Boo-frickin-hoo. Bet you didn’t complain as the value soared three times? The rules is the rules - bitch to the idiots that ran prices far higher than sanity called for.
So how do you know they didn’t complain? I have been complaining long and loud for quite a while now. I write to my representatvies, the local newspaper and anyone else who will listen.
You shouldn’t have to sell your property just because the FED prints too much money. So, now the new pride is not owning anything? Sounds like post revolution Russia or some banana republic - screw the landowners those evil pigs, it’s all their fault! Give the land back to the “people”. What about Mugabe and his “revolutionary war heros” they’ll kill you for owning land.
Presumably you’re up north of Gainesville or out near the national forest. I don’t understand how you can be charged an impact fee if you have not requested and new services, such as water or sewer hook-up. I thought impact fees were directly tied to permits or zoning changes.
“‘The middle class is just being wiped out,’
Since when has the Middle Class speculated by getting ten parcels of real estate as an investment? REAL Middle class folks buy a house, pay it off and try and save a few bucks while raising a family.
What a joke! 8 grand in taxes for vacant land! Tough sh*t.
Exactly. Who cares about these idiots. Financial Darwinism strikes again.
I have to agree. Being an idiot investor doesn’t mean the middle class is under attack. We’ll hear more of this though.
Got popcorn?
Neil
Poor folk know they’re poor, rich folk know they’re rich. It’s the middle class that is afraid of being poor and wants to appear rich cause it’s so cool to be rich and spend money all the time on loads of stuff that support the Chinese manufacturing machine. This is giving rise to a whole new class, the Credit Class. Did you know that if you pay off your debts and don’t buy anything on credit, after about 6 months your FICO scores disappear? Hey J6P, it’s great you don’t have a mortgage and you own your cars, but what have you SPENT on your CREDIT CARDS lately????
I found that out! I haven’t used credit literally since the 1980s and when I went to get my credit score, my god, the raw number makes me look like Casey Serin! It’s insane. Avoid debt and you look like a deadbeat!
You are a deadbeat, you’re not paying your protection moeny to the keepers of the currency. We have no money anymore, just relabeled debt.
Apparently, nowdays, living within your means is no virtue. And being hopelessly in debt is no vice.
txchick57
In the credit card biz. if you pay your bill in full each month the word they use for that is “deadbeat”. Amazing.
If you have no active open credit but you have positive trade lines that are closed,they will stay on your credit report for 10 years to keep up your scores.
SKB
You are lucky that all you had to worry about is a lack of a proper score. You may have found out you had been the victim of identity theft and would never had known.
It is very important to check your credit reports and scores every year from all three agencies Trans Union, Equifax and Experian.
SKB
Agreed. I found out the hard way. Years ago I got turned down for credit and got a copy of my report (before you could get them annually) and discovered somebody opened a checking account and wrote thousands of dollars in bad check over a few days.
It took me years to clear the mess off my report and it cost me lots of extra interest when I bought a car.
The worst part is that every few years, the mess rears it’s ugly head and I have to go through the whole process over and over again because places keep reselling their bad debt over and over again and despit all the notarized paperwork, police reports creditors won’t just clear it off.
Whole experience has totally soured me on ever giving any creditor my business.
We have no debt and have a very high credit score. To not appear a deadbeat, just use credit cards and pay them off each month. I kind of like only having to write one or two checks a month and have a nice itemized list of what I’m spending. You can also take advantage of stopping payment if you get screwed in a transaction.
Why would you intentionally ignore your credit score? If you’re financially responsible, it should be no problem to pay off your balance in full each month, earn free ‘points’ which translate into free gasoline gift cards (I’ve received $400 in free gas this year), or Best Buy gift cards,
My credit score is over 800, and I haven’t paid interest on anything in many, many years.
Throw the cable TV bill on the credit card, supermarket trips, cell phone bill, house phone bill, anything that’s possible. You’ve got to pay the bills anyway, may as well get something out of it (free money and a good credit score).
Even if I was a multi-millionaire, I would still want a good credit score (and $400 in free gas is nice, too).
I ignored it because I don’t need credit. Why would I obsess over something I wouldn’t use.
bedub, you really hit the nail on the head there. Beginning with the boomer generation, financial smarts went completely out the window. You can never have too much imported crap to stockpile in the garage.
gov solutions- always late always stupid
A permit to build a home or business in Lee County will cost you three times as much starting today, but this effort to raise money to build roads might fail because of a slow real-estate market. 3 x 0 = ?
So the Bermans have decided they won’t pay the taxes on about one third of their lots.
‘I’m not going to pay all my taxes,’ said Lanie Campion…
Brilliant move! Luckily those nasty revenuers don’t read newspapers…
last night at gym a freind said his kid is settleing on 2 “investment” properties tommorrow
I said there’s still time “
I have seen these lots!
I’ve seen firsthand the lots in question in North Port, as well as lots in Venice, Rotonda, Punta Gorda and Port Charlotte.
In 2004/2005 they were selling for 50-70k and yes, they were in the middle of NOWHERE, dirt roads and uncleared.
HOWEVER; here’s the biggy, some were NOT, repeat NOT buildable!!!
The scrub jay (bird)is an endangered species which resides in the area and certain lots that were being sold resided in KNOWN scrub jay habitat and would be bought on speculation that the bird would be removed from the endangered species list. (I make this stuff up NOT)
As for Seabring lots (and Placid Lakes area)I looked at those too. There’s nothing there! Do a google Earth pass by (assuming you have high-speed) trust me the dinner IS Mc Donnalds!!
Hope this has been of service to our Northern friends on this site.
Being a protected species makes no difference. Florida developers routinely plow wildlife habitats under, regardless of the damage, with the approval of the government fools who give them “variances,” blah, blah. All the development in South Hillsborough County on Tampa Bay is a tribute the importance of developers’ money (also known as bribe money) and tax revenues vs. the importance of wildlife or the larger ecosystem. The destruction is unconceivable; so are the hundreds, or thousands, of empty McMansions, tawdry condos, tract houses, and other junk put up over the last three years for speculators, and ex-New Yorkers.
My Hyde Park neighbor, a realtor and flipper wannabe, recently chopped down three huge Grand Oaks, also supposedly protected by law, in his backyard to make way for a new house. He went to the government idiots in charge and lied that another neighbor was demanding the trees be cut down because they posed an immediate threat of falling on his (the other neighbor’s) house. A hearing was scheduled. The neighbor with the supposedly threatened house was appalled when he found out, and called the scheduled day of the hearing to get the time and place. He was told no hearing was being held that day. Another neighbor called and was told the same thing. But, in fact, the hearing was held, and since nobody other than the realtor/flipper wannabe was present, permission to chop down the trees was instantly given. (This all reads like a scene from the Dukes of Hazard movie, which may have been the realtor/flipper wannabe’s inspiration). When the neighbor whose house had never been threatened by the trees went to the “authorities” to file a complaint, he was told to forget it, the deal was done.
I suspect the realtor/flipper wannabe pulled many strings to make this happen. In any event, the trees were cut down, and now there is a hideous vacant lot, with no grass and no trees. On Gaspiralla Day, it provided a wonderful open-air toilet for all the parade goers too drunk, or just to damn trashy, to make their way to real ones.
Scrub jay?
We have tons of those in California. Want some?
(I realize that it is probably a subspecies or another species called by a common name. But still.)
There is something I don’t understand about some of these stories. I have seen several cases where people have like 100k drawn from a construction account, but nothing to show for it (or very little, like just a slab). Last year, I built a house (a spec house). The way it went was that the contractor would hire work done, he would get bills for that work and I would then take the bills and pay them directly, or in a couple cases pay him. I would make draws against the construction account as necessary. He never had access to that account.
Did these people let CCI or other contractors/builders have direct access to the construction accounts? Is that typical across the country?
Lived and worked in Florida years ago for a large corporation. Met and knew a very sucessful old time local wheeler dealer in Florida Real Estate that ran with the Out of State Big Dogs. After the 80’s Florida condo Bust, I asked him how he survived.
He just smiled and said, ” If YOU ever get burnt with Florida Real Estate, then YOU’RE still a TOURIST.” A lot of Big Dogs went down…but not him and his friends. Things haven’t changed much.
I think some builders and realtor/investment companies were really taking people for a ride on these investment deals like the one with Coast Bank . The investment scheme was designed to put all the liability on to the investors ,while the builder and the realtors/investment company took the money off the top of the proceeds,(from credit lines Coast bank gave ) . It was a way of avoiding construction loan requirements ,while the builder could pull funds with no liability as if the builder was just a hired contractor .
it just seems like whenever you have a real estate mania the market makers/crooks think of these schemes to limit their liability ,get the money up front ,and leave the greedy investor holding the bag .
The seminar groups were tied into alot of builder/developer marketing and these people had the nerve to charge for these seminars, making them look like they were objective training classes .
Look at how Donald Trump started holding those “get rich ” real estate seminars right before he released a couple of projects .
Builders know that they can’t build unless they can get construction loan financing and the Lenders have their requirements . Usually lenders require that the builder/developers have some skin in the game on a project . The builders scheme is to reduce their requirements and not have any skin in the game . Also the investors are led to believe they don’t have any skin in the game .
it all goes back to the risk that people take when making a investments and how much money they are risking . The illusion with these investments was that it was limited risk for the investors ,but the real truth is is was a crooked ,bad faith way to get limited risk for the builders/developers/realtors/investment company .
Thanks…. I too didn’t understand how these draws were taking place. Was it the case that Coast Bank of Florida would tell the customer that they were setting up a loan, when in fact they were setting up a much larger line of credit?
Right . Apparently they set up a credit line with these investors of 300k ,while the investors were told their risk was much smaller . In other r words, the credit line was used to satisfy the contruction loan requirements ,while these investors were lead to believe they had limited liability and they were getting in on a no-down deal . The investors found out they had all the liability and all they have to show for it is a inflated lot and alot of sub-contractors liens because the builder never paid ,but the builder pulled all this money . Also the investment company and the realtors took their money off the top of these credit line proceeds and got paid first .
Also , you should not have the same bank that is giving the constructions loans also giving a credit line to investors so they don’t have any down payment requirements for the construction loan . Also with construction loans the payments are suppose to be checked and dispersed to sub-contractors
accordingly . You don’t just give a builder a big wad of money ,so they can take the money and run or not spend it wisely or not pay sub-contructors .
In the article linked to by the “Susan Matyi, a Jacksonville, Fla.” item above, there’s an interesting stat:
Renters are more convinced of a bust, with 57% thinking continued price drops likely, versus 43% of homeowners.
Well, duh! Hopefully, they aren’t implying that by renting, you are thus more likely to be “down” on the housing market. It is quite likely the opposite: If you are down on the housing market, THEN you are more likely to be renting!
Nice bit regarding RE doom and gloom, also from that article:
But Leo Nordine, a Redondo Beach, Calif., real estate agent specializing in bank-owned properties, says the sentiment jibes with what he’s seeing in Southern California’s once-scorching real estate market.
“I’ve been through a couple of these cycles already,” Nordine says. “And I think this next one will actually be worse. The buyers are controlling the market now.”
Nordine thinks the Southern California market will decline over the next few years, with prices eroding about 10% each year. As prices have softened, he says, many sellers are already pulling their houses off the market.
10% per year. Each year. Hello FB’s! That means year after year. Ouch. And when that happens, not only can’t you sell out for what you owe, but you can kiss any refinancing possibilities goodbye as well.
About right… 7% drop in prices over the last year +3% closing costs now paid by seller (not buyer). Personally, I think it will keep at 10%/year (about 1%/month) until those October REO’s hit the market in about August. Well… not exactly then. We’ll need to have a few more months of REO’s pile onto the market and then we’ll see the floor fall out.
The question: Will my job be in Southern California then or out of state? (I will follow this job.)
Got popcorn?
Neil
“‘The middle class is just being wiped out,’ Fountain said of small-time land speculators in a city with more than 60,000 empty home lots. ‘We could sell all our lots and still not make any money,’ said Padhaisky, noting that years of taxes already paid and a buyers’ market that is driving prices down would likely lead to a loss if he decided to sell.”
Hey pal, this isn’t how the middle class live: trying to own 10+ properties.
“‘I will be damned if I take a $110,000 loan for a $30,000 lot,’ Hatch said Wednesday. ‘I’ll walk away, let the bank foreclose and take the hit to my credit.’”
Cue Steve Martin’s, The Jerk: “I damn thee!”
‘I’ll walk away, let the bank foreclose and take the hit to my credit.’”
Naive boy. These days you actually get to pay for that debt rather than just walk away with bruised credit.
Depends on whether the loan is non-recourse. If so, he can walk, and his credit will be badly affected, but the lender can’t pursue him for further monetary damages. (They can, perhaps, send him a whopping big 1099 for Valentine’s Day, though.)
Here is how Fountain and Padhaisky’s tax bills skyrocketed:
A lot they paid $5,000 for in 2004 was valued at $39,800 in 2006 by the county’s calculations, leaving them with a tax bill that increased five-fold in two years. And that wasn’t the most extreme case.
Two lots the couple paid $600 each for in 2001 were worth more then $43,000 apiece last year, according to the county.
“The middle class is just being wiped out,” Fountain said of small-time land speculators in a city with more than 60,000 empty home lots.
Okay, now I’m confused. They wanted their land values to go down?
How can paying $8,000 in taxs put them underwater, after those run ups. Just sell at the current rate minus a little discount. That will give them enough for taxes and some profit. Did I miss something here? Can they sell me their land at the prices they paid for. I’ll be happy to pay $8,000 in taxes after I sell them…..
Probably because the actual market values are not the same as the counties values. Also, assuming the county is accurate, then you would have to continually buy and sell at lows and peaks to just stay even.
There is something a little wrong with paying real dollars for imaginary gains. The problem gets accentuated in the above bubble scenario.
Okay, I get it. They payed year after year of taxes that get added to the overall expense of carrying the land. Let me ask you this; Why are we hearing the complains now? Of course, because the value stopped going up. So the tax bill was ok right until they started losing money. Funny how it always works out that way. haha
‘What is the county of Sarasota doing for me?’ he said, standing on one of the couple’s wooded lots in an area so deserted people dump debris on his land.”
LMAO. Maybe he can turn his lot into a private dump. “They’re not building any more dumps. Buy now or be priced out forever!”
“‘In this market, you do have to market your house well and have a reasonable price,’ Matyi says. ‘We had a good offer on our house three days after we put it on the market. We didn’t take it, but we should have.’”
Note to greedy sellers: Nothing is more expensive than regret.
I can NOT believe that people actually expect tax relief from the county because their speculation deal didn’t turn out to be profitable. If I were the decider, these people would be losing their land in a New York minute (if they didn’t pay their taxes) and the city would be getting a bunch of nice new dog parks!
BankAtlantic took a $7MM charge that almost exceeded it’s loan loss provision — from a single bad deal.
http://southflorida.bizjournals.com/southflorida/stories/2007/01/29/daily48.html
How much more of this is out there?
hundreds of billions.
It hasn’t even started yet.
I love from your link: ‘He added: “In a reasonable market, it is very high-quality piece of property. In this kind of market, it becomes something different.”‘
Yea, its a piece of Florida swampland now!
Got popcorn?
Neil