A Year Of Capitulation In Florida
The Orlando Sentinel reports from Florida. “The wave of investors who invaded Lake County in the mid-2000s did no favor to buyers, and in the long run, no favor to the community either. They served as a main engine to drive prices to an artificially high level for a short while. Neil Fischer, owner of one of the biggest real-estate firms in the county, said the house flippers set the stage for the slump today. ‘It got to a stage where they started seeing things slowing, and the investors went ‘poof!’ They’re out,’ he said.”
“In March 2004, only three months of inventory was for sale in Lake County. The inventory on the market today is an astounding 38 months.”
“Meanwhile, buyers in Lake County have a window, and Fischer, ever the consummate salesman, knows how to take advantage of it. ‘If a buyer says, ‘I think I’ll wait and see if it bottoms out,’ I say, ‘How much more do you think it’s going to bottom out? Ten percent? OK, let’s make an offer for 10 percent less than the asking price.’”
“‘If they think it’s going down 50 percent, they’re crazy,’ he said.”
The Palm Beach Post. “Two years ago, Angie Cifarelli of New Jersey signed a pre-construction contract to buy a condo at the Residences at Midtown in Palm Beach Gardens. Purchase price in the contract: $404,500. Last month’s appraised value of the newly completed condo: $200,000. ‘I was shocked,’ Cifarelli said.”
“A property worth less than half its value in 2006 is all you need to know about how bad the real estate market is these days. But this 50 percent drop is not just academic for Cifarelli. With the rock-bottom appraisal, she says she can’t get a mortgage for $283,000, as planned. And she says she certainly can’t go into her pocket for the balance.”
“Cifarelli says she asked the developer either to drop the price or to let her out of the deal and give back her $80,000 deposit. Ram Development’s response: No, thanks.”
“Her lawyer, Gary Nagle of Juno Beach, said Ram has given Cifarelli an impossible choice: ‘Lose $200,000 at closing, or walk away from your $80,000 deposit.’”
The Sun Sentinel. “The housing slump and shaky economy have led to a shortage of jobs for people in the construction industry. They say they are so eager for work they are taking on smaller projects they might have rejected a year or two ago when there was a glut of jobs.”
“‘We’re wheeling and dealing because we all need the work,’ said Bill Adams, an owner of Plantation-based Superior Pools, Spas and Waterfalls Inc. ‘Compared to last year, this is the worst year pool contractors have had that I can remember.’”
“The price of screen enclosures has also dropped, going from as much as $25,000 two years ago to $9,000 today. The wait is about a month, compared with as much as six months after the hurricane. And the enclosures are built under new regulations adopted after the storms.”
“‘Our prices are back to where they were and people are getting a much stronger enclosure that is more resistant to wind,’ said Glenn Cummings, owner of Sunshine Screen and Patio in Hollywood.”
The Miami Herald. “On Thursday night, neon lasers lit up the 10th floor of Jorge Perez’s newest achievement: The Plaza on Brickell. The Miami developer unveiled what is now Brickell’s largest residential structure, two 56- and 43-story towers boasting a total of 1,000 units.”
“What may seem like an odd time to debut a gargantuan condo, at the yet-lowest dip in the housing market and start of a possible recession, Perez sees as a successful long-term investment.”
“Construction on both towers began at the peak of the housing boom in 2005, after all 1,000 units were spoken for with deposits. In the last month, Plaza has had 200 closings, well shy of the 1,000 available. As condos are not officially sold until after closing costs and final payments, units may still be available.”
“But Coconut Grove Realtor Nathan Kurland doesn’t think many of those buyers will be American — partly because of the weak dollar. ‘We’re one of the leading foreclosure cities in America, and we’re talking about building another 1000-unit system of housing we can’t afford. Who bought them?’ he asked.”
“For those that don’t close, Perez will do what he said is most sensible — he’ll buy and keep them until the housing market recovers.”
The News Press. “A conversation about single-family homes in Lee County with a pricetag under $200,000 would have been brief, two or three years ago. But oh what a difference a couple years can make.”
“In January of 2004, in the market’s pre-peak phase, there were 1,626 homes listed under the $200,000 threshold, according to the Denny Grimes & Company’s VP, Michael Polly. A year later, that number had declined to 588, the vast majority of them in Lehigh Acres, and by January of 2006, that total had a miniscule rise to 593 homes.”
“Proof of the market’s decline was illustrated by the January 2007 figures, which found 1,524 such homes. And over the last year, that total has exploded, leaping upward to 5,485 homes.”
“Grimes & Company is also the agent for a short-sale home in Cape Coral, built in 2006, with three bedrooms, two bathrooms and 1,272-square-feet of living area. The price is $119,000. Polly said the home probably would have sold for more than $230,000 at the market’s peak.”
“‘Unfortunately, the people who are not short sales are having to adjust their price based on what’s happening in the market,’ said Gloria Tate of Raso Realty in Cape Coral.”
“Raso said the drop in prices has meant that homes that were unaffordable are now within reach of middle-income home shoppers who had been priced out of the market. ‘In essence, affordable housing has come back to Cape Coral in a good, affordable way, without government help,’ she said.”
“‘I think two-to-three years ago, we would have been talking about are there any (such homes) on the market,’ Tate said. ‘Today you have a wide variety on the market. Before, people picked where they lived based on what they could afford and now its based on where they want to live.’”
The Tampa Tribune. “Real homeowners with real problems seem to be driving the mortgage foreclosure debacle in Pasco County…according to government officials and real estate agents.”
“Chief Circuit Judge Lowell W. Bray Jr. said the culprits behind the crisis appear to be unscrupulous lenders. ‘There is a lot of really creative financing out there,’ he said. ‘One I couldn’t believe had adjustments every other Monday. I guess you had to call every week’ to find out what the next payment would be.”
“Bray said he has seen adjustable-rate mortgages ‘tied to strange indexes’ or no indexes at all, meaning monthly payments can go up without reason. Some such loans, and others with high prepayment penalties, have been found to be unlawful by appellate courts, the judge said. Others leave the homeowner on the hook.”
“‘Even if they can find another source of financing, they have to pay a prepayment penalty’ for paying off the original loan before the term is up, he said.”
“Further aggravating the situation has been a drop from the inflated home prices of a few years ago, the judge said. Where there used to be a surplus of $40,000 or more when homes were sold at foreclosure auction, more and more homes are selling for less than the homeowners owe, Bray said.”
“Some lenders refuse to accept the loss and are demanding ‘deficiency judgments’ that remain in effect for 20 years, meaning someone who is left with nothing will still owe money, he said.”
The Herald Tribune. “The MLS used by Realtors is supposed to specify, in the comments field, whether the listing is a short sale. At the Sarasota Association of Realtors, Executive Director Kathy Roberts says 5 percent of listings now carry the designation. But that probably understates the reality of the marketplace.”
“At Horizon Realty, a regional leader in the short sale game, President Matthew Augustyniak estimates that 15 percent of the listings now on the books in Sarasota-Bradenton will result in short sales. ‘In all distressed sales, I bet at least 25 percent of the market,’ Augustyniak said.”
“‘Lenders have been resistant or unwilling to accept losses, said said Jack McCabe, a Deerfield Beach-based economist.”
“McCabe predicts that 2008 will be a year of capitulation for lenders who have held back on short sales. ‘Lenders will become more realistic to what actual market values are, which are considerably different from what they had in mind,’ he said.”
“‘We know the short sales are definitely accelerating across the country, but it is impossible to quantify because lenders will not reveal that data,’ McCabe said. ‘They don’t necessarily want anyone to know how many deals they are willing to accept at lower than the loan amount.’”
“George Lewis probably was given a larger loan than he should ever have been able to get for the family home on the Island of Venice. After that, he got another one on the house he moved his family to in Manatee County.”
“During a year of unsuccessful listing, Lewis was thinking of his Venice property as an $800,000 deal. The marketplace had a different number in mind: $445,000. The Venice house became the subject of a short sale, with the lender taking a $185,000 loss.”
“Lewis and his wife made dramatic improvements during the 19 years they lived at the desirable north end of the Island of Venice. But a $630,000 refinancing loan for a guy working as a counselor in the school system, and for his wife, who owns a hair-dressing shop? How could this loan be issued?”
“‘I have no idea,’ Lewis said. ‘I think it was lack of due diligence on the part of the people who were doing this. It was an adjustable rate mortgage. I think it ratcheted up after two or three years.’”
“That second loan on the house in Lakewood Ranch: ‘It takes everything that we earn, my wife and I — and I work two jobs — to make the mortgage payment and scrape together the money for the monthly bills,’ Lewis said.”
From NBC 2 News. “Yard sales are good for getting rid of old stuff, but for one man in Cape Coral, his yard sale Sunday was to get rid of it all. Al Rasmussen is facing a foreclosure and bankruptcy. He’s part of a growing number of people in Cape Coral and Fort Myers who can’t survive in an area with record breaking foreclosures.”
“Rasmussen and his wife retired in the Cape and got a mortgage before the market went belly up. Then, during the housing boom, they got a second mortgage to pay of their bills.”
“‘That was another amount of money suddenly going out for payments. Then everything kind of fell apart. Gas went up, food started going up, everything started going up, and my income didn’t change,’ Rasmussen said.”
“‘We had a first mortgage, which was no problem, then when the market went up we said, all this money is just sitting idle, we can use it to pay off some bills, so we took out a second mortgage,’ Rasmussen said.”
‘For those that don’t close, Perez will do what he said is most sensible — he’ll buy and keep them until the housing market recovers.’
I think it mentions in the article that he is using his new ‘fund’ to buy the units. But he has said that he will be buying discounted units and renting them out.
So there we have it. A guy builds towers, buying them at distress prices (from who?) and holds them. A full circle. Good luck to the people that ‘funded’ that.
Only in Florida. That place takes the cake for corruption.
Paging Ria Rhodes. Your commentary on Miami is sorely needed in the Florida thread.
Not “only” in Florida, but certainly at a much more massive scale. Once the bubblista’s house of cards starts to crumble (even if they get to buy more time from a gov’t bailout), we’ll see just how pervasive this scheme has been throughout the country.
In Miami, every decision is viewed through the prism of “is there a way that I can use lies, deception, aggressiveness, disregard for the law to take advantage of this situation? In a traffic jam, that means drive on the shoulder or the sidewalk to get around others. It means parking in the fire lanes. In real estate it means borrow OPM with no intention to pay it back. It means stealing from medicaid (something like 90% of the medicaid fraud in the entire USA happens in Miami), the IRS, and FEMA. The people of Miami would have only one thought when reading this article om screwing over your fellow man - “why didn’t I think of that”?
Good luck to the people that ‘funded’ that.
He probally forgot to mention to these investors that they stand to lose 20-30% over the next two years while he profits from the fee’s he charges the fund.
Anyone know the name of this fund? I’d like to watch it on the market and lmao.
“Meanwhile, buyers in Lake County have a window, and Fischer, ever the consummate salesman, knows how to take advantage of it. ‘If a buyer says, ‘I think I’ll wait and see if it bottoms out,’ I say, ‘How much more do you think it’s going to bottom out? Ten percent? OK, let’s make an offer for 10 percent less than the asking price.’”
“‘If they think it’s going down 50 percent, they’re crazy,’ he said.”
all he has to do is wait for the 2001 price levels and then call it “crazy” as prices are falling 50%
Neil Fischer, owner of one of the biggest real-estate firms in the county, said the house flippers set the stage for the slump today.
What Neil forgot to mention was that many of the Flippers/Investors in Florida were Realtors who were inflating the home prices so they could profit.
I have some news for Mr. Neil Fischer. Prices in Lake County are down 20 to 25% from the 2005 peak and will be down 50% or more from that peak.
I missed a 4500 commercial building in Lake County that sold for 34K. It needed 10K of work, but now you’re talking.
Also, N. Lake County has the Villages, which have also ground to a halt, but the rest of Lake is really no where.
Sorry, I meant a 4500 sq foot building
OK, check this out:
“Two years ago, Angie Cifarelli of New Jersey signed a pre-construction contract to buy a condo at the Residences at Midtown in Palm Beach Gardens. Purchase price in the contract: $404,500. Last month’s appraised value of the newly completed condo: $200,000. ‘I was shocked,’ Cifarelli said.”
“A property worth less than half its value in 2006 is all you need to know about how bad the real estate market is these days. But this 50 percent drop is not just academic for Cifarelli.”
Now check out this dickoff:
“Fischer, ever the consummate salesman, knows how to take advantage of it. ‘If a buyer says, ‘I think I’ll wait and see if it bottoms out,’ I say, ‘How much more do you think it’s going to bottom out? Ten percent? OK, let’s make an offer for 10 percent less than the asking price.’”
“‘If they think it’s going down 50 percent, they’re crazy,’ he said.”
50% is crazy, eh? As that lady above if she thinks it’s crazy, Mr. Dickoff Fischer.
Let’s see, it went up 300% (perfectly OK), but a 50% drop is crazy.
Mathematics is funny like that. Say you have a $100,000 property, which increases 200% - it goes to $300,000.
Now, if that property drops only 50%, it goes back to $150,000.
I am amazed how much arrogance there still is in Florida. At least 85% of the people down here still have no clue what is coming. I wish we could just skip the next 2 years and get to the good stuff.
This is the good stuff. I’m seeing a lot of anger around here.
Mine Eyes Have Seen the Fury … Of the Coming of the JT.
‘This is the good stuff.’
You beat me to it, Faster. I’m not getting tired of any of these delightful little stories!
“I am amazed how much arrogance there still is in Florida.”
I’ve found that the more stupid individuals are, the more arrogant they are. The two qualities seem to go hand in hand.
The converse is also true.
Arrogance interferes with learning.
Stupidity interferes with humility.
Yeah, like a dumb electrician I sorta kinda know who quit his job because his house “made $500K” last year.
I’m told he’s back at the job now.
I’ve found that the more stupid individuals are, the more arrogant they are.
Palmetto: Did you mean “I’ve found that the more stupid sheeple are, the more arrogant they are.”
“‘We’re wheeling and dealing because we all need the work,’
News from SoUtah.
I wanted to get some concrete work done on my property last year. Last years price $7-$9 per Sq ft., and you had to wait until the concrete company was ready to gat around to your job. This years price (for two different companies) is $3.00. Three different people came out this year to look at the job, all within one day.
Last year, the amount of “work” that I needed was too small a job for any of the people that actually came out to see what I wanted done.
This year no job is too small and the concrete “guys” who came out to estimate can start immediately.
The Commercial work around here (the last bubble for these guys here) is now pretty much completed, and sitting empty.
One concrete guy (who just finished a Parade of Homes house a couple of months ago) told me that he has laid off half of his staff and he needs any jobs that he can get to keep his business going.
He offered to do the job for $3.50 a Sq ft.
I wonder how asphalt is going. We have a 500 ft driveway I’d like to have paved.
Offer him a $1.50/sq ft. See how he reacts. Make a few other phone calls.
these constuction dudes need to take a lesson from the retail world; offer 2-for-1 deals. in fact, make it impossible buy a single item . . . get a trade agreement in place amongst yerselves to force the public to order TWO pool enclosures, TWO driveways, etc.
hell, the public has been forced to buy 4-packs of light bulbs, 2 packs of car headlights/tailights, 20 batteries to a pack, and 6 briefs/socks per pack for a long time. god forbid the retailing overlords be forced to make-do with a small profit when they can force a larger one w/a larger purchase.
c’mon now boys, get with the program & SELL SELL SELL those screened pool cages. it’s the captain america way, bucky !
asphalt…….who’s fault?
I call it the arrogance of ignorance.
“The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.”
- Bertrand Russell
Don’t confuse stupidity with arrogance.
remember they are paper wealthy and not really wealthy.
we are just slow in florida like the snowbirds
Yea, Palmetto, that’s a good point.
For most of you who don’t know the Florida Market, I have lived here my entire life. The first big crash from over-building condos here was a 50% drop in prices.
But, even so, very few buyers appeared. They took years to unload and 12 years for prices to re-establish at the prior levels. Problem was, with everyone walking away, the lawsuits started. Condo Associations couldn’t get fees from absentee owners. The Association got sued from buyers/sellers/owners/investors. That cost the residents more money in assessments to cover the lawsuits.
This is HISTORY, not a new occurrence.
But I liked this comment better:
“Her lawyer, Gary Nagle of Juno Beach, said Ram has given Cifarelli an impossible choice: ‘Lose $200,000 at closing, or walk away from your $80,000 deposit.’”
She has not lost $200,000. She is simply buying at the price she had agreed to pay. It was a bad investment idea, but if you agree to buy something, you obviously thought it was worth it, didn’t you.
Try shorting stocks and see if you get the same kind of legal opinions. Your gamble, your loss. If you can’t stomach the downside, you need to stay out of the game.
lol
I love two bits on this series:
1. A buyer has already lost 50%, but the Realtor is being ‘helpful’ with the willingness to ‘under-bid’ at 90% or more precisely, 180% of current market value.
2. There is enough inventory, despite a huge number of SFR’s and condos coming onto the market, to last through 2011! Mr. Realtor ™, are you telling me that someone who has to sell now won’t lower their price by 2011?
lol.
People have suddenly discovered a lot of “used” JT’s around Florida.
Got Popcorn?
Neil
Neil, your comments always entertain and are true!! I have popcorn and am watching the show in a rental!
Allan
“Her lawyer, Gary Nagle of Juno Beach, said Ram has given Cifarelli an impossible choice: ‘Lose $200,000 at closing, or walk away from your $80,000 deposit.’”
What’s the chance that the deposit was debt funded and has her caged into the deal?
I wonder how Mr. Knife Catcher Robert Milligan, the 26 year old Real Estate savant.
I accidentally hit enter. I meant to say…
“I wonder how Robert Milligan, that 26 year old Real Estate savant from Sarasota feels about being a knife catcher?”
It’s a “long term” investment.
Death by a thousand cuts, I betcha.
Actually do stupid people ever feel the pain?
I think you guys are wrong, after all (from the Residents at Midtown… website: “Enviably situated on PGA Boulevard between I-95 and Florida’s Turnpike in Palm Beach Gardens, one of America’s “Signature Cities,”…
It’s a signature city, for goodness sakes! That’s extremely enviable! They also have “high end” shops and restaurants! Some of them might even be upscale! I’m driving up from Boca this second to buy one, if they’ll have me.
Hey, how are things in Boca? We moved from there 8/06, after 15 years. A guy two doors down with an identical “villa” (though with upgrades…you know the drill, granite, stainless steel, tile everywhere) put his up for sale just when we decided we’d had it and needed to move elsewhere. He was asking $270K for his 2/2, so we priced ours at $230 and sold it for $210, not quite a month after being listed. At the time, our realtor was thrilled we were willing to accept that “lowball” offer. That condo is now “zestimated” to be worth $185. Meanwhile, the guy 2 doors down just recently relisted his place for a $240 asking price…
Anyway, what is going on with real estate in Boca? Are starter homes under $280K yet? Or is it only the condo/villa market that’s imploding?
I heard that Flakowitz bakery closed…what is up with that?? Damn, I still miss their rum cake.
We also miss Kyojin Buffet and their all-you-can-eat sushi, but not hurricane season, and definitely not the ridiculous price of houses and land.
-S.
Perfect!
Perfect.
And Fischer is in Lake County vs Palm Beach Gardens.
“Some lenders refuse to accept the loss and are demanding ‘deficiency judgments’ that remain in effect for 20 years, meaning someone who is left with nothing will still owe money, he said.”
Nothing like “just walking away” with a giant ball and chain strapped to your a$$ for the next 20 years. For full recourse states, FBs not only effed up their current credit, they get to carry around their mistake(s) like a scarlet A until the deficiency is gone or they BK. All that for a couple of years with granite countertops and stainless appliances . . . sux to be them.
I wonder how many people (who have the legal option) will chose to emigrate in order to escape these “deficiency judgements”. Or do what illegals do: create a new identity for themselves.
Lol,
But that’s a pain and as people start to see their friends having to ‘jump through hoops’ due to their Donald Trump days… it will further slow the velocity of money.
I’m still smiling at the number of severly discounted premium homes on the market where I want to buy. Just to be clear, my company is looking to keep a presence in pretty much every bubble market where they have a large employment base; at most we’re moving ~1/3rd of the workforce to non-bubble areas.
Someone commented that this was ‘fighting the last war.’ Ok… but the employees are moving anyway. We have to have offices where people want to work. Remember, most of the sheeple see the market as it was two or three years ago and honestly believe they are priced out forever in the bubble markets. Or… they believe they can make a quick $500k to $1M off their homes and its time to get their employer, or as in the last two years- their new employer, to pay the Realtor ™ commisions and moving costs.
This is just like the 1990’s… companies were moving out employees just as home prices were becoming affordable again. There is a pretty big time lag in relocations for Fortune 500 companies. They must often commit to a move 2 years before it happens. Its not the same as if discussing a small company (or office); it would be silly not to negotiate with the state your moving jobs to for a tax concession, moving expense offset, or free buildings. (Some of the states were thinking ahead further than others. In some cases, we’re getting two of the three!)
Got Popcorn?
Neil
I expect these efforts to collect deficiency judgments will prompt a flurry of litigation scrutinizing the practices of the lenders. Will these collection efforts put pressure on additional states to become non-recourse states?
If I was a lender with thousands of underwater mortgages, I’d make SURE every one of my mortgagees knew that I would file a deficiency judgment against them if they walked. I’d change my name to the 1st National Bank of Deficiency Judgments.
Big opp for collection companies — “Hey Mr. Bank, we’ll buy that paper for a PENNY on the dollar.”
$250K note will sell for less than that — about $1,000 to $1,500 actually — and then the letters from hell will never stop.
I know one company already talking to banks about buying this stuff, btw.
FBs not only effed up their current credit, they get to carry around their mistake(s) like a scarlet A until the deficiency is gone or they BK.
I doubt the BK will work for them since the BK laws have changed in the favor of the lenders. Experience is such a good teachers and many people are learning the hard way!
Makes you wonder if the lenders saw all of this coming and lobbied to have the BK laws changed before all of this came tumbling down?
There are NO conincidences in finance….
Gordo nyc….
I see you moved down to Ormond Bch….I moved out in October…Lived and looked at Plantation Bay, and decided to get the he11 out of there..over a hundred empty housesitting with ICI [builder], and prices capitulating rapidly….6000 home listings in Volusia Cty, and only a 3% absorption rate…….
Does that mean there is a 2 1/2 yr supply???
I hope you’re renting, and didn’t buying into the Realtrolls sales pitch???
“‘Lenders have been resistant or unwilling to accept losses, said said Jack McCabe, a Deerfield Beach-based economist.”
This will only prolong the downturn. The lenders and homeowners need to face the reality that the game is over and the market is dictating it’s course.
Check out the HT article. Option One chases the market down big time on a short sale. It will only take a few times of that before each lender learns to dump these houses quick onto a GF.
It was noted on the HT article comments section and I also double checked it myself but the guy in the beginning of the artlice who did the short sale for approx. $219k had bought the house for $180k in late 2004. He then refinanced and took out cash twice since then. He ended up taking out a total of nearly $120k tax-free. The reporter seems to have left this part of the story out….go figure.
““In March 2004, only three months of inventory was for sale in Lake County. The inventory on the market today is an astounding 38 months.””
So much for “pent up demand”.
“Spring Selling Season” will save us, “pent up demand” will save us, the Easter Bunny wil save us…
“The wave of investors…served as a main engine to drive prices to an artificially high level…It got to a stage where they started seeing things slowing, and the investors went ‘poof!’”
Looks more like “pent up supply”.
LOL, pent up supply.
ROTFLMAO
Roidy
My bet is on the Easter Bunny. More reliable than “the spring selling season” or “pent up demand”.
I still can’t get over how many retirees have mortgages and even HELOCs. Maybe that’s why the new retirement paradigm is that you’ll need about as much monthly income in retirement as you do while you’re still working.
We live comfortably on considerably less. But with the coming hyperinflation, it’s gonna be tough.
i see talk of hyperinflation. i don’t have a definition of the term, but in Serbia during the 90s (I lived in the ex-Yugo for a while), inflation made it such that the amount of money to purchase a house soon became the amount of money to purchase a loaf of bread. I’m not exaggerating. It got to a point where inflation was something like 60% PER DAY.
So, we’ll have inflation. But hyperinflation? I don’t think that is on the cards just yet.
You’re right. My bad. But it will be Carter-era inflation and the accompanying pain.
What happens when it’s over? Do your dollars return to a normal value or do the countries reset to the new value and leave it there?
We effectively add a 0 to our bills. Alexander becomes the new George. Ben becomes the new Alexander, and Grover becomes the new Ben. Life goes on.
Sometimes countries will just whap off a few zeros. It Turkey, a Coke used to cost 1,300,000 Lira. In 2006 (I think), a coke suddenly cost 1.3 Lira. Bills are marked to easily identify “new” versus “old” Lira.
We purchased a place in Hendersonville, NC….Taxes on a $300K house are “”" $1600/yr “”"…. He11, I was paying $1250/mo rent…
NOW my annual taxes are a little more than my monthly rent was in Ormand Bch….Beautiful place, without all the constant heat of Florida, from April thru October [in the 90's]
I am wondering how much jorge perez paid miami herald to publish that article.
whoever funded this project and purchage will be killed before they see the light at the end of the tunnel.
Nah, if they suck it up and keep their mouths shut when their money disappears, they’ll be fine.
I don’t understand what kind of paradigm shift in American thinking has lead to the acceptance of debt as ‘income’. The baby boomers are probably too far removed from the generation that experienced the Great Depression. It is probably because of them that the post-war boom was able to happen, and that we had a long period of steady (if slow by today’s standards) growth.
Even if we recover without too many serious effects from the upcoming recession, it is chump Rasmussen’s mentality that will cancel out any long-term market corrections and fuel the next bubble.
I think it’s that stupid “debt consolidation” game that J6P is convinced is so smart. Maybe it is “smart,” if you do it right, but few do. For some reason, tying up all loans in one big giant payment appeals to people. But neatness ain’t paying it down. I’d rather have separate debts at different rates, just in case TSHTF, I can let the unsecured ones go…but then, I’ve never had a lot of debt. Maybe 15k max with student loans.
The problem with debt consolidation is that J and M 6-Pack don’t ask themselves WHY they’ve got $26K on credit cards, $35K in car loans/leases, etc. They don’t consider for a moment that their spending habits are fundamentally screwed-up. Instead, they just bundle up all the debt and make it “disappear” down the HELOC hole. Then, because they’re still spending like drunken sailors, they proceed to run up still more debt! The debt consolidation just allowed them to get further into debt than would have otherwise been possible…nice going! Congrats!
-S.
“The baby boomers are probably too far removed from the generation that experienced the Great Depression. ”
I think you’ve hit upon the really deep root of the problem. Most people don’t think about it - but really the baby boomers are *two* generations removed from the GD. Boomers were born in the late 40’s and 50’s - so their parents, who were only about 20 during WWII, were only kids at best during the worst of the GD, and thus didn’t have to deal with the financial problems directly. They only have some vague notion that things were better a long time ago in the 20’s, but didn’t have to apply that knowledge practically, in terms of rainy-day savings and frugality. By the time they were making financial decisions - the 50’s, things were booming.
In reality, it was grandparents of the boomers that really learned the lesson of excess, as taught by the GD. They’re long since gone now, thus haven’t lent their wisdom to the current generation.
Packman - nice post.
” all this money is just sitting idle”
What money? I am still looking for one those machines that resemble a Toaster but crank out $100 bills whenever you need them.
They all thought the houses would never go down in value.
Prices always go up….. lol
I dont understand the logic either rather than greed and keeping up with the Jones’s.
Just another fool that simply used the house as an atm …….
“Further aggravating the situation has been a drop from the inflated home prices of a few years ago, the judge said. Where there used to be a surplus of $40,000 or more when homes were sold at foreclosure auction, more and more homes are selling for less than the homeowners owe, Bray said.”
A clear indication that homes were grossly overpriced and bought at NEGATIVE EQUITY, something a prudent lender would never allow.
Seems the financial “models” didn’t work out so good when you factor in buyer motivation. NO Down, No motivation.
Oh, but you can’t model “motivation” statistically, and if it ain’t in a regression then it ain’t worth anything.
“Her lawyer, Gary Nagle of Juno Beach, said Ram has given Cifarelli an impossible choice: ‘Lose $200,000 at closing, or walk away from your $80,000 deposit.’” I don’t know, seems like a pretty easy choice to me. Unpleasant. Catastrophic, maybe. But it should be an easy decision. I wonder how much she’s paying the lawyer to tell her there isn’t a third choice.
“Ram told Cifarelli she signed a contract for a cash deal that was not contingent on mortgage financing.”
If her lawyer was hired at the get-go (probably not), then she should be suing him for overlooking the financing clause that would have protected her. Pay $500 up front or pay $80K later. Hmmm…
“But Nagle said he still might be able to get her out of the deal because he believes Ram didn’t comply with certain provisions of a federal housing law known as the Interstate Land Sales Full Disclosure Act. Nagle said Cifarelli and at least one other Midtown buyer have notified Midtown they want out within two years of signing, as required under the law.”
Usually a buyer doesn’t have a choice on how the purchase contract is worded when buying directly from a developer. The developers use special contracts that do not allow financing or other contingencies. Of course, in the crazy days, no one cared. They all made money. The piper has now rendered his invoice.
My thoughts exactly. I know so many people who haven’t made a hard choice in their entire lives.
As far as I can tell, this woman has 3 options: a) try to take the whole mess to court, where she may–or-may not–pay more than $80K in legal fees, b) go ahead with the purchase, with the associated haircut-on-value, or c) walk away with a loss of $80K and write it off as a very expensive, very painful tuition cost in How Not To Do Business.
(Of course, if she DID have a lawyer handling the contract at the beginning, I’d go for a malpractice judgement against the lawyer no matter which of the three paths above that she takes. She probably only pulled the lawyer in when the whole thing got sticky. Hey, people, it’s when you have the contract being WRITTEN that you want the big guns giving you advice, not after you get into a mess….)
I don’t think she can go ahead with the purchase. She’d have to come out of pocket another 83K.
Wouldn’t she have to come up with another, assuming she could only get a mortgage for 90% of the 200,000 current value:
$404,500 - ((200,000 x .9) - 80,000 = $144,500
“And she says she certainly can’t go into her pocket for the balance.”
Wrong. She means she *won’t* go into her pocket for the balance. Anyone who can afford to have planned a $400K *second home* purchase can cough up another $80-100K if they have to.
There is another choice. Show this stupid ginch the contract that SHE signed and the earnest deposit she LEGALLY AGREED to forfeit if she walked away. Then TASER her dumb ass and send her on her way, $80K poorer but oh so much wiser.
I lol’d when I saw her options of losing 200k or 80k (we all know she is worried about the 80k she likely took out of her house to play mogul).
I’ve been reading the site since 05 when I moved from DC to VA after looking at condos in DC and no one could give me a straight answer when I asked, how were they able to afford a 900 sq ft $350,000 condo?
Btw, Ben thanks for the blog and the articles. Its much appreciated. I guess I only needed one really good quote from someone in NJ - my home state for me to start posting and stop being a lurker. And, I guess now I’ll start contributing since a friend and her husband told me this weekend that now is a good time to buy. I’m somewhat baffled because they told me in 05 it was a good time to buy. The advice is also from two people who co-own two houses with the bank. They purchase a new house before selling the old one. I guess having two mortgage payments would make just about anyone a little confused.
“That second loan on the house in Lakewood Ranch: ‘It takes everything that we earn, my wife and I — and I work two jobs — to make the mortgage payment and scrape together the money for the monthly bills,’ Lewis said.”
Another sob story. Where is the $630,000 refinance breakdown?? Where’s the money Mr. Lewis? Had a nice trip to Tahiti, a home in Switzerland, perhaps?
Or just squandered it, foolishly?
diogenes, Lewis is a SCHOOL COUNSELOR. No wonder the education system is in deep doo-doo in Florida. Serves ‘em right for getting their budgets cut, if this is what they have to offer the kids.
Too many “counselors”, anyway, and not enough teachers. Everybody is a star, no matter how stupid you may be.
A little more practical education and a whole lot less of the touchy-feelgood stuff and the kids would be a lot better off.
Yeah, and the parents would harsh you up on dissing their “special” child.
While I on your side in this position, most counselors just tell people what they want to hear. If you have no motivation to tell the truth, why should you?
When I was in school, the counselors were the ones that told us what classes to take (what track to follow), and how to get into colleges or universities. I suppose they also dealt with sleepy kids who worked after school, and incest cases, but we never heard about those.
As to the more recent ones, I agree, they tell the kids to take whatever the parents want them to - and push everyone to academia, not vocational education. We tried to inform the high schools’ staff about careers in the skilled trades, but they insist upon channeling only the troublemakers into that area. Do you want your plumber, electrician or excavator to have a lifelong habit of scamming (sounds like the mortgage or realty crews, eh?)?
Exactly. I would love to see an accurate break down of where that $630,000 went. I’m sure it would be quite fun to read through.
“‘I have no idea,’ Lewis said. ‘I think it was lack of due diligence on the part of the people who were doing this. It was an adjustable rate mortgage. I think it ratcheted up after two or three years.’”
dude, could it be you are part of the due diligence problem? you certainly were one of the “people doing this.”
I know, right? “I have no idea.” “I think.” “I think.” Why don’t you have any idea? Whaddaya mean, “you think,” why don’t you KNOW? Who was it signed all those papers? Pinocchio?
But Coconut Grove Realtor Nathan Kurland doesn’t think many of those buyers will be American — partly because of the weak dollar. IMHO these people will be double hammered by the continued fall in Fla RE prices and the U.S. dollar. They’re jumping out of a 5th story window to catch knives falling from the 20th floor.
“Rasmussen and his wife RETIRED in the Cape and got a mortgage before the market went belly up. Then, during the housing boom, they got a second mortgage to pay of their bills.”
Let me see. Retired. Not working. Income from SS and “investments”. OH!! Your house is your retirement~!
Let’s borrow some money and pay it back with our SS checks. When it gets to be too much, we’ll refinance.
These people deserve to be living in a tent.
[blockquote]“‘We had a first mortgage, which was no problem, then when the market went up we said, all this money is just sitting idle, we can use it to pay off some bills, so we took out a second mortgage,’ Rasmussen said.”[/blockquote]
Please, let me be the first, Mr. Rasmussen, to call you a liar, sir.
If the [i]only[i] thing you used the second mortgage money for was to pay off existing bills, then your debt level should not be significantly different now than it was at the time you took out the second mortgage. If you were able to handle the debt load then, you should be able to handle it now. Why, then, are you in bankruptcy?
[i]Surely[/i] you didn’t borrow even [i]more[/i] money than you’re telling us about here, did you, Mr. Rasmussen? Perhaps to eat out more than you used to, maybe to buy a fancy car, or maybe for some new granite counter tops, new clothes and jewelry, pink flamingoes for the lawn. You know, bling. Because if you did borrow more money to buy expensive new baubles and not just pay off existing debts, then [i]that[/i] might explain why “paying off some bills” which were manageable before, suddenly lands you in bankruptcy now.
Surely you are not leaving something out of your little story, are you Mr. Rasmussen?
Ever notice when someone makes a boneheaded move, a chain reaction of unfortunate events seems to occur in the wake of the boneheaded move?
Polonius, Hamlet, Act I, Scene 3. Much of wisdom is timeless.
good point, palmy. the movie ‘ the butterfly effect ‘ is an excellent example.
I was in Tallahassee this weekend to check out the town (I’m considering a move there). I was absolutely blown away with how the bubble has affected the town.
Every third house seemed like it was for sale. As we drove around, it was amazing how every intersection was littered with for sale, for rent, and open house signs. I have never seen so many homes for sale – and I live in South Florida!
The over-building was also amazing. Everywhere you turned it seemed like there was a new development. As we drove through some of the developments, we noticed empty home after empty home.
I’ve searched the web to see if I could see any balanced coverage of what seems like an implosion in Tallahassee, but found nothing. There are some Realtor®-created blogs, but they spend most of their time trying to convince folks that the Tallahassee market is not really imploding (despite the painfully obvious reality). Their local paper, The Tallahassee Democrats, have only cheerleading articles that often quote the same article.
I realized that the bubble are crushing housing here in South Florida, the Southwest, Orlando, and Tampa. However, I never expected it to be that bad in areas like Tallahassee that had seen the same type of appreciation.
Needless to say, if we move there, we will be renting. And rentals are a bargain; we repeatedly saw homes selling for $300,000 that were renting for $1500 or less (often with a lease-purchase option).
Does anyone know the Tallahassee market? I’d love to get your insight.
Just a quick aside; lease purchase, IMHO, makes no sense at all in this market. I guess it depends on the deal, but most of the ones I have seen allow me to take some small percentage of rental payments and apply them to a pre-negotiated purchase price on a home. That’s a losing bet unless you really think that FL home prices are going anywhere soon. They all throw it in there; typically for a small rent increase. IMHO, your better off taking the lower rent and putting the difference in the bank. That’s much more likely to pay off in the long run (again, all IMHO).
I completely ignore the lease-purchase part of the lease agreement. Based on the massive amount of inventory that I saw in Tallahassee, their market will probably be 30% or more lower in a couple of years. So, I am 100% confident that I would never take the purchase option if I were to sign one. Basically, I would simply consider a lease-purchase contract as a rental agreement, nothing more, nothing less.
You should try an experiment. Put on a Gator hat, shirt, and sweats. Carry around a stuffed Gator chewing on a Seminole. Go to open houses, and if people are nice to you, you know things are really bad in Tallahassee.
AHAHHAHAhahahahaaaaaa
ROFL.
“‘In essence, affordable housing has come back to Cape Coral in a good, affordable way, without government help,’ she said.”
See. We’ve been saying that all along. Let the market work.
Except that a large percentage of the people who could be the buyers already bought at the peak and are now screwed…..
(from the full article)
If people still can’t get a mortgage, Cummings said he’s sympathetic. “But it’s a two-way street,” he said. “When prices were going up, no one offered to pay us more money. Now that prices are going down, the purchaser has the option to close, or walk away and lose their deposit.”
Though Cummings said Ram does not sue people to force them to close, “we don’t return deposits, either,” he said.
And there you go, Angie. So I guess it’s not an ‘impossible’ choice, after all.
“‘If they think it’s going down 50 percent, they’re crazy,’ he said.”
Will we ever get any credit for our crazy predictions?
Nope. Everyone will consider us evil.
Which is why whenever someone says that the local market won’t drop anymore… I go bummer, I was hoping my employer would stop moving jobs out of state, but I guess we aerospace workers are truly priced out forever.
They usually don’t get it that high paying aerospace jobs require large numbers of well paid, but priced out, employees to support their work.
Again, my employer is going to keep 2/3rds to 90% of their current employees in each bubble market. But the “bleed off” will be enough to impact housing. One of our competitors looks to be ready to do a huge move this summer. I have no inside information on them (obviously), but I see the CRE contractors in one ‘non-bubble’ city are pretty fat and happy.
Got Popcorn?
Neil
No. I call it the Cassandra Complex.
We were “wrong” on the way up, and we will be “shunned” on the way down.
I will also observe that Truth is a harsh harsh mistress.
“What may seem like an odd time to debut a gargantuan condo, at the yet-lowest dip in the housing market and start of a possible recession, Perez sees as a successful long-term investment.”
And they say we are CRAZY!
Fannie and Freddie just put out new rules. If they are to do loans and buy them, companies are not allowed to use their own appraisers. This from the fact that appraisers were being threatened for not hitting the number and causing deals to fall through.
“Yard sales are good for getting rid of old stuff, but for one man in Cape Coral, his yard sale Sunday was to get rid of it all. Al Rasmussen is facing a foreclosure and bankruptcy.
YEAH! On Friday in weekend topics I suggested a discussion on yard sales–will they get even better as people get foreclosed on and have to move or else try to make money for the bills by selling their stuff, OR will yard sales get worse, as no one will have the money to buy other, new stuff?
The yard sales in Olympia are terrific. Better than actual antique stores in Utah, wayyyy better. On that post I told you all about getting a walnut wood dresser with brass handles, 1930’s, for two little dollars. Huh? Huh? Yeah, baby!
So now I’m wondering if I need another walnut dresser, and if I can get one for ONE dollar, this year.
C’mon, you know you wanna flash that bling around, baby!
You’re just dying. Admit it. It’s all good, baby, it’s all good.
I think that under law all asset dispositions within 90 or 120 days prior to filing for bankruptcy are presumed to be frauds against creditors. The bankrupt has the burden to prove otherwise.
Neil Fischer, owner of one of the biggest real-estate firms in the county, said the house flippers set the stage for the slump today.
The vast majority of these house flippers were realtors or were realtors providing false information via their hype to convince people to buy inflated properties. Now they are ctrying to blame others for the mess they participated in creating.
“Some lenders refuse to accept the loss and are demanding ‘deficiency judgments’ that remain in effect for 20 years, meaning someone who is left with nothing will still owe money, he said.”
This is the second time I’ve heard this in the last week after not hearing it at all for the first 2 1/2 years of the bust.
I think the lenders were terrified of the political backlash if they went after bankrupt borrowers, given their predatory lending practices. Just as, at first, builders were willing to let buyers get out of contracts to preserve their reputation with future customers.
But now, lenders are terrified of youwalkaway.com. The example of people who walk away suddenly living better and feeling like they have a future seems to have created a panic to make an example out of people. And the builders are sticking it to current buyers because they are worried about being in business in two years, not their reputation.
It’s getting ugly.
It’s illegal to try to collect a debt from someone who filed for bankruptcy. The article refers to mortgage lenders going for a deficiency judgment against the former borrower. In response the former borrower can file for bankruptcy. If he qualifies for Chapter 7 the judgment will be discharged. If he doesn’t qualify (too high an income) he’ll be ordered to pay off some of it, over time (I think 5 years). The court determines how much of the debt must be paid.
Just came back from Fl last night…some interesting observations:
1)Was at a mall in Miami…dead..and for the few walking around..no bags in the hand…business was however busy at the outside restaurants with FOREIGNERS/TOURISTS eating…
2)Went to another larger mall..a mills discount mall…LOADED with tourists…shopping their hearts out…if I did hear English it was with a accent…
3)Went one of the higher end cities in Broward….wanted to go to one of my fav local eateries…closed for lunches ON THE WEEKEND NOW!!!
I find that most people are spending their money selectively…sports for the kids, certain discount retail shops like Ross, TJ Maxx, and low cost restaurants…
On the MLS in Florida here is an example of 2 sellers in the same community….4000 square foot home in gated community $700K…5000 sq foot home in gated community $1.5Mil…same bedrooms same bathrooms..homes 1 year apart in built year…what is up with that?
Perhaps the more expensive home has a 1000 sq foot room made out of platinum.
I just want to see the dirty looks that the 1.5mil lister is giving the 700k lister.
Wow, you really have to wonder how close that bad late 70’s movie “AmericaThon” starring John Ritter will come true.
question to rental owners. i don’t know anything about rental property so here it goes.
i’m being offered a 50% stake on a 4 unit apt. the appraise value 700g and the mortgage debt is 400g. so the equity is about 300x.5= 150g. the amount being asked is 70g for the 50% stake, is that a good buy? the rent price is 900 per unit and currently the owners get about 150$ positive cashflow income.
Why is this being offered to you ?
because they are buying a house and they need a downpayment right away
You’ll be making $75 * 12 = $900 annually on $70K. That works out to 1.28%.
You’re better off sticking that in a bank CD.
If you are so stupid that you can’t do this calculation, you have no business f*cking around with anything more complicated than a savings account.
Sorry for asking a question so stupid that your highness got so pissed.
Yeah, we tend to be impatient with financial fools around here, in case you didn’t notice.
I’d stick to “punani” rather than rentals if I were you.
It’s easy not to think about these things. We got into this mess because people didn’t get taught at school to whip out a spread sheet and do the return calculation on any form of investment/debt.
Excel is your friend. If you don’t have excel, Open Office is an even better, and free friend. Do not invest without calculating expected return. Ever.
Incidentally, “punani-boy”, someday you’ll thank us for teaching you the things you should’ve learnt in high school.
You’re welcome, in advance, BTW!
wow what’s up with you, did you not have a good weekend.
So not buying a house while everybody said i have to make’s me a financial fool. And i guess trying to learn from people who’s been in the business of rentals makes me a financial fool. Wow i guess we all learn everything from High School.
i was told of this proposition just last night and i just wanted an initial assessment.
I wonder if you have rentals? if you do then just say it’s good or bad and if not then you don’t have to answer my question.
If that’s the way you teach, a joshua tree will slide in faster in your behind, than a person learning what you teach.
And there you have it! FB psychology in a nutshell.
Yep, want something for nothing without the pain of the learning.
Incidentally, punani-boy, better slather your Boy-Punani with some Boy-Butter before you start making them sweet deelz!!!
LOL
I think that this is a terrible time for anyone without extensive experience to invest in rental property. Think about it - why would anyone give you $150K in equity for $70K? Wouldn’t you also have to take on 50% of the debt? You’re going to take on $270K so you can possibly make $150 x 4/2 = $300 an month?
actually the 150 amount of income. Actually i thought about that, not having experience.
The 150 is the actual amount of income not 300.
They only make $37.50 per month per apartment? Like if they need a new toilet, there goes 6 months of profit? Is this a joke? I think that counting on that $80K in “equity” to justify this decision is extremely risky.
If you don’t know anything about rental property, I think you have your answer. The sharks are hemorraghing into the water now–the little fish are getting eaten alive. You don’t want to be one of them.
That’s is the reason why i asked, to learn from people in the business, you have to learn somehow from someone to be able to go into it, but i hear what your saying.
This doesn’t make a lick of sense. So your annual NOI would be $7,200 a year ($150/unit x 4 units x 12 months). Capitalize (divide) that by 6% and you get $120,000 as the value of this 4-plex.
A property “worth” $700,000 would need cashflow income of $42,000 ($700,000 x .06). That’s $875 per unit per month in net operating income, not $150.
This is a joke, right? You’ve just asked this to get us all riled up, haven’t you?
If you don’t know anything about a type of investment vehicle then don’t get involved in it. Only invest in what you understand reasonably well. Make sure that you know all aspects of the downside, as well as the upside. The best place to start learning is the library. Once you know the basics then search around the web. Warning! A lot of crackpots post all sorts of financial nonsense on websites.
i understand what you are saying, as i’ve said i was told of this prop just last night, just wanted to get a feel of it, but not to get flame for being dumb enough to ask the question. The library is good but isn’t it better to hear from experience people. That’s why i really liked arroyogrande’s response to my question. It gave me questions that need to be answered.
lovpunani,
In a normal real estate market where houses of prices go up +- 5% a year, this would kinda make sense since you are now really making 6%+ a year. However, given today’s RE bust, and the likelihood that RE will be going down or at least staying flat until 2015 in my own estimation, it would not be a good deal.
If I were you I would stick that $70K into a stable mutual fund like the Permanent Portfolio (stuffed with gold, Swiss franc, etc) as a great inflation hedge or buy some AAA rated muni-bonds, which currently offers 5-6% tax free yield due to the extreme credit environments currently. In the state I live, NJ, our Port Authority recently had to paid 20% interest for one of its tax-free bonds. If I had a chance I would mortgage my house to buy that bond as collecting tolls at tunnel/bridges and operating airports is as steady of a revenue stream as anyone can find.
The Federal Reserve’s rescue has failed
http://tinyurl.com/23vmlo
It never had a chance to work but lets appease Jim Cramer !
What do you know about the area the fourplex is in? Do you have a good understanding of the neighborhood, and the direction the neighborhood is going? What is the current vacancy rate? Do you have a verifiable list of all of the current expenses? Is there any differed maintenance that you will have to pay for later, or that could effect the rents or vacancies? What types of leases (length, conditions, etc.) are there? Did you get a copy of the signed leases? Are there any liens on the property? Are property values relatively stable in the area? Are housing costs (purchases, rentals) likely to go down in the area? Who does the maintenance and property management, how much do they charge, and how reliable are they? How reliable are the tenants?
Is there something better you could invest the money in?
Just some typical questions.
Ooops, this was an answer to the “question to rental owners” above.
Hi arroyogrande,
actually this is in california, i just did not say that because this is an east coast thread. to answer some of your questions the area is in Redlands, CA, it’s a good neighborhood, close to a lot of hospitals and a couple of Universities. And i was told that there is a waiting list of renters and they are signed leases. The apts. units were bought in 2005 for about 500g. I know SFR prices are going down and they don’t have any property mgmt company they do all the work maintenace and such. .
With your question is there anything better you could invest the money? what else you can invest in?stocks are volatile right now, maybe gold? i don’t know actually.
Lovpunani, you have an x-rated name. I heard the word from Russel Peters. Anyway, it makes sense for upside down homeowners to walk away. In a year or two they can be a homebuyers again. I am wondering if Lenders will make exception for foreclosure victims to be able to buy again in the future. It is a national epidemic right now.
I have a book for you to read (actually many, but it’s a start), but the name escapes me…I’ll post the name and author later tonight.
Basically, you are trying to price an investment, with it’s own particular risks and returns…without the proper tools (valuation methods), you really can’t gauge whether it makes sense or not, other than the vague feeling that you are getting a “deal” on some perceived equity.
Plenty of people have made a fortune taking the bull by the horns, and with the attitude “damn the torpedoes, full speed ahead”. But just as many (if not more) have turned their finances into smoking craters by getting themselves into messes they really didn’t understand in the first place (a certain brother-in-law falls into this category).
If you are truly interested in rental properties and property management, take the time and effort to acquaint yourself with the tools and methodologies of the business first. Deals that are “too good to pass up” usually turn out not to be so. Equip yourself with the tools to truly evaluate these prospects, lest you become yet another smoldering corpse on the speculation scrapheap.
The time of blind speculation has long past. That’s one of the reasons that there are so many irate responses, even the thought of blind speculation doesn’t go over so well with the sharp minds on this blog.
Good luck, I’ll try to find the name(s) of the book(s) when I get home.
Here is the book…at least read and understand the contents of this book before you even think about possibly thinking about entertaining the idea.
“The Complete Guide to Buying and Selling Apartment Buildings”
Steve Berges
ISBN 0-471-68405-8
Saturday in the Florida thread, a cracker-shack in Lee County was featured. “Taxes for 2007 were $1,141.64.” “It should probably be around $19,900 for this market.”
IMO, this is a key problem in Florida that at the moment seems nearly impossible to overcome – properties grossly overvalued by tax assessors. When values were rising, the assessors seemed up to the challenge of revaluing properties (that lacked Save Our Homes protection) with reasonable efficiency. But on the way down? Noooo….. It’ll take a long time for those assessments to ratchet back to “real” values without vigorous protest by the owners.
I wrote that poorly. The market value is $19,000, so the effective property tax rate is 5.7% per year, until and unless the owner gets the appraiser to lower the valuation.