Investing 102

[bdahlg68]

Originally Posted by GregWeld

Some people work that way -- I never have - never will.

I had a mortgage on the place when I bought it (Tempe place) but paid it off... it was at 6+%... and I don't like to make payments. Regardless of that it is still my obligation - not anyone else's, I don't care what anyone else says.

Same here. Bought a place that has gone down 30%+ since purchase in 2005. Over the last 7 years, we've gotten right side up through persistence and low interest rates. Although it would have been easy to just make minimum payments and walk away now that we're buying a new place, but that is not us. We made the conscious decision to buy and got caught in bad timing. We've been lucky to be in a position to pay it down and still save for a new place. We're now moving into a great place and we are looking forward to separating ourselves from this poor investment we currently call home!

[Bucketlist2012]

Originally Posted by bdahlg68

Same here. Bought a place that has gone down 30%+ since purchase in 2005. Over the last 7 years, we've gotten right side up through persistence and low interest rates. Although it would have been easy to just make minimum payments and walk away now that we're buying a new place, but that is not us. We made the conscious decision to buy and got caught in bad timing. We've been lucky to be in a position to pay it down and still save for a new place. We're now moving into a great place and we are looking forward to separating ourselves from this poor investment we currently call home!

Well Done Guys... Kinda my rant and point from earlier.

I sat down with my in-laws way before they lost, or excuse me, WALKED, away from their home..

They pulled money out to fund the remodel, hot tub, private college for the BMW boy, Europe, and on, and on....

In the end , they gave up their HOME, for all this.And with 40K in a 401K, and they are 50 plus..Had they followed my plan, they would have never been in this mess.

I am in California , in an Area of fancy cars, and High end remodels, all done on the bubble equity..

so much of what is around me is built on Leverage and not ownership..I am the consumer debt free guy..kinda a rare breed here..

The survivor I told you about earlier, one left out of 9 homes. She bought in 2000, made all the payments, and NEVER took out any FALSE equity.

Her house is still worth what she paid for it, 10 years later, not under water, and she will be fine. All the other houses,eight of them including mine, went to foreclosure and were resold.

It was scary to buy when i did...Am i buying into a ghost town ??? so many for sale signs on ONE street. now everything has changed and the homes have been resold to more qualified buyers and the area is beautiful.

Big Banks are as immoral as it gets, But I went old school when i went to get a Loan.. FICO, Healthy Down payment, ect..., and I read the contract..

And I had lost a home in 1993 due to non payment and foreclosure... that was another housing Dive, So i know the drill. no pay...go away...Also I was going through a divorce, so no strategic default there...

The bubble had people relying on a quick buck and unrealistic views of the equity that was being built on thin air..

Rather than talk morality, since this is Investing102, we can say that for some, it was bad investment decisions that led to personal decisions that i will not Judge.

I would think that just going through the experience would make people make better decisions..

[CRCRFT78]

Whether or not this is a moral vs. immoral decision, I too lost my house about 9 months ago. The wifes company was sold and the whole staff layed off. She had 11 years with the company. All I asked for was a little help on my monthly. I made it clear I had no intentions of walking away, didn't care that the house was now worth -50%, didn't ask for my loan to be changed, I just wanted some help with my monthly payment until she was able to get back into another job. They strung me along for 5 months before they basically told me tough ****. The house sat vacant for 6 months before it finally sold again. Do I have a little resentment towards the banks, yes I do. Not everyone decides to just walk away because of a loss. I did everything I could to keep it and still got stiffed. Or at least everything I could with the knowledge I had at the time. This is why I'm taking this Investing 102 thread so serious, NEVER AGAIN will they play me for the fool.

[Bucketlist2012]

Originally Posted by CRCRFT78

Whether or not this is a moral vs. immoral decision, I too lost my house about 9 months ago. The wifes company was sold and the whole staff layed off. She had 11 years with the company. All I asked for was a little help on my monthly. I made it clear I had no intentions of walking away, didn't care that the house was now worth -50%, didn't ask for my loan to be changed, I just wanted some help with my monthly payment until she was able to get back into another job. They strung me along for 5 months before they basically told me tough ****. The house sat vacant for 6 months before it finally sold again. Do I have a little resentment towards the banks, yes I do. Not everyone decides to just walk away because of a loss. I did everything I could to keep it and still got stiffed. Or at least everything I could with the knowledge I had at the time. This is why I'm taking this Investing 102 thread so serious, NEVER AGAIN will they play me for the fool.

Man, I am sorry that it happened to you.. you seem committed to bouncing back.

I hope to let this thread steer it's way back to investing. I do not want people to feel old wounds.

Thanks for sharing your story, and I will try to share info to help going forward, and not looking back...

I had a few MAJOR setbacks in life before I got to the never again stage..

The wolves are always ready for us to make a mistake.. I had a fortune and lost it all...I rebuilt it, and now I am with you, NEVER again , will i let someone else control my life...Only the man upstairs and my Health can stop me now..

I wish you the best.. With Greg and others help, the future is ours..

[Sieg]

Condolences Jose, it's no fun being taken down by the corperate boys in suits. Which is one of the primary reasons I deal with a local bank, I previously dealt with First Interstate (B of A now) and learned early on they were becoming too big for me to do the type of business I like to do......face to face with a genuine caring human.

Stay the course, you'll survive and be a better and wiser person for it.

[GregWeld]

The difference here Jose is that you TRIED to do the right thing... and I commend you for that. If a guy tries -- and it doesn't work out... then that's the way it goes sometimes - but you made an honest attempt to do your best.

People don't start businesses because they're afraid they might fail. If you're young and have time to recover from the failure -- I always say go for it... failing is not strike against a guy in my book -- it's a plus because it tells me he was willing to take the risk to raise himself up. That takes guts - and most come out of the failure a better businessman. Most of the guys I know that are successful have failed at least once.. and it's also why we have LLC's and Corporations - because people know things can and do go wrong - and they protect their personal assets thru these.

I will also tell you - the only money I've ever lost - was investments in sure fire 100% the coolest ideas in the Universe... If I didn't think that way - I wouldn't have invested in the first place.

The Investing 102 school says -- that's okay -- as long as you keep those investments to a very small percentage of your investable dollars.

[Bucketlist2012]

Originally Posted by GregWeld

The difference here Jose is that you TRIED to do the right thing... and I commend you for that. If a guy tries -- and it doesn't work out... then that's the way it goes sometimes - but you made an honest attempt to do your best.

People don't start businesses because they're afraid they might fail. If you're young and have time to recover from the failure -- I always say go for it... failing is not strike against a guy in my book -- it's a plus because it tells me he was willing to take the risk to raise himself up. That takes guts - and most come out of the failure a better businessman. Most of the guys I know that are successful have failed at least once.. and it's also why we have LLC's and Corporations - because people know things can and do go wrong - and they protect their personal assets thru these.

I will also tell you - the only money I've ever lost - was investments in sure fire 100% the coolest ideas in the Universe... If I didn't think that way - I wouldn't have invested in the first place.

The Investing 102 school says -- that's okay -- as long as you keep those investments to a very small percentage of your investable dollars.

Words to live by...

The most successful people have failed more than they succeeded...

A Hall of Famer in Baseball needs to only hit the Ball 3 out of 10 times to make Cooperstown...A .333 average..

The post it note came from a failure at making a permanent glue....the opposite happened..

Edison and the Light Bulb..how many failures ? Hundreds? Then Boom...

It is the people who get up after failure, and learn to never repeat that failure, that make it..

Very few have hit the big one on the first shot...

I have had multiple successes, and multiple failures...

The times that I did not get up and move on, bad things happened..

EVERY time i got up from a loss or failure, and i moved on, great thing eventually happened..

Jose, this will make you stronger, and wiser..

And as Greg said, at least you tried..The example I used , was of family on a self destruction mode, that they caused.

You just got caught up in the big mess.

Mike V.

[Fluid Power]

Great question -- and I hope I don't come off as sounding arrogant or like a smart ass with my response.

#1 -- I don't need the money so I'm okay taking the capital hit.

#2 -- I live in Seattle - this place is a zillion miles away in Phoenix

#3 -- Running the numbers - the rent is $1250 (other 3 bdrms there) so after I pay $250 month HOA - Insurance - Property taxes etc - Utilities etc... my net might be $700 a month or less. Less if I hire a "professional" property manager cause they take their share. $700 a month to me is about like most people picking up a dollar... it just isn't the kind of money I think about.

Now -- IF I had a mortgage - and needed to cover "most" of it -- and didn't want to ruin my credit by walking away (or doing the morally correct thing of actually paying my bills)... then that would be one thing... and especially if I thought the market might come back within the next 3 to 5 years. Remember that the market would have to TRIPLE for me to get my money to break even - and then if you calculate time money line -- I'd own the dump for 10 years and still probably take a capital loss.

If I sell it for 100K --- net -- I can invest that and MAKE 5K per year tax free in Muni bonds and have absolutely no worries or hassles.... like when the renter fails to pay or pays late - or goes bankrupt and it takes me 6 months to evict - or runs off after trashing the place.... and it costs me everything I "made" for the year plus to rehab it (again).

So for me -- I'm not in a positon to have to cover my arse... I'm in a position to just be able to make decisions on what I "want to do" not what I should or could do.

It's why our boat was called "Options".... everyone thought I was a stock trader -- but it was really because the boat was just another "option" for how we wanted to spend our time. If I was a trader - and the boat named Options -- I'd have named the dingy 'Puts and Calls".



Not at all Greg, I just wasn't sure what you could rent the thing for. At those kind of numbers, I agree, not worth the hassle and the 100k could go somewhere else.

Darren

[GregWeld]

That's the whole deal in a nutshell Darren. Everyone has different financial circumstances - and fortunately for us - the "loss" just isn't worth the hassle of trying to "save it". While I would have felt better about the "investment" - because nobody wants to feel what they did was stupid... regardless of the dollar amount... this turned out to be a stupid move. I have a long list to which it can be added.

And - as I said - if I had a mortgage on the place - it would make more sense to rent it even if I had to subsidize it a little each month... and hold it til I could sell it for the mortgage. But I don't... so I look at it as cash (employees) not working real well that would need lots of management to do very little in the way of a return.

We've actually discussed just donating it to a worthy cause... but couldn't get it finished in time to do that in the 2011 tax year. I can not claim the purchase amount as a loss deduction If I could then it would really be worth it.

[lmnop]

Hey Greg*
*You just have to buy down your loss on your condo. By three more at 100k. Total investment on 4 units 600k or $150k per condo. Net rent per unit $700 so on 4 units that is $2800 per month. That is 5.6% on the 600k or $33,600 a year until the market comes back. I know you know this and don't care for the hassle but $1200 a month on $100k condo is really good rent for the landlord. Plus I learned about buying down a loss a couple of pages ago.*
Ray