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Miss Kitty

Meow
Jun 10, 2005
47,017
1,131
69
Jellyfish said:
I had lunch with a business associate Friday who was stressing over just that. Had his lot on market, approaching build out date, never intended to build, 3 year option ARM adjusting soon...etc. Said if he does not sell by July payment will double. His problem is not "crashing values", it's the carrying costs/transaction costs/mortgage cash flow dynamic vis a vis what he can sell it for. For buy and hold/build/keep the market is not an issue. For those who lived on the edge, problems for sure.

I am hoping for some great deals this year so I can buy in...I'm long term.

Isn't that the way the cookie cumbles sometimes?
 

Bob

SoWal Insider
Nov 16, 2004
10,364
1,391
O'Wal
Jellyfish, your acquaintance is indirectly educating you as well here. If he is sweating his first option ARM adjustment, then he was totally unqualified to buy the land in the first place. The lender just enabled him to financially corner himself.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
Jellyfish said:
I am hoping for some great deals this year so I can buy in...I'm long term.

These lots with "build-out dates" are getting interesting to watch...they add a whole new layer of risk to real estate investing where none existed before. For someone who is ready to build at any time, I'd say the chances of picking up one of these lots at or below original cost will get better and better.
 

Jellyfish

Beach Lover
Jan 6, 2006
89
0
Atlanta
If he is sweating his first option ARM adjustment, then he was totally unqualified to buy the land in the first place. The lender just enabled him to financially corner himself.

If you have decent credit or home equity, the banks and other lenders are almost like drug dealers...they have been, and still are, pushing these crazy mortgage products that enable people to do stupid things. The "option" ARM is my favorite :rotfl: the option part is you can go bankrupt if you wish since your loan amount goes UP, not down.
I know these produts can be used to leverage great returns, but I like sleeping at night.

Everyone looks like a genius when values are going up- the latecomers will be the ones who get hurt if they are in it just for the flip.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,770
802
TooFarTampa said:
Investor + speculator. Right Shelly?

Is this a term you are trying to coin in your thesis? It's pretty clever actually.

That's correct. An "Investulator" is a hybrid--a cross between an investor and a speculator. They claim to be an 'investor' to be PC in social circles or to secure a property where flipping is discouraged--but they are really in the game for the short-term money grab as a speculator or flipper.

(I can't take credit for coining the phrase--it's being used in investment circles.)
 

Cork On the Ocean

directionally challenged
You've hit the nail on the head with your analysis of the investulators (cute), Shelly. Thanks for asking Kurt, I was wondering myself.

Jelly, you make a good point about the lenders and their creative loan programs. I remember a term coined "lender liability" several years back where there could be liability on the lenders part for lending money to people that couldn't afford it. Any attorneys here that could comment on the concept of lender liability related to all these non-traditional loans that they've made that could financially bankrupt the borrower?
 
I like to think of this speculative real estate buying (like pre-construction, flipping, etc.) by the novice investor and your normal Joe Citizen to what I call the Money-Magazine-phenomenon. By the time the hot stock tips make it to print, they are rarely hot tips anymore. Same concept in this real estate game. Those that made great money were #1 here before the rest of the world found out what was happening and/or #2 are/were seasoned investors and/or #3 had/have either cash or enough cash to weather the storm. I have also heard a lot about "mortgage fraud" from ECAR over the last week. Hold on for the ride!
 
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