As I sit here, reflecting on real estate of the past and experiencing the present real estate mortgage market, it's hard NOT to feel bitter toward banks/lenders, on behalf of those who, now, need a loan to purchase some real estate.
Assholes ("Pioneers"), like the, now, defunct Countrywide, contributed to the mess we find ourselves in.
While it's yesterday's news, we all know why Countrywide, and many other "pioneers", no longer exist.
They "developed products", they knew were designed to fail - and they disregarded the people they trapped within their f*cking GREED ! - in the worse-case scenario we reflect back on, today.
I'm using Countrywide as a representative of the masses of banks/lenders that FAILED and were dissolved and/or sold/traded off to "responsible" such institutions.
Listen, our economy is in shambles because of greed, NOT capitalism.
Technology has turned us into robots - and unrealistic robots, at that.
We have so much information flying at us, from every direction, that we can't filter it all.
What does this have to do with getting a loan ??
What if you had a loan on some real estate, back in 2000 something, and the bottom fell out ?
You were always earnest in paying your, monthly, debt - believing your "investment" would provide shelter (as in taxes (mortgage interest/1099) and physical shelter too) and payoff in the end, relating to cash value.
Well, here we are, in 2012.
Cash value ? IF....with emphasis on IF, you purchased pre-2005 and did not over-leverage your real estate, you're probably sitting ok, generally speaking.
That said, now you're thinking about selling and you're expecting to get more than your investment back, at the POS (Point of Sale, or closing), resulting in a nice payday AND your ability to, now, take advantage of the real estate prices of today's market.
So, you get an offer on your property, that you believe is acceptable - and life is great.
Your buyer has a pre-approval or they're pre-qualified and you just keep smiling at the purchase and sale agreement, imagining how you're going to use the funds, after the closing of the sale.
25 + days go by and the closing date, as reflected in you PSA (Purchase and Sale Agreement), is approaching.
You haven't heard much, if anything, from your buyer/buyer's agent - or even your listing agent (DON'T EVER USE A LISTING AGENT/PAY 6% TOTAL COMMISSION) and you're concerned.
You decide to inquire and find that your buyer is having a tough time getting financed.
Underwriters are not satisfied with, what would have been acceptable in "reasonable times", your buyer's ability to re-pay the proposed debt that would result, as a mortgage, on the property you're trying to sell them.
NOT only that, but the lender's appraiser, who arranged to come out to your property, came back with a value that is less than what your buyer contracted to purchase your property for.
Remember, the real estate agents AND the lender all assured you that "everything will be fine".
So, 25+ days rolled by and all your emotions and dreams ran their course - now you're losing your buyer AND have to accept the fact that your real estate is not worth (according to the appraisal) what you were selling it for.
HERE'S THE DEAL:
There are many ways to find out if you're over-leveraged.
Simple ways are to Google/Bing/Yahoo....or whatever, the address of the property you're trying to sell.
What's the, CURRENT, tax assessed value ?
What have, similar, properties - in a 1 mile, or less, proximity to your property, sold for - in the last 45 days ??
Simple due-diligence will help you to arrive at a realistic value of what your property is worth, in today's market.
That will help your expectations too AND the research will, also, help you to understand today's mortgage market.
I believe that education is paramount in anything you opt to do, but when it comes to understanding the purchase and sale of, possibly, your most significant "asset", your understanding is most critical.
Lenders have gone from one extreme (Lending to everyone) to the other extreme (20% down and/or highly constrained guidelines).
Couple those "guidelines" with a challenged GLOBAL economy and "struggling" housing values and you have all the information you need to price your real estate accordingly, or to "HOLD" that real estate until things improve.
Whatever the outcome, it's VERY cool to have options.
New To You RE, LLC
Nowadays, my business is taking lots of my time - and I'm cool with that.
It's an exciting AND rewarding business.
For the faint of heart - it's VERY stressful too.
So, just exactly what is it about real estate investing that makes the risk worth the reward ?
In a word: wealth
Wealth has many definitions, but I'm referring to 2 elements of wealth that makes it worth it - for me.
#1: Independence - I get to live any way I want to, as long as I have the discipline to self-motivate and perform the steps, every day, needed to make deals happen.
There's nothing greater than having the freedom to plan your day any way you want to.
Any time you want a day off, you got it.
Need a sick day ? Done
Want to take a drive to Yellowstone to check out the beauty and pull some inspiration from Old Faithful ? Done
Whatever you want, whenever you want it is all part of the experience.
Having those freedoms is powerful and deeply satisfying.
Of course you realize I, only, put independence at #1 ASSUMING you have a handle on #2....right ?
#2: Systems - Methods, methodologies, people, programs, routes, associations, etc.
Whatever it takes to make your time spent, running this business, successful - you've implemented it and you do it, EVERY day.
Another reason I LOVE real estate investing is because it's something tangible.
It's a physical possession - I can touch it, feel it, walk it, live in it.........you get the point.
It's NOT like stocks, bonds or mutual funds - which are NOT tangible.
I can use real estate in many different ways: I can borrow against it, change it's shape, size, color - modify it in almost any way I choose - as long as I understand the game, right ?
I mean, before I put $$ into the real estate I purchased, I have to be sure I purchased it right and, after I sink "X" amount of $$ into it, I have to be sure I can sell that asset over and above my basis, which results in the 2 elements of wealth I discussed earlier.
In other words, I have to have a plan BEFORE I go in.
Wealth also relates to it's, obvious, definition: Money
When you have $$, you have the ability to empower.
What are you interested in ?
Do you like getting out on the open seas, with some of your closest friends, in your Ocean Alexander ?
Do you like helping those in need ?
Do you like contributing to the growth of your favorite university ?
How about those season tickets/box seats at your favorite sports stadium - even if it's a 3 hour flight a couple/few times a month ?
How about funding a non-profit that is significant to you and the cause(s) you believe in ?
Yeah, real estate has created more wealth than any other investment and, if you get a good handle on real estate investing, you can achieve all of the above.
For these reasons, and many more, I believe real estate investing is your best investment.
Want to look into the possibility of investing with us ?
Happy investing -
New To You RE, LLC
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