Maybe I Won't Buy That House Afterall...
A powerful quote I've heard from many sucessful people comes from Warren Buffet:
"Be fearful when others are greedy. Be greedy when others are fearful."
Source I heard it from: TheKirkReport
I've recently spoke about how I'm buying a house, and about to get financing for it. Well I'm doing a double take after really looking into this. I have no doubt the area I'm buying in will be developed like crazy in the coming years, but there's a little problem lately: All those financing problems in the sub-prime market.
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I look at it this way:
So at the very height of these years of steadily increasing prices and easy lending practices, I'm actually BUYING right now??? Hmmm...
What I'm trying to say is that some of these people with wacky loans will eventually fall....and that means foreclosure. I feel I'd rather hold onto my cash right now and scoop up a home in a year or two when others start getting desperate to sell.
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A family friend of mine who I highly admire for his real estate accumen through the decads sold almost ALL his holdings about 2-3 years ago, when things started getting really hot. I asked why he sold everything, because ever since I've known him he's had multiple holdings and deals concurrently going.
He said, "I'm waiting till 2008 or 2009 when all the foreclosures start happening." Keep in mind he told me this about 3 years ago.
I see what he's talking about now. The way this man has made his wealth is by getting DEALS. I'm getting pretty much a standard rate on this new homes, not even a "decent" deal, and definitely not a bargain price.
So for now I might be backing out of buying the home. All I had to do was put down $500 for the deposit, and if for some reason I couldn't purchase the house, I get it back. Since the last month they've yanked the financing option I was planning on doing, so because of that, I'll be requesting my $500 check back from Centex and the whole deal is off.
Not a bad learning experience....and this time it was actually free :-)
"Be fearful when others are greedy. Be greedy when others are fearful."
Source I heard it from: TheKirkReport
I've recently spoke about how I'm buying a house, and about to get financing for it. Well I'm doing a double take after really looking into this. I have no doubt the area I'm buying in will be developed like crazy in the coming years, but there's a little problem lately: All those financing problems in the sub-prime market.
-----------------
I look at it this way:
So at the very height of these years of steadily increasing prices and easy lending practices, I'm actually BUYING right now??? Hmmm...
What I'm trying to say is that some of these people with wacky loans will eventually fall....and that means foreclosure. I feel I'd rather hold onto my cash right now and scoop up a home in a year or two when others start getting desperate to sell.
-----------------------------------
A family friend of mine who I highly admire for his real estate accumen through the decads sold almost ALL his holdings about 2-3 years ago, when things started getting really hot. I asked why he sold everything, because ever since I've known him he's had multiple holdings and deals concurrently going.
He said, "I'm waiting till 2008 or 2009 when all the foreclosures start happening." Keep in mind he told me this about 3 years ago.
I see what he's talking about now. The way this man has made his wealth is by getting DEALS. I'm getting pretty much a standard rate on this new homes, not even a "decent" deal, and definitely not a bargain price.
So for now I might be backing out of buying the home. All I had to do was put down $500 for the deposit, and if for some reason I couldn't purchase the house, I get it back. Since the last month they've yanked the financing option I was planning on doing, so because of that, I'll be requesting my $500 check back from Centex and the whole deal is off.
Not a bad learning experience....and this time it was actually free :-)
Labels: Housing
posted by Neville @ 1:31 AM
38 comments
38 Comments:
$50 billion mortgages are set to reset in December 2007. $35B are sub-prime loans.
The foreclosure process usually takes 3-5 months. So expect to see fire sales next spring.
You spend a whole post with cute little thought bubbles "justifying" why buying a house now is not such a good idea. Yet the money shot is in the last paragraph:
"So for now I might be backing out of buying the home. All I had to do was put down $500 for the deposit, and if for some reason I couldn't purchase the house, I get it back. Since the last month they've yanked the financing option I was planning on doing, so because of that, I'll be requesting my $500 check back from Centex and the whole deal is off."
Gosh, who woulda thunk that they'd actually require you to, y'know, demonstrate income and all that kinda semi-important financial stuff to prove you can actually pay for the house in the midst of a credit crunch...hmmm....lets see...
http://www.nevblog.com/2007/08/house-update.html
At 10:59 AM, Anonymous said...
Only an idiot builds a house on impulse. What a shmuck.
Dying to see how you get a mortgage with no verifiable income.
At 11:05 AM, Neville said...
Anon,
Did you even READ the post?
"I just have to prove to Centex homes that I have about 3 months worth of mortgage payments in the bank and have decent credit, and I can get full approval."
God...this is why I removed comments for a while.
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Or this other relevant comment left by another anon:
At 6:13 AM, Anonymous said...
Hey J, you really have your nose up Nev's ass. Why is that?
Don't you find it odd that Nev has a "financial blog" yet knows nothing about finances? I mean, look at his "income" on the right. He lists a magical income generating "change jar," that if he patented he could sell for a gazillion dollars!
Here, he decided to just build a house...y'know, just because. Crappy market...foreclosures everywhere...if Nev was a financial guru, he would have gone out and bought a foreclosure for cheap.
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You are, indeed, the one-eyed King in the land of the blind...
Now it's just a bunch of meaningless posts such as "i'm goin to (insert city)" or "here's pictures of the 2nd apartment that i'm renting" and many other posts basically describing his money wasting ventures.
I really haven't seen anything about making money in forever besides the post about selling ad space.
Also it's gotten to the point now that not only does he just post about how he's blowing his money, he also only posts maybe once every week or two.
Before it seemed like he was working hard to make money and to make the blog a good one, now I think the money has gone to his head and he's lazy and doesn't care.
As to the last Anon, I don't post a lot about how I make money anymore because what happens is I get copied all the damn time.
People see I'm making money, I show how I do it, so they just copy exactly what I do.
I've been VERY open about ventures like HouseOfRave which has now been copied TONS of times, and while none have got to the level of HouseOfRave, it still gets annoying when people try to directly poach on my business.
Although describing how a business works helps a lot of people, it also gives people the tools to copy it without any originality. I encourage people to start their own things, but don't directly copy mine, and if you do, at least go after a different market.
And I wouldn't call visiting all these places and friends in various cities a WASTE! Isn't having fun the ultimate end goal to making money? It is for me.
I save enough to live pretty well, but I also spend enough to have a lot of fun. There's no point in sitting on your money like a hermit. You've gotta find a good balance.
I'm invloved in two things I'd really love to speak about on the blog, but unfortunately would be copied very quickly if anyone knew they were making good money. So I talk about what I can.
...and this IS my blog, so I can write whatever I want, as frequent as I want. If you think I'm a fraud or useless to read, then by all means please don't visit my site. I'm sure if you had a site I'd never read it as well :-)
I do understand what you're saying about being copied and not wanting to post your money making ventures because of that. It is a shame though cause that's one of the things I really liked reading about on the blog when I first found it.
It was more of a form of motivation to me to see somebody else making money, etc.
Here's a great story about a 17 yo who is doing what you can't do: make a living off of a website venture. Whateverlife.com, who gives away myspace page layouts, but attracts 60 million views a month, generating $70K a month in ad revenue.
http://www.fastcompany.com/magazine/118/girl-power.html
So you can brag about making $5500 on your facebook website, but if you had any sort of business sense, instead of a big mouth, we'd be reading about you in a financial magazine, and not your crappy little blog.
What sites are copying you Neville? Let's see how well they are doing compared to you! =)
Gents and ladies... easy on the negative comments. If you don't agree with what Nev does/says, just don't read the darn blog.
Nev, maybe requiring registration to allow comments would help solve this problem.
Bud, keep blogging about WHATEVER THE HECK YOU WANT.
Capitalist societies thrive on competition....bring it on." -Nev (http://www.nevblog.com/2005/12/how-my-first-online-business-works.html)
Guess that changed. Maybe his business started slowing down after raveworx.com, dreamrave.com, ravehaven.com, clubandrave.com and clubthings.com joined in.
No longer a proponent of capitalism?
So if Nev doesn't like to be critized, he can turn off the comments again. But he can't, because he is an attention whore and he knows that his page views will plummet if he turns off comments.
BTW, it is quite hypocritical of Nev to complaint about people copying his business when (1) he encouraged people to do so and (2) 95% of "his" ideas are poached off of others. Quite simply, Nev has no original ideas.
Nah, those sites predate house of rave. If there were people copying him then they would have newer 'birthdates' and undoubtedly an updated look. House of Rave is not as much an eye sore. You wonder how any of these places make money looking the way they do..
I don't know if you made the right decision but you looked at this from a purely financial perspective. I don't know the details of the real estate market and investments but it is good that you did not fall in love with the property.
These foreclosures are the result of people buying too much house than they needed or could afford.
I get this feeling that rather than deciding against the house, you simply can't afford it. After all, your glorious account to buy things for the house never made it past the first deposit.
Has Nev jumped the shark? I think so.
Now, for the shocker. Nev is pulling your collective legs. How do I know? Look at his tables that show income, etc.. Using Centex own loan estimate program, on a $100k mortgage ($60k less than Nev's), the payment was $815 a month. House of Rave and its clone, Body Monkey, aren't going to generate this kind of income and still allow Nev to take 10 vacations a year.
I can't wait till reality sets in when he's ready to retire, only to find out that spending all that money on vacations came at a very high price when you think of the opportunity loss of what could have been gained in an IRA or Mutual Fund.
Historically, buying a house in Austin city limit is NOT a gamble, whereas its suburbs (and most other parts of the country) it may be. Texas is ginormous, and each planned community is being built farther and farther from Austin, thus decreasing the value of its ever-expanding homes, all while increasing the value of homes in Austin c.l.
Being a home owner -- after reading the blog for a bit and laughing at anon comments, I would have to agree with some of them. Without a solid, proven income most banks and even mortgage brokers will not extend a loan to you. It would be easier if you were self-employed (at least then you'd be able to do a "no doc" loan). It sounds like you're making good money from your projects, but ... would YOU cut a $200,000 check to someone who doesn't have a job?
Don't forget that even during the dot com crash of the early '00, Austin realty market did not "tank", but simply dipped and quickly recovered a couple of years later. Why would the market "tank" when the town is filled with people who are making at least $75k+ a year, three times the national avg?
You can still find a 2,000 sq. foot home in Acl for around $200k, which will run you $1,250 (loan) + $500/12 (ins.) + $5,000/12 (tax) = about $1,600 a month. Because most of that is interest, you'll get it back come tax time.
Good luck in your endeavors and keep posting! I love your blog!
slaughter lane
I am in the same boat you are. I have looking around for property for over a year (my first home), but the market is horrible at this point. I believe I am going to do as your family friend suggested and hang on for a year or two and wait for those foreclosures.
Many people have commented on how it may not be the right decision, perhaps they are right if Neville was investing with plenty of left overs, however, this is the first time he's bought a house and the biggest investment of his career yet. It's less of an investment to him but somewhere to live - perhaps if it was the 3rd or 4th property in his portfolio he could afford to take the risk and it may pay off in the long run, but for now - he can't afford to lose before he gains. Good choice.
Many have quoted what they are paying, i'm 22 soon and am looking at buying my second home (moving house, not investing). It's around the £150 mark, i guess roughly $300 000. I'll be paying around £1200 ($2400) a month on my mortgage with an interest rate of about 7%. The market is different in the UK but looking at what some of you guys are paying and probably getting twice as much - it makes me so depressed to know i'll be spending so much, good for the long run i guess.
payday loan
let it get value and sell it.
check http://www.efamilyfinance.com/articles/95/some-valuable-real-estate-secrets
Simon Canada
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