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.

—————–

I look at it this way:

There’s currently huge problems in the financing world, many lenders are going bankrupt (even some big ones) and the last few years have been a lending-spree for them, meaning people that really shouldn’t have got large loans were getting them with ease. This obviously means almost anyone interested in buying a home could. Which means increased home demand, which means increased prices.

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 :-)

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    Blog posted on: September 11, 2007

    47 comments on “Maybe I Won’t Buy That House Afterall…

    1. Wren

      Good call. The news alone about the housing bubble burst alone might discourage people from buying houses, therefore decreasing prices.

      Reply
    2. Anonymous

      Just because the rest of the US is in a housing crisis, that does not mean that your area is in one too.. That’s the most common mistake newb investors make.. And that’s why your family friend hasn’t sold ALL of his holdings.. If you were in the ridiculously appreciated areas of the US like San Fran, San Diego, etc, then of course you’d be dumb to buy now. Personally, I think $160k for a house is cheap.. and if you really believe that the area is going to develop in the long-term and you are planning on keeping it for the long-term, it doesn’t really matter whether you buy it at $120k or $160k..

      Reply
    3. Johnie

      All you really need to do is look at this chart: ARM Reset Schedule.

      $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.

      Reply
    4. Anonymous

      I see they tried to sell you a wacky loan. Buy a house when you qualify for a traditional loan. Right now you cannot afford a house

      Reply
    5. Anonymous

      Nev, you are such a bullshitter it is amazing. Actually, its pathetic…although not as pathetic as the asskissing following on your blog.

      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.

      ——

      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.
      —-
      You are, indeed, the one-eyed King in the land of the blind…

      Reply
    6. Anonymous

      Hey Anon@841. U R rite on the money. Nev is a fraud. I have been reading this blog for more than a year and it makes less and less sense. Nev is not growing as a businessman,or as a person. If he is then he is doing a great job of hiding it.

      Reply
    7. Anonymous

      When I first found this blog it seemed pretty cool, Nev was keeping the blog updated with money made from his websites, he was building websites to make money, and posting other money experiments.

      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.

      Reply
    8. Neville

      Oh you crazy Anonymous posters, you make me laugh!

      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 :-)

      Reply
    9. Anonymous

      No i agree it’s not a waste of money to go have fun with friends and stuff, what I meant was you make more posts on spending money than you do on money you make, which makes it appear that your blowing money like crazy and not doing much to make money anymore

      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.

      Reply
    10. Anonymous

      Nev, you are hilarious….now you are claiming that you are sooo successful and soooo widely followed that you can’t brag about your awesome businesses because they’ll be copied. Are we really supposed to believe that? I mean, what a load of crap.

      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.

      Reply
    11. Anonymous

      “HouseOfRave has been copied TONS of times?”

      What sites are copying you Neville? Let’s see how well they are doing compared to you! =)

      Reply
    12. Sam

      Wow. It’s disappointing to see the amount of negative comments I read Nev. It’s a surprise you’ve stuck around to keep blogging and you’re right, I see why you removed comments. I rarely post comments here, but I always read.

      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.

      Reply
    13. Anonymous

      “I welcome anyone to start up a similar business, if I was scared of competition I wouldn’t have wrote anything.

      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?

      Reply
    14. Anonymous

      Hey Sam…here’s an idea: if I don’t agree with Nev’s line of BS, I’ll call him out on it. Do tell…what in any of the above comments, while negative, is errant? That’s right…nothing.

      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.

      Reply
    15. Anonymous

      –”Guess that changed. Maybe his business started slowing down after raveworx.com, dreamrave.com, ravehaven.com, clubandrave.com and clubthings.com joined in.”

      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..

      Reply
    16. Anonymous

      One thing too — you have to call a goat a goat — Nev’s biggest asset in my opinion is his ability to hype things and get attention. Anyone can go out and do any of the things Nev has done, but would anyone care? Being mildly attractive doesn’t hurt either. What the rest of you lot got going for you?

      Reply
    17. Nagita

      Nev,

      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.

      Reply
    18. Anonymous

      I love how “body monkey” became a House of Rave clone.. Most of the financial parts of the “financial blog” are long gone. Nev, I don’t mean to sound disrespectful, but 10 vacations a year, and no real job isn’t going to be viable in the long term. Most of your accounts are exactly where they stood months ago.

      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.

      Reply
    19. Anonymous

      Lots of comments, lots of people reading, more traffic for Nev… Maybe Nev is the Anon posting against himself to create a little show on his blog and keep people looking. It works for me. For that matter, maybe Nev is typing this comment.

      Reply
    20. Anonymous

      I’m surprised Centex was stupid enough to build this house in the first place..

      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.

      Reply
    21. Anonymous

      More comments does equal more traffic. Sadly for him, there’s probably more people coming to read the comments than the blog

      Reply
    22. Millionster

      Centex conveniently leaves out the part about the TX property taxes. That $800 mortgage is more like $1200-$1300 in Texas. I was looking at Lennar houses near that Centex plot, and the rate for a 180K house was nicely $1100. After all the other fees and taxes it was more like $1700/mo. Hell to the no. Probably not worth it in the end. Austin doesnt have very friendly walkscores.

      Reply
    23. ES

      All wrong. Check out realty sites for some solid research — Austin real estate market does not fluctuate like, let’s say, Arizona or Michigan. Suburbs of Austin, like Pflugerville, Round Rock, Cedar Park, and Georgetown DO … because they are heavily dependent of how well Dell does.

      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!

      Reply
    24. Anonymous

      hey Nev. I agree that it might be prudent to hold off on buying a house, even in austin. Banks and lenders are rolling back a lot of financing options due to the national mortgage “crisis”. Makes it tougher for first-time and self-employed borrowers to obtain financing with good rates/terms. However if you can put 5-20% down and have good credit you can still get a loan with decent terms. There is a good chance the fed will cut rates within the next year. That should make it cheaper for everyone to borrow money. I also live in Austin and have a good job and good credit. However my rent is really cheap so I am saving as much as possible for down payment/closing costs and waiting for rates to drop. Then I’ll buy a house or condo sometime in 08 or 09. Also if you check sites like zillow.com you can see that austin/travis prices are dropping just a bit (after the nice run up the past decade).

      slaughter lane

      Reply
    25. factoring

      Hey Neville,

      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.

      Reply
    26. Dave

      You have probably made the right decision there Nev. With the American housing market is as it is it’s hard to predict which way it’s going to turn and it’s probably going to get worse before it gets better.

      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.

      Reply
    27. Mark

      Even I will say wait and watch for sometime. I am not against the rent as well, But if you can pay for your own home in form of instalement then the rent per month it will be great as after some time you will get your own home and in rent even if you paying it for 100 years you can not be the owner of that property.
      payday loan

      Reply
    28. Raymond

      Neville, you and I are in the same boat. I wanted to buy a house this year but the real estate market bubble popped and has me very concerned. This is the time to take advantage of deals and the deals have yet to materialize fully. Give it 1-2 more years and I am certain house prices will have dropped to their very lows.

      Reply
    29. Anonymous

      you’re really wasting this blog. Definitely not using it to it’s full potential. If you posted daily and posted referral links to products or sites that had anything to do with money, business, or blogging, people would be all over it.

      Reply
    30. Jon B

      nev, 160k for a new house in austin is cheap. I think the area is good and has potential and don’t let the housting ‘scare’ shy you away. You have good credit, you shouldn’t have a problem getting a good lean at a good rate. Their has been a major risk adjustments with the subprime lending woes and therefore you’re out of luck if you have horrible credit.

      Reply
    31. Chase

      I see they tried to sell you a wacky loan. Buy a house when you qualify for a traditional loan. Right now you cannot afford a house.Don’t try that with bad credit.

      Reply
    32. CoachingByPeter

      Buying real estate is a complicated process that you do not want to mess up with. It is going to be the most expensive purchase you make in your life. Therefore, make sure you are well educated and understand the entire process.

      Reply
    33. sadhousebuyer

      Good thing you backed out. We have been trying to buy a repo in Ar. Unfortunately, found out the house needs a totally new roof, there is leakage inside — which probably means mold — and US Bank in CA is soooooo difficult to deal with.

      In addition to the roof, the previous owners took all the applicances — including the kitchen sink! No joke. We have determined that roofing, applicances, kitchen sink and faucet, etc. will cost us an additional $20,000 — and the bank wants us to pay their full cost! I think we will move on — pity the bank does not care if the house falls down or not!

      Reply
    34. Perth Property

      If you have plans in buying a house think that it’s usually better to buy than to rent, but not in every case, and usually not right away. It usually takes at least a few years for buying to become a better deal than renting. But the latter is the best investment you’ll ever had.

      Reply
    35. phoenix property management

      We purchased a foreclosure a while back and got a great deal. Luckily my wife is in real estate and her brother is an expert in the housing market. We knew what to look for at the right time. Banks will stiff you if they can so you really do need to be educated when looking for a home.

      Reply
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