Tuesday, November 14, 2006

FICO got you down?

Housing inventories are up, prices are leveling and individuals wanting to buy homes have a selection to choose from. This sounds great, so why the long face? Oh, you were expecting to make $100,000 this year in equity appreciation. Bummer.

It took my grandfather 40 years to sock away $100,000; mom worked for the telephone company for 40 some odd years to save for her retirement. Why are we so opposed to following the footsteps of those before us, is it an antiquated way of life to finish school, get a job and work your way up the ranks? Although there have been significant improvements, I don’t know of anyone who has reinvented the wheel.

I’ve been following the story line of a young individual that has gotten himself into trouble trying to fast track his success through real estate investments – not a bad way to make money; it’s a stable investment, contrary to the doom and gloom reports of the bursting bubble. I’m not even sure what that is. Last time I blew a hole through a bubble it was G – O – N – E gone and it didn’t come back. Anyhow, this guy purchased the get rich quick pill and bypassed us all. Or did he?

At 23 or 24 years old there’s little life experience and not much hindsight to reflect on. Except in my case I knew everything there was to know at 23. Unknowing if my annoyance with his story stems from him cutting in line ahead of me; after all, I have been waiting longer than he has; or because of the overpriced lemonade he’s trying to sell the public made from his sham lemons. I smell another investor book deal down the pike. After all, most of the get rich quick charlatans have made way more money on the products and seminars than they ever did in real estate investing.

Man have I gotten off track! Back to the storyline, the good news is that property ownership is still attainable and available for most people regardless of credit. Think back to the early 80’s; remember when interest rates were 17 percent? Buyers and sellers had to be creative and if you were a real estate agent who survived it was because you knew how to negotiate. Unlike most agents today, who make a living just being licensed. Yeah, I said it; most real estate agents today are terrible, even a blind pig can find a truffle now and again.

There are many ways to buy property with poor FICO scores; by the way, a great FICO score is totally over rated. Hey, life happens! A large percentage of borrowers are sub-prime and even more are sub sub-prime; it’s circular. Investors buy trustee sale properties at prime rates; sell them through land contract to sub sub-prime borrowers at sub sub-prime rates. After a year or so the land contract borrower, with the benefits of homeownership restores their credit rating to a sub-prime status and refinances paying off the land contract freeing the investor money to purchase more trustee sale properties and so on and so forth…
So the good news is the market is still strong. Maybe your property won’t appreciate 33% in one year but what’s the hurry? Real property isn’t going anywhere.


Anonymous said...


On Casey Serin's site, you stated that you found him arrogant. I suggest you reread some of your past blog entries because I find you arrogant and annoying. Perhaps this is why you have no follow up comments at all. I'm not trying to defend Casey. I think he's slime. I just made the mistake of landing at your blog. The fact that you're jealous of a total loser is pretty funny too. Why don't you go out and buy 7 houses since "there's no such thing as a real estate bubble"? You claim to have generational experience in real estate and yet you don't believe in real estate cycles. Have you had a head injury?

Paul R. Andres said...

I love anonymous posters, blah, blah, blah…

I believe that the real estate market is circular and not a giant bubble – maybe it wasn’t clear for the anonymous poster.

my post on Serin's site - http://iamfacingforeclosure.com/122/avoiding-stress-more-stress/#comment-16999