Tuesday, April 21, 2009

Realitter Brain


You just have to read this to believe it. From the Press Enterprise:
Inland residents find ways to cope after foreclosure

Facing Reality
Carol Byrd, a 42-year-old real estate agent, earlier this year tearfully watched her lender foreclose on a house with a pool, spa and view she had bought for $525,000 in Riverside and that had fallen in value to about $275,000.

The divorced mother of three children had fallen on hard times like others in her industry. Once pulling down an annual income of $200,000 to $350,000, she earned a fraction of that in her new job working for a company that lists bank-repossessed houses.

It was her boss, a broker at Re/Max Results in Moreno Valley, she said, who advised her to stop struggling when it was obvious that, on her current $3,200-a-month salary, she could not afford the modified monthly mortgage payment of nearly $4,000 a month that her lender offered her.

Her biggest worry, she said, was whether anyone would rent a house to her because her credit was poor.

When a friend withdrew an offer to let Byrd's family room with her, she appealed to a landlord who had listed a house for rent. She went to see him armed with a recommendation from her employer.

"I literally sat down and explained my whole situation for an hour, begging and crying. I was desperate," she said.

She said she landed the lease after paying a $2,100 deposit and the first month's rent of $1,625. She said the landlord also insisted on examining the condition of her former house to be reassured she would make a good tenant.

Byrd said it is a relief to have enough income to cover her household expenses, and she advises friends who are over their heads in mortgage debt that foreclosure is not such a bad alternative.

One of the biggest changes in Byrd's life, she said, is how she handles her finances. "I just pay cash for everything," Byrd said.

Her goal is to save enough to buy small investment homes that she can rent out to boost her income. She said she knows she will have to pay cash for the houses because she doesn't have a hope of getting a mortgage for a long time.

Irrational pricing, failure to save, ruthless default and her goal is to own rental property?

15 comments:

Northern Renter said...

In the 12-step program, the FIRST step is to accept that the market is a power greater than oneself. Then one can start to change.

NR

Rob Dawg said...

SECOND step:
Power greater than ourselves can restore us to sanity.

Tyrone said...

You nailed it, Rob. I read the article and thought the same things. Annual income of $200,000 to $350,000 and nothing to show for it. She drank the kool-aid, deeply.

Property Flopper said...

I was a bit shocked by that too... with an income of $200k to $350k, why did she even have a mortgage? If she had a low rate, she should have left the loan, but socked away money. With an adjustable, she should have paid it off.

Sad in a way...

H Simpson said...

GMA was showing food pantries yesterday.

Had a nicely dressed realtor grabbing mac&cheese cause houses are not selling.

Don't remember NAR funding such programs in the boom years....

One thing for hammer bangers to think it was going to last forever.
Shame on realtors. They should know better just by reading a book or 2..

h.

tj and the bear said...

Like everyone else here, I'm going "WTH did she spend all that money on?"

She was only been pulling down that money for the boom years, so she had to have ramped up pretty hard on the expenses.

Rob Dawg said...

And talk about money stupid. She understands she needs to pay cash for an income property. Ever do the math on that?

$100k house in the Inland Empire can generate $8000/yr in rent. Add in tax benefits and subtract expenses and you are below tax free munis for total return. All she needs do as a divorced mom with kids is to save $100k of her $35k/yr salary.

El Hombre said...

Shit like this leaves me sad to be a Realtor.. How in the hell did this lady make $200k+/year and not stack it away?? That is a LOT of Botox!

I propose that anyone sitting for a RE license should be able to first demonstrate that they can in fact use a calculator..

Props to Jim the Realtor for keeping it real.

tj and the bear said...

Anyone notice that virtually all of these ex-homeowners had roughly $4K/mo mortgages? That's not exactly chickenfeed, especially in the IE.

p.s.: The ex-realtor at least has some other "assets" to fall back on.

Cobradriver said...

"Anyone notice that virtually all of these ex-homeowners had roughly $4K/mo mortgages? That's not exactly chickenfeed, especially in the IE."

tj,

We just lost our last long term tennant to a home purchase. All of our tennants in the last couple of years have come from 1.5-3K payments. I don't think any of the current tennants came from another rental...

Rob,

You have wayyyyyyyyyyyyyyyy more tolerance than I could ever muster over on CR.

My head hurts with some of the comments.

On a serious note...out of 1K lots,1 acre or larger within 10 miles of my zip,I can say with a good amount of confidence....
900-950 are upside down.

Its gonna be a long summer in Florida.

Last but not least...

8 /2003 VACANT $250,000
6 /2005 VACANT $380,000
12/2008 VACANT $190,000

2 acres on the water. Half off sale. But wait! There is more!
Current ask on the MLS...

170K. How to loose 20K quickly!

They pulled the adress on the listing today to make it harder to locate on the counties site.

Chris

tj and the bear said...

Chris,

Hey dude! Miss you posting over at CR; yeah, a lot of trolls lately, but still worth the trouble. As soon as Ken gets a filter back we'll be stylin'.

I'm sure your long-term tenants all found homes for not much more than rent, and I know you give'em great deals to keep'em.

2 acres on the water sounds nice; did you get the address before they pulled it?

Rob Dawg said...

Rob,
You have wayyyyyyyyyyyyyyyy more tolerance than I could ever muster over on CR.

My head hurts with some of the comments.
Yeah. I have a tiny bit of special status on CR. All it took was years of quality posting, years of being right, years of effectively standing up for myself and the patience of a saint and humor of a martyr.

I confess to a personal failing of being drawn to luring assholes out into the open so everyone sees what I see.

Florida is so far down even randomness is enough to make a few deals no brainers. If taxes weren't so high I'd consider a seasonal place on the water down there. I expect the opportunity sooner than later.

Pleather Murse said...

Sounds more like 2 acres UNDER water.

tj and the bear said...

FTR, the photo for this post is scary.

Usually I'm curious how you find them; this one I definitely do NOT want to know.

segfault said...

She is paying half her monthly income for rent, so it will probably be a few decades before she is able to save up enough to pay cash for a rental property.