Thursday, December 20, 2007

Do You Really Want to Know?

In the past few days, I've tried to respond to some of your comments shortly after I published them, but many had escaped before I could post. So, please bear with me as I play catch up today. I suspect that most of what was written was rhetorical, but I'll give it a shot anyway.

Did any of the properties cash flow? From what I could gather from your posts even the 5 core properties appeared to rent at a level that covered their costs but did not produce a return beyond paying down the debt. Did that even beat the opportunity cost of investing the down payment elsewhere?

At that time, most of our five properties were breaking even (with the full PI payment), which aligned with our initial goal of paying them off in 30 years in order to garner a retirement income. However, with the glut of rentals shooting into the market, we had to lower the rents by as much as $100 when it was time to find new renters. So we were in the red on some of them by the time we sold them.

I'm assuming you're in California, and if you are why did you invest so far away? In an area you knew nothing about (again an assumption on my part). I still don't get from your Reader's Digest version how you lost. How big was the building or should I ask how many units, what was the LTV, what was the vacancy factor in the area.I mean understand from my stand point that's very hard to do... too lose that amount of money on an apartment complex.

CASH FLOW!! I don't know how properties in CA are performing now, but when we were looking, multi-families had negative CAP rates! The numbers out of state looked so much better, unless we were willing to put more than 20% down in CA. On our KY property, we had a recourse loan with 20% down because it was a rehab. On our OH property, we assumed the non-recourse loans for a little less than 20% (I'm sorry, without a bit of research, I can't give you the exact LTV on that one). We had the vacancy factors down--checked it all out. Both properties looked good.

I've known others to lose money on apartments after segueing from SFRs, except a friend of mine who was happy to accept a lower ROI. If you have any secrets on how to flow with an 80/20 LTV in combo with poor management, I think we can all learn from that.

Some people were probably assuming similarity between you and fraudsters like Casey Serin . . . . .Casey committed mortgage fraud like lying about his residence or his income on a stated income loan and then justified it by claiming that everybody did it.

I stumbled onto the IAmFacingForeclosure blog (don't bother trying to link, it's now owned by a stop foreclosures business) by accident a long time ago. My first reaction was, "What?" I felt really sorry for him because, although he knew what he was doing, he was victimized twice. Once by the "advisers" who steered him wrong, and a second time by the people who attacked him. I thought he might go out of his mind at one point. The last post I read was written by someone claiming to be his publisher. Do you remember that one? It was crazy. The "publisher" was vulgar, couldn't put two words together coherently, and seemed to be victimizing Casey for a third time. I was so disgusted that I didn't read the entire post, and I didn't go on it again.

Speculators like yourself were the egg NOT the chicken.


I would humbly suggest you start writing about managing your family more, than about this . . . I mean my parents failed at their businesses, lost money and property. But they had the drive in the soul quality it seems you and your husband do, he sounds great by the way.And just as you can give us insight on business, which again I think is very childish, you might want to move and gives us advice on how to have such a great family.Come on, you start a blog for your biggest failure? Start one for your biggest success, don't be shy now!

Yes, shy. I'm known around here as the shrinking violet. But, seriously, I really don't try to give anyone an insight on business, no matter how childish my acumen may be. That may be the effect, but it's not the intent. All I have is my experience to lay out on the table and let people learn what they will so that they don't make the same mistakes. Hey, my education cost closer to a million dollars than I'd like to think about. Why let it go to waste or keep it all to myself?

As for starting a blog on family life--I'd like nothing more. With five boys and two girls ranging in age from 1 to 21 (with the same husband, no less!), I have much to write about. There's just one problemo. Those blogs abound on the Internet. Have you ever heard of uber-popular mom Dawn Meehan of "Because I Said So" fame? Some of them are semi-entertaining and others, well, aren't. Whine Country Real Estate is in a smaller niche right now because I'm one of the few (if any) investors willing to stick my neck out for the benefit of others. But when I finally run out of material, who knows.

Why do you have 7 children?

Why wouldn't I?

Your blog is interesting but it almost seems like it is written by 2 different people. Some commentary is very level headed, but other statements seem to come from way out in left field.

I disagree. I agree. I disagree. I agree . . . . .

The way I see it and maybe you could have seen it too, is that when you are cash flowing as a prerequisite, who cares if properties drop 10, 15, or even 20 percent. Money is coming in to cover your payment. In fact, a slower market creates more buying opportunities.~Dr. Housing Bubble

Amen! That was our philosophy for buying in other states that have a history of extremely low appreciation rates (like 3% annually). Oh, and, by the way, I really like your blog.

It's people like you that cause people like me to take drastic measures like move out of state and away from family just to secure their future.

Wow! I did all that? I didn't know that I wielded so much power. I'll be careful how I wave my arms around from now on. Gosh, with that victim attitude, your family must be missing you plenty.

I'm an active investor... in bonds/stocks. I've looked at RE before, but I admit I don't know RE investing well enough. By 2004-5, what I did see in the market looked like a bubble... and having lost a cool mil in the .com bubble... I'm shy of them. I mention this because there are always risks in investing. Most of us who are responsible investors take risks.. responsible risks. I've since recovered my dot-bomb losses. This year, I will finally not have any carry over capitol losses... and I have net unrealized gains several times larger than my original loss.

Thank you so much for your comment. You're the type of person who I would take advice from any day of the week. Not because you lost money and misery loves company, but because experience is a great educator. I, also, am a risk-taker (file that under "tell me something that I don't know"), but I am not a gambler. I despise gambling! It's a game of chance with no information available to help you make decisions. Risk (the calculated kind), on the other hand, is the unknown outcome to an action taken after performing research, due diligence, and all possible analysis in order to predict the end result. But, most of the time, you never really know what will happen until you try. If someone has such an aversion to risk that they never swing the bat at the ball, then they'll never hit a home run. I'll keep swinging like you did. Only, each time I do, I learn something from the time before.

Ah, you must be "DOPES" on Housing Panic!

Um, I'll take that as a compliment, but, no, I'm "Carol, " as in "Stupid Enough to Use My Own Name." But this "DOPES" sounds like a fascinating person.

Are you or were you, by chance, a realtor?

Well, you've finally done it! Now I'm insulted! This oughta answer your question.