Housing Crisis Bad - people choose to sleep on lawns?

[sheehs1]

If my understanding is correct, you can't insure a home that has had mold until you can produce evidence that it was treated by a certified mold remediation expert.

I called 2 insurance companies because I wanted an idea of the costs. Told them mold had appeared on the bottom level game room/garage level. They didn't seem to care. Both companies told me "mold" and mold damage was excluded from coverage anyway. They also told me there was a LOT of mold at this resort area. ummmm...
Trying to see if I can attach picture....of the one we are NOT getting...

 

[W2R]

I called 2 insurance companies because I wanted an idea of the costs. Told them mold had appeared on the bottom level game room/garage level. They didn't seem to care. Both companies told me "mold" and mold damage was excluded from coverage anyway. They also told me there was a LOT of mold at this resort area. ummmm...
Trying to see if I can attach picture....of the one we are NOT getting...

Mold not being covered isn't too encouraging (to me, anyway). Oh well. Glad you talked to them and know exactly what you are getting into.

Nice house that you are NOT getting!

 

[sheehs1]

Thank you for your comments W2R. The picture is the one of the house that has the mold. Oh well. Buyer beware.

 

[arebelspy]

Not really a fan of rental real estate. Did this in my 30's with some success but the work/hassle required of being a landlord put me off. Also very illiquid asset and a long time frame is probably the best approach. There was a study done in Canada that reached the conclusion that you get very similar returns with REITS as compared to owning directly. Much less work too.

Interesting. I'd love a link to that study if you have it.

That being said, real estate is something you have a lot more direct control over than an REIT. There are some good deals to be had right now, IMO, that will net you much more return (and yes, more work) than an REIT.

A lot of it, as with lots of things in life, is all about timing. My inlaws bought a rental house in the boom years that they lose a few hundred a month IF IT'S RENTED. If it's not, they lose like 2500, IIRC. And naturally it's a few hundred thousand underwater (it's in Southern California). Doing something like that where the numbers don't make sense, yeah, you won't make any money.

On the other hand there's places you can get now that net you $400/month on a 20k investment. Going underwater isn't a big deal in that circumstance, because it's a long term hold. Buying a rental house in 2011 is much more profitable than in 2005. Now why am I saying this obvious fact? Cause I'm betting that the study above was made over time, so averaged boom and bust real estate markets. Whereas you can time the market with purchases now. And timing is everything.

 

[haha]

They had someone in there "cleaning" the mold off the walls on the bottom floor when my agent went in there on Tuesday. The mold is not evident now. We saw it when it was. Hope they are not trying to hide it from a buyer.

Any other hypotheses?

Ha

 

[sheehs1]

Any other hypotheses?

Ha

I dont know Ha. I don't really think they are trying to hide it....as the agent verbally disclosed it to my agent...but it's possible they are soft pedaling it. It's also possible they are trying to remediate it....as the guy cleaning said he was going to recommend they replace the duct work and possibly the air handler. But there are not any test samples for air quality or sheetrock...so the remediation is not a public fact (according to my agent).

It was not a little bit of mold. The walls, ceilings and interior closets as well as some sheet rock in the ceiling of one of the garages was covered in it.

All I can really say is it is not disclosed on the public listing.

It was enough to scare me...as my mom had aspergillosis in her lungs which contributed to her COPD.

We really liked this house and it's location.....and if I thought it would not be a continual problem....I'd offer a bit more.

 

[Texas Proud]

Mold not being covered isn't too encouraging (to me, anyway). Oh well. Glad you talked to them and know exactly what you are getting into.

Nice house that you are NOT getting!

Same here in Texas.... after they got hit with all the mold claims they lowered the amount they cover to about $5K or so.. I think it might be mandatory..

 

[kcowan]

Exactly right Kcowan...
The mold worried me...quite a bit actually...as my mom ultimately ended up with aspergillosus (sp) in her lungs..which contributed to her COPD.

... My brother died of COPD. I sold his house as a tear-down and disclosed the mold problem in the basement. It still sold for 5% above list price (bidding war, highest price, great neighborhood). It was the family home and had that problem for 72 years. When I visited, I always stayed at a hotel.

 

[Gatordoc50]

Any other hypotheses?

Ha

The banks are playing games. I bought a foreclosure and found out later that a contractor had made an offer for 20,000 more than me, but the bank accepted my offer over his. The last thing the banks want is for qualified people to inspect and find mold or Chinese drywall or etc. The bank tried to make it very difficult to inspect. I ended up breaking in and spending a couple days fully inspecting the property after I put my deposit down. Some great deals out there but you have to lower yourself to the level of the banker to be on a level playing field.

 

[sheehs1]

... My brother died of COPD. I sold his house as a tear-down and disclosed the mold problem in the basement. It still sold for 5% above list price (bidding war, highest price, great neighborhood). It was the family home and had that problem for 72 years. When I visited, I always stayed at a hotel.

Aww...I"m sorry kcowan.
This mold converation makes me want to get my house checked again. I get it checked for termites and moisture every year..but am thinking about a full blown inspection including mold. It' s very humid in the south east where I am.
Problem with that is these companies...can rip you off..unless you follow the guy around. (and I don't like crawling under my house !).

 

[sheehs1]

The banks are playing games. I bought a foreclosure and found out later that a contractor had made an offer for 20,000 more than me, but the bank accepted my offer over his. The last thing the banks want is for qualified people to inspect and find mold or Chinese drywall or etc. The bank tried to make it very difficult to inspect. I ended up breaking in and spending a couple days fully inspecting the property after I put my deposit down. Some great deals out there but you have to lower yourself to the level of the banker to be on a level playing field.

You are right about that Gatordoc. Looks like as of now I may still be in the running with my bid. Other guy might have dropped out. As of 11:30 today he had not contacted them with another offer. 12:00 was the deadline. I resubmitted the same one.
I still have several "outs" as this was just a bid, not an offer and not a contract. I've signed nothing. These banks only give you 7 to 10 days for due diligence. If they accept the bid and IF we get to a contract offer, I'm asking for 15. Company specializing in mold will go in immediately and we will tell them where to look. If by chance the 15 days pass, my bank will do an appraisal. They already know about the mold..and will not lend if it is present....so...perhaps we will be in a position to see how big a deal this mold is.

 

[calmloki]

Don't worry about the banks - IMO the Dodd-Frank law has had the effect of pretty much making owner-carry contracts onerous to the seller. An owner of a property can sell no more than 3 places/year without being licensed, must be sure that the buyer can afford the contract at it's current and any raised interest rate, cannot charge other than market rate interest, cannot have a balloon payment.... Effect is that if 'ol Ma and Pa want to sell their free and clear home when they are 55YO and live on the proceeds they can either insist on cash, driving the buyer to the bank, or carry the contract. In a low interest rate climate Ma and Pa might want to have an adjustable rate - their buyers need to be capable - at the time of making the contract - of making the payments on whatever higher rate M&P might impose in the future.

Doing a 30 year contract at 55? M&P may never see the place paid off. Doing a shorter term contract? Buyer may not be able to make the payments and thus be precluded from making the purchase.

Good Job Dodd-Frank - way to level the playing field for the poor banks.

(in the position of having a fair amount of older property free and clear that would be nice to sell - but not if it means locking my return in at 4-5% and never seeing it paid off.)

 

[clifp]

Calmloki

Does this mean that if you do less than 3 transaction per year, you can continue to make the same type of loans you were doing before? Or does this mean that you have to follow the rules of Dodd-Frank regardless of how many transaction you do, but need to licensed if you do more than 3?

 

[calmloki]

Calmloki

Does this mean that if you do less than 3 transaction per year, you can continue to make the same type of loans you were doing before? Or does this mean that you have to follow the rules of Dodd-Frank regardless of how many transaction you do, but need to licensed if you do more than 3?

Think you are required to follow Dodd-Frank regardless of the number of transactions, but over three requires licensure. We had never loaned to a private party for their own use as a residence; our loans were all made to flippers or to people who had the loaned on property as a rental.

My objection is to what Dodd-Frank does to our ability to sell our free and clear rental property. We would be good with selling them on contract, but I'd like a five or ten year balloon - something prohibited by Dodd-Frank. An adjustable rate mortgage is something I am just opposed to personally as a borrower or a lender, and to meet Dodd-Frank adjustable rate mortgage requirements is much more complex. I have visions of normal interest rates hitting 10% or better within the next ten years, or inflation making the dollar worth a quarter of it's current value. To address those concerns I'd like to make contracts with a short term but modest monthly payments. After 5-10 years the buyer can look for a new loan at the then current rates. I don't want to be getting payments into my nineties. Short term loans allow me to track interest rates and have access to the principal on a regular basis.

Kinda chaps my hide to be forced to make a buyer go through a bank loan or be restricted in the number and manner of sales of my own wholly owned property. It wasn't owner-carry contracts that caused the mortgage mess.

 

[kcowan]

It wasn't owner-carry contracts that caused the mortgage mess.

This seems to suggest that investment properties will be worth less in the future because of these rules? I mean liquidity has always been an issue with them and now that liquidity just got much worse.

 

[calmloki]

This seems to suggest that investment properties will be worth less in the future because of these rules? I mean liquidity has always been an issue with them and now that liquidity just got much worse.

I think smaller older, long time owned investment properties value will go down - you know; the kind an owner-carry contract is more common on, you know; the kind we have. Thinking in the large I'd guess that the effect of Dodd-Frank is to urge more new construction, creating more jobs and coincidentally creating solid easy to qualify places that the banks feel safe loaning on. Everybody wins but the old folks who busily paid off their properties and who cares about them? They aren't destitute and can just keep on being landlords or living in their paid for homes. Cheap collateral damage for the greater good.