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Old 06-04-2007, 04:58 PM   #1
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How would you like this problem?

My home and the Vanguard REIT fund is as close as I will ever get to this RE mess.

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The couple took real estate investing courses online and joined the Central Florida Realty Investors Association to network with local experts. When Steve retired in March 2006, their daughter, an area real estate agent, helped them search for properties to launch their business.
Exactly how fast the local real estate market was deteriorating wasn't clear in August when the Daimlers bought two three-bedroom, two-bath houses: one in a Daytona gated community for $235,000; the other in Palm Coast for $120,000.
To finance the purchases, they took out a $400,000 mortgage on their home. They spent $31,000 on renovations and listed the houses in September. But since then the market has been flooded with homes for sale, and the Daimlers have been caught in the changing current.
Retirement interrupted - May. 22, 2007
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Old 06-04-2007, 05:10 PM   #2
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I love these supposed sob stories the press does...not until you continue reading do find out that not only is their primary house worh more than $600: they also own a retirement home worth $900,000....

If you want to worry about someones retirement, worry about the couple with a $200K mortgage on a $230K house living on their $1200 monthly SS check and a job at Walmart...not these idiots - I don't feel sorry for them.

Sell the vacation home, dump the investment properties and they will still be better off than 96% of the country....
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Old 06-04-2007, 05:25 PM   #3
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I don't get it. Did this couple really not put together a budget of expected expenses for retirement, or did the writer just not go into detail about it? Even if the housing market hadn't crashed, I don't see any plan for their income to cover expenses... they retired with some 200k in a 401k and 36k per year in rental income... and NO other sources of income...
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Old 06-04-2007, 06:14 PM   #4
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I'm a lot more concerned about the people who bought new homes around the corner from our old house for $400k+ and they're only worth about 300k now.

Hope I get the sucker on the market and sold before the foreclosures really hit stride.
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Old 06-04-2007, 06:59 PM   #5
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eating homemade ice cream
I understand that this always messes up retirement budgets, especially when you buy those Cuisinarts.

It doesn't sound like they really retired but they decided to change their careers to house flippers.

I think that there is a lot of Schadenfreude from this article.

And here is another person with a $900K retirement house that they aren't willing to get rid of. This is deja vu all over again, complete with emotional attachment. Good thing that the advisor recommends that they sell.

Also, I would stop dining out before not buying medication.
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Old 06-04-2007, 07:08 PM   #6
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Wow .. all thier NW tied up in thier primary residence and a vacation house.

Desperate times call for desperate measures ... put all 4 houses on the market. Any one sells and the pressure is alleviated. If you sold the roof over your head, pack up and move to the vacation home. Then rent - or fire sale the remaining two for investment cash. SS only a year away; they might make it.
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Old 06-05-2007, 10:14 AM   #7
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I can't see why: a) they need a "vacation" home when they are retired and living in Florida and b) why two retired people need 3700 sqft of house. I'd sell both and move into something cheaper - like one of the investment properties.
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Old 06-05-2007, 10:22 AM   #8
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It's a classical problem of not being diversified. Everything is tied up in real-estate properties.
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Old 06-05-2007, 10:28 AM   #9
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I can't believe they'd rather him go back to work than sell their Outer Banks vacation home for a profit of 650k. That makes absolutely no sense. I could see if it was the family farmhouse that had been handed down for 200 years or something, but a beach house they bought 15 years ago? I find it really hard to feel sorry for them.
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Old 06-05-2007, 10:53 AM   #10
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just to clarify (though not to justify flipping), the state of the national real estate market really was not clear especially here in florida when we were dealing with an unusual succession of hurricanes. for one thing, while there is a named storm churning, no insurance is written and the market here goes on hold. so it is not odd for us to think a calm between storms is temporary.

then, in south florida at least, we finally got womped by wilma at the end of the season. most of us figured the market would still be here but by the time we cleaned up our yards and fixed our houses the market was gone. many of us seriously did not see that happening or coming.

before wilma things were still looking pretty good here. but by the time they got our electricity working again, a lot of us were caught in the dark.
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Old 06-05-2007, 10:58 AM   #11
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Quote:
Originally Posted by lazygood4nothinbum View Post
just to clarify, the state of the national real estate market really was not clear especially here in florida when we were dealing with an unusual succession of hurricanes. for one thing, while there is a named storm churning, no insurance is written and the market here goes on hold. so it is not odd for us to think a calm between storms is temporary.

then, in south florida at least, we finally got womped by wilma at the end of the season. most of us figured the market would still be here but by the time we cleaned up our yards and fixed our houses the market was gone. many of us seriously did not see that happening or coming.

before wilma things were still looking pretty good here. but by the time they got our electricity working again, a lot of us were caught in the dark.
I have a client that wants to buy a condo on Sanibel Island. When I asked him where he was going to live if a hurricane blew his condo away, he got awful quiet. Something about living in a FEMA sponsored mobile home was not appealing to him.......

besides, he can rent the condo for $1200 a week, and saved the $800,000 for something else........like food.............
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Old 06-05-2007, 01:01 PM   #12
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I have a client that wants to buy a condo on Sanibel Island. When I asked him where he was going to live if a hurricane blew his condo away, he got awful quiet. Something about living in a FEMA sponsored mobile home was not appealing to him.......

besides, he can rent the condo for $1200 a week, and saved the $800,000 for something else........like food.............
4% on $800k gives him $615.38/week. so i guess he'll be renting a studio on the carolina shore, but not a year-round apartment on sanibel. but thanx for the hurricane dig. haven't had one in at least two weeks.
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Market unclear?
Old 06-06-2007, 12:58 AM   #13
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Market unclear?

The Fed was raising rates for a few years before. It doesn't get much clearer than that.
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Old 06-06-2007, 07:19 AM   #14
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I agree with Gumby: they should sell the over-sized 'retirement dream home' and live in one of the more modest (but perfectly adequate) investment houses.

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"I know you should have a diversified portfolio," says Steve. "But I believed real estate would give us bigger returns." ... "We thought we'd make $100,000 without batting an eye," says Carol."
There is a word for such people: "greedy".

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"We're in this beautiful area and see our neighbors doing fun things like cruises, golfing and going to the country club, and we can't enjoy any of it," says a frustrated Carol.
How tiresome, not being able to keep up with the Jones'.

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They've tried every strategy they can think of: holding dozens of open houses; offering a higher-than-usual 4 percent commission to buyers' agents; distributing brochures; running thousands of dollars' worth of newspaper ads; lowering the prices on the homes by $40,000; and offering rent-to-own and other financing options.
The solution is obvious: continue lowering the asking prices until the surplus properties sell. At the right price, there is a willing buyer for virtually every property, in any condition (too bad their online real estate investing courses didn't cover that issue!).
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Old 06-06-2007, 07:27 AM   #15
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Quote:
Originally Posted by lazygood4nothinbum View Post
the state of the national real estate market really was not clear especially here in florida when we were dealing with an unusual succession of hurricanes.
Regardless of the direction of the national real estate market, I would have imagined that anyone dealing firsthand with the effects of multiple hurricanes would have suspected that the latter would not be especially helpful for future property sales.
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Old 06-06-2007, 07:51 AM   #16
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I'm a lot more concerned about the people who bought new homes around the corner from our old house for $400k+ and they're only worth about 300k now.

Hope I get the sucker on the market and sold before the foreclosures really hit stride.
Where do you live?
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Old 06-06-2007, 08:49 AM   #17
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Northern california central valley.
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Old 06-07-2007, 09:27 AM   #18
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I can sympathize .... called my realtor in southern VT to see how bad the vacation home market is hemoraging after 2 crappy winters. Says the market is saturated (7-8% "for sale"). And prices are tanking ... houses under agreement are not closing because they can't appraise at the sale price. Said the 500k market has plummetted to 350k.

YIKES! It's a down year for the tryan household (but, thankful for the rents).
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