"I still have a house"

[lswswein]

It seems losing money in housing is a better feeling that losing it in stocks. Stocks are just pieces of paper it seems! I remember around a couple of yrs ago posts about construction loans.

http://www.iht.com/bin/print.php?id=4689785
It was a simple pitch: Investors would put little to no money down and take out construction loans that a developer would use to build modest homes in a fast-growing stretch of Southwest Florida. When finished, the homes would be flipped for tidy profits of $30,000 to $40,000 apiece

"It was strictly a passive investment," said Paul Matera, a retired contractor from West Islip, N.Y., who signed up for two houses and introduced dozens of others to the plan.

"You didn't pick out the model of the house. You didn't pick out the exact location. Everybody signed papers without reading what they were signing."

"It was a groundswell," said Jerry Manning, who runs J. J. Manning Auctioneers, which sells homes in the Northeast and in South Florida. "Everybody thought that they were going to be a real estate mogul."

Mr. Matera, the retired contractor, learned about the chance to invest after a limousine driver, taking him to the airport for a Caribbean vacation, mentioned that his boss owned a part of a real estate company, Seashore Resorts in South Carolina, that helped people buy investment properties.

Mr. Matera did not blindly jump in. He said he visited Seashore and even hired a private investigator to look into the company. Later, he visited lots where the homes were to be built in the Florida towns of North Port and Rotonda.

All together, about 100 of the nearly 500 investors are from the New York area, according to lawyers who are representing many buyers. Seashore recruited most of them through marketing materials it circulated through networks of friends and family members.

Seashore steered borrowers toward loans that start out as construction debt and convert into traditional mortgages when the house is built. "I've got my father stuck, my brother stuck, an ex-wife stuck," said Carl Cirinelli, a partner at Seashore who previously lived in New Jersey. He says that he recruited 25 relatives and friends and has a $200,000 loan under his name.

Few had to be convinced. Several investors said they saw little downside to investing in Florida real estate, especially with an experienced builder. The area south of St. Petersburg where they were investing was promising because prices were relatively affordable and rising.

Jesse Battle III, who heads the developer, Construction Compliance of St. Petersburg, was a charismatic figure with experience in single-family homes. One contractor who worked for the company noted it had moved aggressively and had paid its bills on time, at least for a while.

"I had a great relationship with them, and I got paid well," Fernando Cacoilo, the contractor, said. He recently fired 23 of his 32 workers because of the souring real estate market and because he has been unable to collect $1 million from Construction Compliance.

Mr. Cacoilo, whose firm Jodfer Land Services is based in Sarasota, acknowledged that he had missed some obvious red flags, including the fact that none of the people having homes built ever checked on the progress.

In spite of the problems, Mr. Matera, for one, believes that real estate is a safer investment than stocks. "I would rather have a house that I can't sell at the moment than a stock certificate," he said. "I still have a house. It's not what an owner of Enron stock can say."

[dex]

It is amazing that some places repeat their history - Florida has always been a place for real estate fraud.