Am I Missing Something?
Question: A lucky couple won an $805,000 condo in a raffle a few weeks back.
Exactly who says it’s a $805,000 condo? The builder?
>http://www.ocregister.com/ocregister/news/local/article_1222542.ph
p>The winner had a choice of taking the condo, or $408,000 in cash >instead. The winner chose the cash.
>Now, I may be missing something, but this seems like a pretty stupid >move. OK, so they don’t want to live in the condo. Why can’t they take >title to the condo, mortgage it to cover the taxes, and then >immediately flip it? They would walk away with about double the >$200,000-some-odd that they will have after paying the taxes on their >$408,000 cash price, wouldn’t they?
Answer: Why can’t they take a mortgage to cover the taxes? Perhaps they have Bad Credit(tm). Perhaps they already have a mortgage. Assuming they make 40K/year (recent salary average for my area), and already have a $100K mortgage, would any bank lend them $400K? Exactly how long did they have to come up with cash for the tax man? I can easily see them not having enough time to fill out one mortgage application before the tax man wanted his due.
Why can’t they IMMEDIATELY flip it? To the best of my knowledge, there is no *immediate* in the real estate market. Or at least you had better not depend on it.
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