Buying a second house
Question: What scares me is that so many otherwise sane people are thinking that they are real estate moguls right now. People are buying 2nd houses that have inflated 300% over the past decade, and doing it with no money down to use as rentals or simply for speculation. We had some guy post a few weeks ago that wanted to buy condos by putting the $4K reservation fees on his credit cards, never expecting to buy (or be able to buy) any of them. I heard a guy on the radio over the weekend that wanted to run up his home equity loan to pull $500K out to buy a single family home to rent out.
Answer: Yep. I’m astounded by what I see also. Actually (other than the condo guy, which I don’t understand) your examples are rather tame.
In my area Sheriff’s sales used to be a good source. As recently as about 8 years ago, you could feel like a little kid in a candy store — everything at the sales looked good. Today, I don’t even bother; there are so many people caught up with auction fever that the prices are bid up way too high. People are buying property blindly and for prices that are no better — and in many cases, worse — than buying on the MLS. And all because it “must” be a good deal if it’s at an auction. And, of course, there are always the types who don’t do the research and buy clouded titles or the wrong property. I’ll never forget the look on one guy’s face when he thought he purchased a veterinary hospital and actually ended up with the vacant land next door.
But it goes both ways. I’ve purchased some good deals due to someone else’s foolishness. I got a SF that was worth at least $75K as-is for $22K because the plaintiff’s attorney was flirting with one of the deputies and missed his auction.
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Filed under: Home Equity Loan
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