Real Estate Investing

Not everyone believes in haunted houses, ghosts, or other paranormal activity.  In college, I once rented a home with two of my friends.  It was an older home on the edge of campus.  We weren’t allowed in the upstairs because the owner still had some belongings there.  The house next door was occupied by an elderly woman who tinkered around her backyard garden a lot.

We had heard someone had died in the house and that it was haunted. We also heard that sometimes you could see a face in the upstairs window.  I never saw the face although I did crack open the door at the top of the stairs once to take a peek.  There were boxes, some lamps, a chair … nothing of great interest.

I went to bed after my roommates one night and as usual the room wasn’t quite dark because of the streetlight outside.  My eyes were growing heavy but I wasn’t yet asleep when I saw my door swing open.  Though I couldn’t see anyone, I heard footsteps walking toward me.  They stopped at my bed, but I couldn’t see anyone.  My heart was pounding when I heard the “person” turn and walk back toward the door.  I watched as the door slowly swung closed and then leaped out of bed.  I ran to the rooms next to mine and both roommates were sleeping soundly.  Eventually I dozed off, but it was an eerie night.

Several weeks later I saw our neighbor in her garden.  I went out to say hello and asked her if it was true that someone died in the home.  What the long-time resident said scared me, “Yes.  A woman was killed by her husband after he came home from drinking.”  “Oh no!  How sad!” I replied.  She added, “In fact, she died in that corner” and she pointed.

I followed her finger and it was aimed directly to where my bed was located.  When I went back inside, I rearranged my room and never had any more night time visitors.

I don’t think I’d want to own a haunted house, but if you’re someone who would like one, there are many to be found online.  In Meaford, near Toronto, Ontario, here’s a house for sale that should be of great interest to people who love ghost-hunting.

The boys were ill at ease and refused to enter certain rooms. One said he woke to a feeling that he was being choked.

“We chalked it up to the children having vivid imaginations and talked to them at length about the inappropriate nature of their stories,” she says.

Things began to escalate: appliances and lights turned themselves on and off, things went missing and turned up in strange places. While they slept, a plaster column in the kitchen smashed as if hit by a baseball bat, and also while they slept, their phones called people.

May the buyer beware.

Former Secretary of the Treasury Paul O’Neill has said Congress should drop it’s latest economic stimulus package in favor of changing mortgage rules to the point that no loan is given without a 20 percent down payment.  According to MSNBC O’Neill said,

In 2006, he says, 30 percent of mortgages had no down payment and a larger number of those buyers defaulted on their first payment.

“That was a strong enough signal we should have shut down this … flagrant abuse of the principles of home finance,” O’Neill said. “It was bound to crater. It was absolutely bound to come down around our ears, which it has.”

If every mortgage was backed by a 20 percent down payment, O’Neill said, the financial system would be protected long-term, even if some individual investments or businesses failed.

This would definitely protect the U.S. financial system in the long run because NO ONE would be able to get a mortgage to buy a house.  If there are no home loans made, there is nothing to lose.  My first house in 1992 cost $88,500.  Although $7,000 doesn’t sound like a lot (5 percent down payment plus 3 percent for closing costs), our gross income as two working parents was about $33,000 per year at the time.  That made finding $7,000 hard to come up with.   

But we had scrimped and saved for six years and finally managed to do it.  However, if it was $17,700 we would’ve had to pay - along with $2655 for closing costs - it would’ve taken 15 years to get into a home.   My point is, there is nothing wrong with asking people to put money down when buying a house, but I believe 5 percent is more reasonable.

My husband and I have never missed a house payment, we’ve never been late on a house payment.  Therefore not every person who puts no money (or as little as 5 percent) down is in default - ready for foreclosure.

However, on the flip side, the benefits of coming up with a big downpayment are tremendous.  Mike Adams of Somerset 08873 writes,

The risk of putting down too little: If the home falls in value and you sell at a loss, you’ll owe more to the lender than you receive from the buyer. In addition, many mortgages require buyers who put down less than 20 percent to get private mortgage insurance, which can add $80 to $100 to your monthly bill. And the less you put down, the higher your loan balance and therefore your monthly payment will be.

I think there should be a happy medium.  I agree that Zero Down programs should accept a large part of the blame for the level of foreclosures we have today.  However, if I had to wait 15 years to buy a house, I would’ve gone bonkers.  The solid compromise, in my opinion, is to go back to the 5 to 10 percent down payment level.

Start saving!

Photo from Lifestyle Options 55.

When you decide to sell your house, it’s so very important to have it “parade” ready - that is you won’t put a float in a parade if it was only half done.  Before your home hits the MLS, you should have all your cleaning, painting, and staging done in advance.

W of Because I Can wrote that he and his wife worked on their home for a couple of weeks before putting it on the market.  He added that someone must be looking out for him because,

So the for sale sign went up Monday evening. Tuesday afternoon the realtor calls to tell me that the listing has just gone live on Realtracs, but he already has a tour set up for someone who just saw the yard sign. Wednesday morning I was on the way to work and I noticed my engine temperature redlining and steam coming out from under the hood of my car. Two hours later I’m in line at the mechanic and the realtor calls me again. He has an actual valid offer in his hand. For our full asking price.

Fortune did indeed smile on Mr. W.  However, I’m going to throw something out here - something wild and crazy.  The market is really kind of okay unless you’re living in Michigan, Florida, Nevada, or California.  Even then I suspect that pockets of those markets are pretty good.  So homes are on the market for a little longer than they were this time last year and prices have dropped a little.  But if your home is in good shape and priced RIGHT, it will sell.

Foreclosures are up to 2% you hear?  That means that 98% of people are able to keep up with their payments.  Not everyone is losing everything.  I heard yesterday that a stigmatized neighborhood in my town (because it was overbuilt by greed) is actually the BEST SELLING neighborhood in my entire MLS area.

It’s the little things we need to recognize that can rebuild our confidence in the real estate market.

Did you hear about the woman who went to a foreclosure auction to help her son buy his first home?  She sat next to a woman who was crying.  As she prodded, she learned the woman’s house was about to be auctioned.  She had fallen behind on her payments after losing a job and though she was again employed, it was too little too late.  The stranger bought the house and gave it back to the homeowner.  They’ll work out payment options later.  From CNN.com:

“She said, ‘I did this for you. I’m doing this for you,’ ” Orr says. “When it was all done, I was just in shock.”

“I thought maybe her and her husband do these types of things to buy them and turn them. She said, ‘No, you just look like you needed a friend.’ ”

“All this happened within like 5 minutes. She never even asked me my name. She didn’t ask me my financial situation. She had no idea what [the house] looked like. She just did it out of the graciousness of her heart, just a ‘Good Samaritan,’ ” Orr says. “It’s amazing.”

See?  Things aren’t always as bad as they seem.

Photo from here.