Quote:
Originally Posted by aneftp
There are no lessons learned.
|
Yet there are lessons.
The lesson isn't that real estate prices can go down.
The lesson is that investing with leverage is dangerous. In the article, the
guy mentions people who made good money who are in financial danger due
to real estate investment that went sour. ( Investment
-s- plural, that is. )
I remember the dot-com bubble and seeing people losing their shirts even
before the bubble burst. When you borrow money and get margin calls,
you can get wiped-out from a short-term dip.
Buying a home with a mortgage is a leveraged investment in real estate.
People come on this forum stating that it is
not an investment, but
it is. It's the biggest investment in most people's lives. It's likely the only
leveraged investment in most people's lives and they are not even aware of it.
Doing a short sale or walking away is kinda like getting the margin call you cannot afford.
It's too bad there weren't rules in place limiting the amount of borrowing one
could do as there are with brokerage accounts. They would have had to be
different, but things like minimum down-payments, no cash-out loans to pay
credit cards, buy automobiles. Home improvements - OK- but only, say 50% ...
.... stuff like that would have been nice ...
I'd like to add one more thing: The guy was/is a financial advisor.
It even states he is a CFA. Lots of doctors smoke, too.