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Old 10-18-2009, 04:22 AM
Status: "I LOOOVE COLORS" (set 10 days ago)
 
30,220 posts, read 27,306,554 times
Reputation: 17595

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depending on your area eviction on a default can take 6 months to years... no way can most hang in there with no rent and pay the taxes , bills and legal fees.

lots of things sound like good ideas until things go wrong and then there not.
holding paper on property is a professional game, in fact to do well with any real estate can be professional gam


never confuse genius with a bull market in something.

but getting back to the origional premise its just not a wise idea holding any paper ..in fact ill say its worse then buying just 1 stock. at least with the stock your losses are limited to what you put in. your losses here could be more then you put in and if the party dosnt pay you have a 100% default rate unlike a bank or investment company which may have hundreds of properties in their holding of paper

Last edited by mathjak107; 10-18-2009 at 04:55 AM..
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Old 10-18-2009, 11:55 AM
 
6,559 posts, read 5,145,828 times
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In my situation the property is paid for, it needs work so it has a value of roughly 450k. Taxes are low via Prop 13. Proportion is the key. Someone carrying 100k, I admit, can be behind the 8-ball because they're going to get only 25k down and a tenant can do 25k worth of damage in an hour. With 100k down, it takes a little more doing to mangle a property to the tune of 100k. I agree you have to know what you're doing, but my parents were in real estate and did a lot of carrying without too much trouble. It's all in who you sell to and the quality of area you're selling in. If you do your homework and screen the buyers carefully you lower your chances of disaster tremendously. About just buying an annuity, I feel one is taking nearly as much risk of the insurer reneging on the contract or hidden fees eating you alive or some other disaster lurking somewhere in the fine legalese that even lawyers themselves often can't really decipher. But that's just me.
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Old 10-18-2009, 03:33 PM
Status: "I LOOOVE COLORS" (set 10 days ago)
 
30,220 posts, read 27,306,554 times
Reputation: 17595
as i discused earlier there are no hidden fees in an immeadiate annuity in fact the only fees are already built into your rate . they are also guaranteed by most states if the insurer fails
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Old 10-18-2009, 03:38 PM
 
6,559 posts, read 5,145,828 times
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Quote:
Originally Posted by mathjak107 View Post
as i discused earlier there are no hidden fees in an immeadiate annuity in fact the only fees are already built into your rate . they are also guaranteed by most states if the insurer fails
This I did not know---sorry if i missed it in your earlier threads which i did read on this topic. You say that if an insurance co sells you an immediate annuity and they renege, or fail, the state will make good on it like they do FDIC-insured CD's in banks that fail?
But many states like California are themselves in dangrer of going bankrupt. What then?
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Old 10-18-2009, 04:00 PM
Status: "I LOOOVE COLORS" (set 10 days ago)
 
30,220 posts, read 27,306,554 times
Reputation: 17595
if you fear everything in the world is going to fail on you then buy gold and call it a day. yes most states take over annuity and life insurance products.

Insure.com - What happens when your insurance company becomes insolvent

for a retiree holding paper can be riskier then a junk bond . at least the junk bonds are diversified.

if a retiree wants to dabble in real estate there are some excellent un-traded reits.

i use one myself and i couldnt be happier. it pays almost 8% .... the one i have pooled a billion dollars and then closes the doors. we buy only extended stay propertites and get marriot and hilton to run them. at the end of 7 years the properties are sold and the money split.

last one with the same company averaged a 17% return a year over 7 years.

just the 8% dividend from the operating profits was worth it.

at least there is no danger the retiree will be stuck with a property he cant afford to keep or hold on to long enough to rent or sell.
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Old 10-18-2009, 05:22 PM
Status: "I LOOOVE COLORS" (set 10 days ago)
 
30,220 posts, read 27,306,554 times
Reputation: 17595
the flaw i see in this entire idea of having a retiree hold the mortgage on a property they want to sell is this:

if the buyer has good credit and the resources why arent they going to a bank for an under 5% mortgage...? why would any retiree in their right mind want to take the risk of foreclosure for less of a return then a 30 year treasury or corporate bond?

if the retiree can get more interest because the buyer cant go to a bank then why would you take the risk on someone when a bank wouldnt.

the whole thing makes no practical sense for a retiree and maybe not even for a younger person to get involved in.
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Old 10-18-2009, 06:21 PM
 
Location: We_tside PNW / CO / SA TX / Thailand
11,296 posts, read 18,991,954 times
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Has worked fine in many transactions I've done.

No fees for buyer
Better than market income rate for seller

Renegotiate every 5 yrs to give buyer incentive to finance long-term if rates are better, seller can 'call' with 120 days notice.

I see you're very pleased with your results too (choke, choke...)

To each his own
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Old 10-18-2009, 06:49 PM
Status: "I LOOOVE COLORS" (set 10 days ago)
 
30,220 posts, read 27,306,554 times
Reputation: 17595
i dont see the better then market rate for the seller, i see a ton of risk of foreclosure but that rate can be beaten by just a AAA investment grade bond.

whatever, makes no sense in my mind for any retiree to attempt this....
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Old 10-18-2009, 07:11 PM
 
Location: Fairfield, CT
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Reverse mortgages are lower risk for the homeowner, because they cannot be forced out of the house. With a HELOC or other mortgage, the bank can foreclose if you don't make the required payments. But with a reverse mortgage, the lender/FHA determine how much you can borrow based upon expected life span, and you can't be forced out of your house while you're alive, and you don't have to make payments. So it seems that the high up-front costs are a fee or sorts for getting somebody else to take the risk. Paying somebody else to take risk always costs you something.
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Old 10-18-2009, 07:17 PM
 
43,308 posts, read 47,186,981 times
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I the case of owner finaanced few want to deal with it because of reasons stated. Its like rent to own with all the problems.One reason so many alos use a property management when renting.
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