Personal Story Of Real Estate Loss
Real estate is a tough business, especially in this recessionary economy. Prices, almost universally across the 50 states, are down and in some places, still dropping. If you got into the market a few years ago when prices were inflated you are in bad shape now. Especially if you were sold a bill of goods on a cheap mortgage that turned out to be a little too good, chances are you are going through a foreclosure or short sale.
I live in California, where the prices of homes five years ago was way above the assessed value and people routinely had buyers with fat checkbooks knocking down their door to get into homes. Unfortunately, I had just moved to Los Angeles, and I needed a place to live. Going with the conventional wisdom of buying is better than renting, I bought property.
I knew I couldn’t afford the place I ended up with. But, they gave me the mortgage so maybe they knew something I didn’t. My house was overpriced and my mortgage was way too pricey and not a good deal at that. I had little equity and no more coming anytime soon. Then, my wife and I had our second daughter and my wife left her job to stay home. We lost her full-time salary and were heading up-creek further without a paddle. We were literally sitting on collapsing furniture with home space heaters at our feet because we couldn’t afford to repair anything when it broke.
As was bound to happen, the housing market and economy collapsed. Our home devalued quickly but our mortgage payments did not. Now, not only could we not afford the home, we couldn’t sell it at a profit and barely sell it at a loss. We went through a bankruptcy to get rid of our debt and decided that to free ourselves up from all financial burdens, we would sell the home through a short sale if we could.
Today we rent and are on the path to recovery. We did learn many lessons and had I to do it all again, I would do it very different.
If I could do it again, I would get into an income property so that I could have a tenant cover the mortgage. I would get into a home that needed some work and touch it up with some home decor accents and maybe a touch of paint on the walls. Certainly, I would buy something not only in my price range but below it. And I would definitely get a mortgage that built equity and whose terms were logical and sensible.
I wouldn’t want to do this again and have to worry about covering mortgage monthly without the income to do it. I would own something with obvious value and not sell until it was a truly decent resale property regardless of the economy.