We're all Capitalists when we are making a profit

During the 90's when the stock market was booming and people were making a killing on tech stocks no one was calling for government regulations to tame the market or for higher taxes on their profits. Same thing happened in the early part of this decade. Where was the outcry for investigations when people were buying houses and flipping them overnight for huge profits?

Now we want to put all the bankers in jail and regulate the heck out of the mortgage industry and Hillary wants to nationalize the oil industry.

When we make a profit it's our great skill that at play, but when we lose money it's someone else's fault and when a company makes a profit its through stealing. Someones not thinking right here - wonder who?

The great mortgage bailout

Our politicians seem hellbent on making the country one great nanny state. The Presidents proposal to bail people out is just the latest example. Here in NY they want to keep us from smoking, eating trans-fats and taking any responsibility for our lives. Fools and speculators have driven up the prices of homes in major markets and now someone has to pay the piper. It's always the politicians solution to make all of the prudent people pay for the crooks, fools and speculators irrational behaviour. People have been speculating since the great tulip bubble in Holland hundreds of years ago and someone gets burnt. Hell, I bought into the stock market in late 1999 and lost a lot of money. I didn't sue anyone or call my Congressman to get my money back. Instead, I kicked myself for my stupidity and learned a lesson. If people lose their houses because they took out liar loans, why should I pay (and I will, as will you)?

I wish politicians would let the free market take care of itself.

Moving week

Well, this week we will be moving to a new house and am putting up our existing house as a "Rent to own" purchase. I'm not sure if the Christmas season will slow shoppers, but I've had three calls since I put out the sign Saturday. With this rent to own concept it seems that all I need is a sign. The $1000+ that I have spent advertising in papers has not yielded a single buyer and amounts to about 1% of the inquiries about the properties I have used this concept on (4 in total now).

The tenant at my trash property has been tearing the place up and seems to be pretty competent at fixing up properties. But he has uncovered some defects that neither of us saw. It seems that the roof has had a leak on one side for some time. When he tore the bath room wall off the interior of the outside wall was soaking wet. He tracked it down to a roof leak, found huge ant nests in the walls and lots of rotten wood. The property is probably worth even less now in its current state and now that we know the condition of the roof (it was very hard to access since the adjoining house is only 5 feet away).

I've fallen off blogging over the last few months for a couple of reasons. My work load at my job has been incredible the last few months due to being assigned to 2 high value Six Sigma projects. I've also been in a funk due to the inability to sell my rehab. But fortunately, thanks to the prodding of one of my readers, I have that house rented out now and feel considerably better. After moving and putting my current home in shape to lease-purchase I expect to get back on track.

Goals - review and look forward

I've been thinking about how well I did Vs my goals for 2007 in my real estate venture. I've been told that if you write down your goals and review them daily you have a high chance of making them. But that doesn't seem to be the case in our situation.

I did buy 3 houses this year, but since I didn't sell any properties this year, I look at my entire plan as flawed. Flipping houses in this area takes much more expertise than I have at the moment. Watching all the flip shows on TV where clueless people do everything wrong and still make $100K just discouraged me most of the second half of the year.

But I did meet some of my sub-goals:

I did find over $720K of funding although I did not seal the deal on the major source ($500K), so I ended up having about $220K of funding available but did not use any of it. The major source was going to cost me $6500 to finalize the deal (I did get approved) and I borrowed that money from Prosper but by the time it came around to paying out the money and signing the papers, I started to realize I was not going to sell my rehab and was stuck with a $2300k per month payment to make, so I bailed.

We did do direct mail all year to pre-foreclosures but again, do to the failure to sell any properties we scaled back our advertising to just those properties in growing towns. This amounted to less then 20 letters per week which isn't enough to really do any good.

The third goal we just didn't do after our first 2 purchases in February. When we couldn't sell the wholesale property quickly and realized I would need much more cash for the rehab I only worked with pre-foreclosures and only made a limited number of offers to banks for short sales.

I did get an operations manual in place which has been a really good way for my wife and I to communicate about what to do.

I see that most of the sub-goals were geared towards buying property and not towards selling. There were several strategies we tried for selling properties: FSBO, flat-fee listing, full service Realtors, E-bay auctions, The "Sell Your House in 5 Days" strategy and Rent-to-own. The last was the the only success that I had, which doesn't get me any of the equity out of my houses.

So now I am in the position of many real estate investors - lots of equity but little cash.

I had hoped to double the number of houses bought and sold next year when I first devised my 2007 goals, but now think that I will scale back. My experiences buying in areas where population is declining echoes my 1980's real estate experiences in WV.

In the next month I hope to come up with a plan for 2008, but for the next couple of weeks will focus on moving and fixing my current residence so I can market it as a Rent to own house.