Meet the Poster Child for Abused Real Estate Speculators
About four months ago a very kind gentle lady called in to purchase two St. Joseph Statue Home Selling Kits, and as typical, I engage her in conversation regarding the real estate she wanted to sell.
In September 2006 she jumped into the real estate game with both feet, purchasing not one, but TWO high-rise condos in Florida; sales price $649,000 each, ($1.298 million total).
Her Story
Born in Sri Lanka, she became a pharmacist fifteen years earlier when she moved to the US. Thanks to an excellent paying job, coupled with a meager lifestyle she had been able to save substantial money and was ready to put her savings to work for the future.
While on vacation from Alabama she discovered, at least in terms of real estate, Florida was the land of milk and honey, (with a little help from hungry sales people).
To set the stage, property values in Florida had reached there highest levels, 8-10 months prior to our unsuspecting pharmacist's entry to the world of real estate investment. At the condo development, I'm sure the air was filled with excitement; kind of like that Mexican timeshare presentation that you had no idea was coming, but felt guilty so you bought.
I believe when they found out she had more than enough money, credit and income to purchase one condo, selling her a second condo became their goal. She may have been very intelligent, but was no match for real estate predators.
To get the party started, here's the math -
| Sales Price: | $1,298,000 |
| Down Payment: | $259,600 (As my family in Arkansas would say,
a ¼ million bucks is real money my friend) |
| Loan Amounts: | $1,038,400 (Lawdy, that's a lot of dough-re-me) |
Monthly Payments
(With Assoc. Fees) | $8,700 (Now, that's a house note) |
Her plan: with advice offered by the project sales people; flip them quickly and make a couple of hundred thousand dollars just like previous customers have done. One small fault with the plan- they forget to tell the naive lady that the market had already begun the downside of the real estate cycle, and there wasn't any chance of her making a dime, much less $200,000.
When I spoke to her, a year and an a half after falling victim to this abuse, she had made 18 payments totaling more than $150,000. This poor lady now had spent more than $400,000 when considering down payment and payments, all for nothing; except for the commissions earned by the people that took her to the cleaners.
During our conversation I asked her several questions, for example:
Are you receiving rental income while trying to sell?
'No, there are several units for rent, but they are still vacant'.
What are the current values of the condos?
'They say about $400,000 each, but the owners assured me the values would go back to what I paid by summer'.
Why are you buying two St. Joseph statues?
'To insure I would receive a $649,000 offer this summer, like the owners suggested would happen'.
Sadly, hundreds of thousands if not millions of people, were lead down the same path as this lady. At the end of our conversation I told her to save her twenty bucks for the two Joes, because even the power of St. Joseph couldn't help with selling her condos given the situation. She understood and said she would just have to continue making those $8,700 payments until the market turned in her favor. 'If the values returned in five years', I said, 'that would mean an additional $520,000 in payments while you wait for the condo values to come back'. It began to sink in with her, that foreclosure was the only viable option.
Her story is a perfect example of how people have been taken advantage of by predatory real estate agents and loan sharks, under the pretence of helping them get rich. This poor lady had no business being involved in speculative real estate dealings, as evidenced by her responses to my questions.
A good person, with good intentions, swimming with sharks, not so good.
All my best,
Phil Cates, founder
StJosephStatue.com, LLC
THINK BIG THINK SOLD - Thank You St. Joseph!
Phil Cates has been in the real estate and mortgage industires for over 20 years. He is also the founder of StJosephStatue.com. For more information and back ground, click here.
You can email Phil at: philcates@stjosephstatue.com
The above information is provided purely for educational purposes and not to be construed as legal or financial advice.
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