Why Are Foreclosures REALLY Up In America?
Posted by Jason Kearney at 4/26/2008 6:06 AM and is filed under Money,Real Estate,Investing,Finances 
You're hanging out at your house, having a nice evening, spending a little time with the fam, when you hear a knock at your door.
You answer the door, and there stands a stranger shoving a piece of paper in your face. He quickly walks away. You unfold the piece of paper he handed you, and you realize that you are being sued for foreclosure. In your heart you think that it is a shock, and it is. But deep down, you knew it was coming. Now they're coming to take away your house.
There are few things more confidence-shattering than foreclosure. This is your home. This is where you sleep at night, where you feel safe, and where your children play with their toys. And now you're either going to have to come up with some quick cash, and lots of it, or you're going to have to move. Either way, it hurts. It is embarrassing. And it shakes your confidence for a long time.
I was looking at the Tulsa County Sheriff's webpage this morning. It has a link to all the foreclosed properties in the county, along with the names of the owners, and the appraised value of the property. Why was I looking? Because every once in a while I get this bone in my head that makes me think I should diversify my investments, and branch out into property ownership. I have friends who are really doing well at this. One friend of mine has a commitment to purchase a new property every year. He is only in his 20s, but he and his wife already have several rental properties. I have clients who have made a small fortune buying real estate, and it has become part of their overall retirement picture. And, to quote the great philosopher Delmar O'Donnell, "You ain't no kind of man if you ain't got land."
Purchasing foreclosed homes at a sheriff's sale can be a great way to find a bargain, if that's what you're looking for. On the Tulsa County website, there are forty pages of foreclosed homes, so you can take your pick. They range in appraised value from $18,000 to $2.5 million. But when I was perusing the pages of the unfortunate ones who are losing their homes to foreclosure, I suddenly got slapped upside the head with a two by four of common sense. Or maybe it was fear, I don't know. But as I looked at the names of the property owners who are losing their homes, I found myself in their place. Its not that I was overcome with compassion and did not want to take advantage of their hard times. It was more selfish than that. It was more like, I dont want to wind up where they are now--broke and screwed. I've been there. No thanks.
Then something else struck me about this list.
Many of the names were the same. I saw the same names, losing five or six homes. Most were the names of individuals, but others were names like "Wolf Creek Investments." It occurred to me that many, if not a majority of these foreclosed properties were not poor single moms who can't make the mortgage. They are people who, like me, got a bone in their head one day to start investing in real estate, when they really couldn't afford it. They were the ones who two or three years ago were watching cable television, and bought into the idiots telling people to buy real estate with a mortgage, then sell it at a profit, and make $30,000 a month by doing little more than signing your name a lot. They are the ones who got high watching Richard Davis flipping houses every week on A&E. And it worked for a while. That is, until the bubble burst. Then they got hammered. And now they're broke. And screwed.
It makes me wonder about this housing crunch that we're in. I know that values are down in many markets. I know that foreclosures are up. Way up. But who are the ones being foreclosed on? Are they the retirees who just can't make it on their social security checks? Are they the middle class couple who are having to pay for mom and dad's nursing home? Are they out of work Americans whose jobs were shipped off to India? In some cases, yes. But in many cases, they are people who should have known better than to take out mortgages on twenty different properties. They are often people who got in over their heads. They are people who should have waited until they paid off their debt to venture into the real estate waters, and used cash to build wealth.
As you may know, Lisa and I are working hard to eradicate our debt.
We have decided that the best way to survive in a down economy is to not owe anybody money. And, we are getting tantalizingly close. If I am debt free, I can deliver newspapers and make enough money to pay the bills and buy groceries, so a recession won't bother me too much. But if I am over-extended, I have to go to work to pay all the people I owe money to. Then a recession becomes a nightmare. Every once in a while, I get that bone in my head, and I start to get distracted from the main task at hand--becoming debt free. Thank goodness common sense took over today, and I got a glimpse into the lives of those people who are going through foreclosure. Not me. No sir.
You answer the door, and there stands a stranger shoving a piece of paper in your face. He quickly walks away. You unfold the piece of paper he handed you, and you realize that you are being sued for foreclosure. In your heart you think that it is a shock, and it is. But deep down, you knew it was coming. Now they're coming to take away your house.
There are few things more confidence-shattering than foreclosure. This is your home. This is where you sleep at night, where you feel safe, and where your children play with their toys. And now you're either going to have to come up with some quick cash, and lots of it, or you're going to have to move. Either way, it hurts. It is embarrassing. And it shakes your confidence for a long time.
I was looking at the Tulsa County Sheriff's webpage this morning. It has a link to all the foreclosed properties in the county, along with the names of the owners, and the appraised value of the property. Why was I looking? Because every once in a while I get this bone in my head that makes me think I should diversify my investments, and branch out into property ownership. I have friends who are really doing well at this. One friend of mine has a commitment to purchase a new property every year. He is only in his 20s, but he and his wife already have several rental properties. I have clients who have made a small fortune buying real estate, and it has become part of their overall retirement picture. And, to quote the great philosopher Delmar O'Donnell, "You ain't no kind of man if you ain't got land."
Purchasing foreclosed homes at a sheriff's sale can be a great way to find a bargain, if that's what you're looking for. On the Tulsa County website, there are forty pages of foreclosed homes, so you can take your pick. They range in appraised value from $18,000 to $2.5 million. But when I was perusing the pages of the unfortunate ones who are losing their homes to foreclosure, I suddenly got slapped upside the head with a two by four of common sense. Or maybe it was fear, I don't know. But as I looked at the names of the property owners who are losing their homes, I found myself in their place. Its not that I was overcome with compassion and did not want to take advantage of their hard times. It was more selfish than that. It was more like, I dont want to wind up where they are now--broke and screwed. I've been there. No thanks.
Then something else struck me about this list.
Many of the names were the same. I saw the same names, losing five or six homes. Most were the names of individuals, but others were names like "Wolf Creek Investments." It occurred to me that many, if not a majority of these foreclosed properties were not poor single moms who can't make the mortgage. They are people who, like me, got a bone in their head one day to start investing in real estate, when they really couldn't afford it. They were the ones who two or three years ago were watching cable television, and bought into the idiots telling people to buy real estate with a mortgage, then sell it at a profit, and make $30,000 a month by doing little more than signing your name a lot. They are the ones who got high watching Richard Davis flipping houses every week on A&E. And it worked for a while. That is, until the bubble burst. Then they got hammered. And now they're broke. And screwed.
It makes me wonder about this housing crunch that we're in. I know that values are down in many markets. I know that foreclosures are up. Way up. But who are the ones being foreclosed on? Are they the retirees who just can't make it on their social security checks? Are they the middle class couple who are having to pay for mom and dad's nursing home? Are they out of work Americans whose jobs were shipped off to India? In some cases, yes. But in many cases, they are people who should have known better than to take out mortgages on twenty different properties. They are often people who got in over their heads. They are people who should have waited until they paid off their debt to venture into the real estate waters, and used cash to build wealth.
As you may know, Lisa and I are working hard to eradicate our debt.
We have decided that the best way to survive in a down economy is to not owe anybody money. And, we are getting tantalizingly close. If I am debt free, I can deliver newspapers and make enough money to pay the bills and buy groceries, so a recession won't bother me too much. But if I am over-extended, I have to go to work to pay all the people I owe money to. Then a recession becomes a nightmare. Every once in a while, I get that bone in my head, and I start to get distracted from the main task at hand--becoming debt free. Thank goodness common sense took over today, and I got a glimpse into the lives of those people who are going through foreclosure. Not me. No sir.
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