OK, while I know this Post will be risky in the sense that many of the nay sayers out there will want to rag on me for giving advice, hopefully they read the entire article before they come back attacking me.
I will say this however. Just like this Blog, it's free. It's not gospel or the word of God. It's advice and it's tough, straight to the point reality in which most of you will not be able to be strong enough to take. That should get you reading further.
Let's talk about the Real Estate Market. We put up a Post Saturday that I thought was pretty stupid. For many of you, you may have thought it was interesting but quite frankly, most young Americans have no clue about the reality of finances.
I'm speaking about Suzie Orman and her STAGED interview with a "Professional" Real Estate Agent of 10 years. IF you happened to view the video, great. If you didn't I'll share with you what happened. You see, some IDIOT Real Estate Agent purchased a home as a single Mother. She had a rental but lost it to foreclosure. There's a lot of that going on these days. However, on her own personal home she has, GET THIS, three mortgages on the home. How could that be, I thought to myself, she's a Professional Real Estate Agent of 10 years!
These are the same IDIOTS that you go to and throw out every single personal piece of information about yourself throughout your entire life and trust that they come back and tell you what you can and can't afford. These are the same IDIOTS that bait you and show you homes that are supposed to comfortably fit into your price range, then they tease you with a few that are out of your range, much cleaner, much nicer, you know the drill. Oh, let's not forget their favorite homes to show you. Not the one you want, not the one in your price range, the one they're the listing AND selling Agent on! Double commission, that's the home run they love so much.
Anyhow, let me part from going any further at this time as I'd like to tell you a personal story from experience to show why the information I'll be advising is worthy.
I have shared with many in the past that I owned a home in Captain's Hill in West Ocean City. I paid $300,000.00 for the home. With my income, I could have purchased a $2,000,000.00 home without any problem. NO, I'm NOT bragging. I'm simply starting off showing you the first lesson, you do NOT have to spend a ton of money on a home to be happy and comfortable.
After purchasing this home I hired some people to come in and renovate it to make it comfortable to me. My neighbor Mr. Bruce Moore, (Moore, Warfield & Glick) got back into the Real Estate business after he had sold his interests in his other company by purchasing the Remax Franchise. A few years after I purchased this property I called Bruce and invited him over as I wanted to see what he thought this home was worth. He came over and said it was wroth $600,000.00. Most would be very pleased with that number, right? I looked at Bruce and said, are you nuts? He said, let me get an appraiser in here Joe and take a look at it. The appraiser came by and ultimately came back to me with a value of $450,000.00! VERY INTERESTING!
Bruce called me a day later and asked, "how did the appraisal come out?" I said, you know this person well? Yes. I said, she's a nut job Bruce. I gave him the value and he said, I told you it wasn't worth more than $600,000.00. Do you want to list it? I told him they were crazy with their figures and of course I was already thinking, WHAT A TEAM they've got going here. Bruce argued and finally said, I'll list it for $700,000.00 Joe but if you want any more than that, you need to find someone else to list it because I want nothing to do with it then.
Let me make a very long story short. I listed my home for $1,600,000.00, yes, one million, six hundred thousand dollars. The home SOLD for $1.6 Mil in 5 hours, CASH! Now, the Real Estate Professional I was relying on had 40 years Professional experience under his belt and OOPS, I made a mistake, didn't I!
Yeah, a ONE MILLION DOLLAR MISTAKE, that is! Even worse, how about that Real Estate Appraiser coming in at $450,000.00!
OK, so it's an interesting story and it got your attention. Again, if you're thinking I'm posting this to brag, you're wrong. The point of the matter is, even the best of the best have no clue what they're doing, or do they? How quickly could YOU sell a $1.6 Mil Home for at $600,000.00? A PROFESSIONAL would have come to me and said, let's put it on the market at $2,400,000.00 and see what we can get from there! If a car manufacturer puts a price tag on a car of $20,000.00, a Professional will sell that car for $20,000.00. Why, because it's worth that much. Other alleged professionals have made sure this is what the market value is, so that's what you should pay. Now, if it were YOUR car and it was worth $20,000.00 and a Salesman sold it for $18,000.00, would you be happy? Don't forget, you haven't paid him the commission yet! Yet in the Real Estate business, an alleged Professional places a value on your most prize possession and you trust them? I can tell you now, Hal Glick and Bob Warfield aren't in a very good position after foreclosing on a massive development on the Virginia Eastern Shore. The name of it slips me at the moment. Captain's Cove, or something like that. Bruce Moore still has a piece of Remax but from what I understand the Agents are walking out the door so fast right now, (seriously) they have no clue what they're going to do. Remember, these are professionals that know the market better than anyone else out there, right?
So a professional told you what you can or can't afford and considering many of you trusted these people, you fell for their game and you purchased homes in that range. If it were me, I would have purchased a home 1/2 of what they told you was affordable and if I couldn't I'd continue renting until I could. Nope, not young Americans. They need to have that perfect palace and when one of the two income providers loses their job, it's back to the Parents for help because they can't afford the payments any more. Bad enough the Parents loaned/gave them the $20,000.00 down payment clearly showing they weren't ready to buy a home to start with. But the Real Estate Agent doesn't care about seeing the very first sign of problems because they want that commission.
Back to the Idiot Professional Real Estate Agent from our Post yesterday. She bought a home, got a 2nd mortgage on the home and then added a 3rd mortgage because she wanted a pool. Oh, what I wouldn't do to know just how many IDIOTS out there reading Salisbury News did this same thing? My guess, NONE OF YOU were that stupid! I could be wrong but that's like buying that $20,000.00 car and financing it for 10 years, STUPID! Oh, but wait a minute, this was a 10 year Professional Real Estate Agent advising you on what you should buy or shouldn't buy. NOW, let me say this to all of you. This is NOT a one in a million case here. MANY Realatards have done this. I know some of them personally and believe me, they're some of the dumbest Idiots I have ever seen! Interest only loans, you name it, these Idiots moved their families into these mansions and are losing everything simply because they just had to have it their way. They had to prove to all of you they were successful and you can trust their advice. Like gamblers, these people think that ONE DAY they're going to sell that one major deal and pay off that interest only loan and own the home free and clear. How's it working for you now?
Here's where I really hit you hard. I started buying real estate back in 1985. Yeah, I'm starting to show my age. My first home was a $300,000.00 home in North Caldwell New Jersey. Real estate taxes on that little 1/8 of an acre property back then was around $2,800.00 a year. Can you believe that! I believe the interest rate was a steal at 9.5%. Now I've made a LOT of money between 1985 and 2009 but let me say this. I made more in one year than the entire price of my first home. North Caldwell, (so you know) is where they shot the home of the Sopranos.
My point to you and my advice to you is this. Stop trusting these people to tell you what you can and can't afford. YOU, of all people, know what you can and can't afford. I'm NOT suggesting you only buy a home valued at one years income. I'd say three years income, MAX! If you can't afford that, don't buy it. Continue to save until you get to that point. Quit depending on your parents and grandparents to front you the money to get into something you can't afford.
You should be able to pay your 30 year mortgage off in 10 years and I'm serious. When you're done with the payments in 10 years by sending in additional monthly payments, look at your position then and decide, why do you need a bigger and better home? If you have good solid reason, sell your home and take all the equity and steal a home somewhere, like I did in Ocean City. Granted, stories like mine are rare but I have been at this a lot of years and I have always bought smart. Today, here's my position. I own millions of dollars in real estate. It's a matter of public record, I paid $50,000.00 for the old Station 7 in Pittsville. I sold it for more than $400,000.00. Buy right and buy smart. Everyone said, what are you doing buying that old hunk of crap? No one says anything to me now about it. The key to this entire story is, while I do own millions of dollars in real estate, I OWE NO ONE! No mortgages, nothing! Just the taxes and insurance.
Some have said elsewhere that I got my money from my Parents/Family. That's just complete crap. My Parents and Family never gave me a penny. I did this on my own and I lived well below my means. Even when I had my big home in the Annapolis area I paid $300,000.00 for it after I sold my tiny home in New Jersey. The move to Maryland was a very smart move as I saved tons of money verses staying in Jersey. I ultimately bought a home in Delmar, De. My real estate taxes are $1,200.00 a year and as many of you know, it's a beautiful custom built home on 7.5 acres. Does anyone need more than that? I can afford the nicest home known here on the Eastern Shore but for what? To impress others? You see how I dress. I'm not out to impress anyone. This Post is done because Americans need to learn. The big question is, are you pissed because I've been successful? If you are, man, there's something seriously wrong with you. I'd be happy to know someone who beat the system and is willing to share some good FREE advice.
Now, the next time you go to the Grocery Store or shopping in general, before you get to the register look into that cart and decide which items are what you NEED and which wants are just things you WANT. Take the wants and put them back and you'll be amazed at how much money you'll save in a year. Could I be walking around in designer clothes impressing the rest of the wealthy people in our communities, absolutely. However, they don't impress me one bit. You know why? Because many of them are in debt up to their eyeballs and are probably some of the same people advising you on what YOU can or can't afford. Look where that got you today! Are you on a second mortgage? Is your home paid off? How long have you been at paying off your home? Are you afraid that you'll never live to see the day you have paid off your mortgages?
Let me say this as well. I happen to have one of the greatest Accountants probably in the United States. He's based out of Rockville and we have been friends for a million years. He advises many of the Fortune 500 Companies in America and does a lot of auditing for them. We sat down many years ago and I said, Harold, what's the best way for me to secure my future? He said, PAY OFF YOUR MORTGAGE! I replied, I thought that was a big write off for me? He replied. Joe, you paid $300,000.00 for your home, right? Yes. Do you realize that if you make those payments for 30 years you'll have paid about $1,200,000.00 for that home? (Remember, interest rates were quite different back then) I hadn't a clue. You see, like many others, all I thought about was, I can easily make this payment. Anyhow, Harold went on to say. Let's say you sold this home in 25 years. You've probably paid close to a million for it. Do YOU think you're going to sell it for a million dollars? NOPE! He said, let's be conservative and say you sold it for $500,000.00. Many think they just made $200,000.00 in profit when in reality they just lost $500,000.00!!!!! THAT'S when it clicked in for me. Getting a write off on a mortgage is a JOKE! You know how little you get in return for our Government encouraging YOU to mortgage a property. It's a complete scam! Our Government wants you to be in a home you can barely afford. We're the Idiots falling for it and when I realized how bad it was, I started sending in an extra thousand dollars a month and started buying my debt down and within no time I was in the drivers seat.
Now look, I'm not stupid. These are my examples and I'm in a unique position. However, you can achieve the same thing if you set your priorities straight. My goal was to financially secure my Family in case anything ever happened to me. Yeah, you can buy a life insurance policy that can leave some security but what happens if you don't die? You fell for the oldest Government trick going. You bought a home you could barely afford, (in many cases) and you also paid for life insurance to boot. The odds of you dying are very slim, like it or not. I'm not at all suggesting that life insurance isn't a good thing, because it is. Especially at today's rates and especially when you're young. Back when I had serious life insurance it wasn't cheap. Today it is because the stats changes as people are living much longer.
So my advice is, start being more responsible with your money. Buy down your mortgage as fast as humanly possible, it's better than life insurance. (Again, I'm not suggesting you not have life insurance) Buy a car that is one year old, not brand new. The Banks will treat it like it's a brand new car, interest rates and all and let someone else take all the depreciation from it the first year. Talk to your Banker and ask them what it would take each month in extra money to pay off your mortgage in 20 years rather than 30, you'll be amazed at how little it would take. If you can afford it, ask what it would take each month to drop it to ten years. Again, you probably can afford it but you'd have to give up some luxuries throughout that time but it will be the best money you ever spent.
Become debt free. It's not as difficult as you would think. Once you become debt free, think about how great your retirement will be! Think of all those trips you'll be able to make once the kids are gone! Americans are so trained that they just keep refinancing because they can afford the payments. Hopefully now you'll see things a little differently. This advice comes from someone who's been there and successfully beat the system. I'm not just some guy, (like those Doctors, Lawyers and Real Estate people) who just throws out advice and doesn't have anything to back it up. You'd be truly amazed at the position you'll be in when the Banks keep coming to you wanting to loan you money. Take back America from these corporate giants who are getting fed your cash to bail them out because they suckered the majority of Americans into mortgages they couldn't afford to start with. Remember, these are the Professionals people like Shanie Shields, Gary Comegys and Chief David See trusted, remember? These are also some of the people who filed Bankruptcy, yet they want to tell all of YOU how to do things. Now can you see why I get so ticked off when I hear these people speak?
Good Luck to each and every one of you. It's never too late to start taking this advice and guess what, it can't hurt you. Take it or leave it, that's up to you but you're not going to be given such said advice very often in your lifetime because our Government is making billions upon billions of dollars off of those people who trust these alleged Professionals, interest rates and mortgages. In 10 years you could be debt free. Is it worth buying those $100.00 pair of jeans or $100.00 pair of tennis shoes because one of your kids WANTS them? My Mom always made sure that if we wanted those sneakers, we had to go out and get a job to buy them. I didn't turn out so bad, did I?
America is in what our Government calls a recession. Sorry Folks but there's been far more money lost than in the last Great Depression and I personally cannot see a new business, (like the Internet) that is going to jump start the economy back to where we once were. We've been living in a false economy for 10 years now and rather than hitting rock bottom and facing the fact that we're broke, we're printing more money and the value of the American Dollar is dropping so low it's useless. The talk about Banks having the freedom to LOAN MORE MONEY is all a boat load of CRAP people! Ask around, even people with great credit can't get refinancing on their home. I know, my own Brother just tried and he just gets the run around. Things are going to get a whole lot worse, believe me. Printing more money is like pitting a bandaged on the Hoover Dam hoping to hold all that water pressure from busting loose. It's NOT going to work!
I thought I'd never say this but do you know what I would have advised that Idiot Real Estate Professional on that Show. File Bankruptcy, you Idiot! It would be far cheaper for you to rent a nice home than it would be to continue paying three mortgages! Of course the Host would have been fired for giving such advice but hey, not that I would ever like suggesting anyone to declare bankruptcy but if the mortgage companies were that stupid and that crooked to give this Idiot three mortgages, EAT IT, I say! If you weren't aware, MANY Americans are buying kits for around $350.00 on how to turn your keys to your home back to the Bank and simply walk away from your mortgage. There is a legal way to do so and of course you'll file bankruptcy but guess what, millions of Americans are doing it simply because they're in way too deep and they just can't afford it any more. In the end, IMHO, why not! If the majority of Americans are doing it, bad credit won't be punished because they're eventually going to want to get you back. If they don't, they can't survive and Banks will start closing like there's no tomorrow.
Which brings me to my final thought. I have been saying for years, Major Banks buying up smaller Banks is going to be the downfall of the American Economy. Duh, look what's happening! We have been posting for months the Banks the Government has been taking back VERY QUIETLY! Why are these big box stores and big Banks such a bad thing? Because, like I have said for years, when the BIG BOYS CRASH, all of America crashes. The Mom & Pop businesses across America keeps BUSINESS HONEST! The competition was fantastic because it kept everyone honest and fair. What will America do IF WalMart closed their doors? Seriously, I'm not at all kidding either. What would happen to YOU if your Bank closed it's doors? NONE of the small home town Banks are hurting one single bit. Bank of Willards, Bank of Ocean City, Bank of Delmarva and so forth are stronger than ever! They didn't make those crazy loans all over the place, allowing Real Estate Idiots to get three mortgages on their home so they could add a pool! These are real people dealing with you one on one.
In closing, I hope this information helps you not only to understand the reality we're currently living in. My greatest hope is that Americans stop walking around like Robots and falling victim of routine and or status quo. You can't win a game if everyone plays exactly the same. Life is far more challenging and if you're smarter at the game and stay one step ahead you'll come out a clear winner. The reason Americans aren't living the American Dream any more is because our Government traied us to believe using credit cards and wanting to have everythig everyone else has by making tiny payments, eventually came back and but most in the butt. Lots of people are learning to swallow their pride and walk away from all those luxuries. If you allow our Government to continue to SUCKER you into believing we're going to get out of this soon, consider yourself an IDIOT too because you have now been warned. Oh, and when your kid comes to you and tells you he or she wants to go to William & Mary for college, tell he or she to go out and get a job! People are living MUCH longer today and they have plenty of time to get an education. To those Idiots refinancing their home for their kids education, it will be as meaningless to MOST of them than it was buying them their first car. You DO remember how they treated that one, right? Get back to basics Folks because America ain't what it used to be.
This link came from anonymous 10:29. Thank You.
"And for those of you who, like me, thought Joe was making this story up...
Here's Proof
