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dryrot

Condo Paradise In Las Vegas

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Hi

In this account of condo disaster in Las Vegas:

http://www.businessweek.com/articles/2013-09-12/after-las-vegass-housing-crash-fraud-ferraris-and-gun-fights#p1

And I particularly liked this comment:

"Investors could buy, hold, then flip a property without ever setting foot inside." Very little has changed, the whole real estate & mortgage industry has become a Ponzi scheme. Sell to those that can't possibly sustain a 15-30 year mortgage payment schedule, foreclose and repossess to resell later. Same concept as a buy here pay here used car lot. Because those properties like the used cars need to generate revenue, think of it as leasing property with a potential bankruptcy ? The real estate stays in the right hands and as revenue producing inventory"

Never thought of it like that but he's right...

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Average house prices fell from $250 to under $100 thousand. :o

Like the legions of people who arrive in Las Vegas hoping to get rich on blackjack or roulette only to find that the system is stacked against them, the boom-time real estate investors, once stripped of their cash and illusions, hastily got out of town.

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Amy and Frank Taddeo liked what they saw. The Taddeos, who were relocating to Nevada from Staten Island, N.Y., had $300,000 to put into an investment property. A sales agent, Amy says, suggested they buy 10 condos at the Meridian, putting $30,000 down on each unit and borrowing the rest; but the Taddeos, who were largely dependent on Social Security for income, thought that sounded risky. Instead, they purchased a two-bedroom apartment for $654,000 and signed a leaseback agreement guaranteeing them $4,000 in monthly rental income for the next three years, according to court documents. No one bothered to point out that rents on comparable apartments were closer to $1,200.

I quite like this, on social security yet had $300k to invest in property!

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Not sure I agree with this. From what Ive read its so costly and time consuming to reposess its often cheaper/lenders get more money back by simply reducing the debt load.

I mean, it works out well if you have cash and you can get on the right side of the deal, but its more the unintended side effect of a utterly corrupt taxpayer subsidized banking and mortgage system than the flippers themselves initiating it.

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I quite like this, on social security yet had $300k to invest in property!

People over here still seem to think the US is some kind of 1920s "if you dont work you starve" pure capitalist society...from what I read, benefits over there are as generous, if not more so than here! Sure overall govt spending as a % of GDP is a bit lower there, but thats mainly because their GDP is a bit higher, doesnt seem their 'entitlements' are lower.

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People over here still seem to think the US is some kind of 1920s "if you dont work you starve" pure capitalist society...from what I read, benefits over there are as generous, if not more so than here! Sure overall govt spending as a % of GDP is a bit lower there, but thats mainly because their GDP is a bit higher, doesnt seem their 'entitlements' are lower.

I suspect that this case is another State Pension one - I very much doubt that the people in question were working age.

Politically, it's the same as here, pensioners vote hence pensions are politically sacred. Very dangerous for a society, if you start stripping education and infrastructure budgets to pay pensions. A real problem indeed for the US.. since the Republicans are dependent on the pensioner vote, but also committed to very high levels of military spending and lowering taxes. Tricky to balance, that one.

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