From $70K to food bank, one family's struggle

[dbarberic]

Re: From $70K to food bank, one family's struggle

Good suggestion. I'll tell my out-of-work brother-in-law the custom builder. I don't know about most neighborhoods, but mine has a good number of 'starter castles' and it's against the zoning to make them multi-family.

EJ is on to something... but it is still to early. Not enough pain out there.

Once the home owner associations and local governments are to swamped with real economic pain to bother going after multi-tenant houses, then it is time to move.

[Guest]

Re: From $70K to food bank, one family's struggle

An iTulip entrepreneur leaving the private sector for the public? We prefer a market solution. Here's an idea.

As I mentioned in our Jan. 2005 housing bubble decline forecast, I still expect that at some point in the cycle we are going to see a trend where large single family homes (aka McMansions) are divided up into multi-family homes.

The economics of the business are that the home owner spends, say, $10,000 to add separate hot water and heat as required by code and other minor non-structural changes, such as an additional inexpensive kitchen, in order to get, say, $1,000/mo. in rental income. This will increase both the supply of inexpensive rental space for the wave of families left without housing due to foreclosures and also a source of income for homeowners at the margin of their monthly mortgage payments. Very rough numbers here but if you can do the work for $5000 per home net and do one every couple of weeks that's not a bad business.

A this point I think it's time for entrepreneurs in your line of work to think about positioning your businesses for that opportunity.

I lived in a beach community with a bunch of old vacation homes where this has already been done for years. Beach homes became beach apartments, since none of the locals could afford the whole house, and no self respecting yuppie would want to own these older simpler beach homes. Often the way they did it was poorly thought out and jury rigged. . Someone with some real sense could do well doing this.

I see it getting allowed more with older big homes than in pristine tract neighborhoods full of nearly new homes. Perhaps the new homes will be bought by the really wealthy, and the neveau-riche will move to simpler homes and the older stately large homes may be the ones getting chopped up.

[FRED]

Re: From $70K to food bank, one family's struggle

EJ is on to something... but it is still to early. Not enough pain out there.

Once the home owner associations and local governments are to swamped with real economic pain to bother going after multi-tenant houses, then it is time to move.

EJ writes in:

By "positioning for this opportunity" I mean that it's too early to actually do it on a large scale but then if you wait until it is everyone will at that point already be doing it. You want to brand your business around this type of work now before it gets popular. You also want to get good at it before others do, that is, learn how to do it quickly and economically. Experience is the best teacher. Start small and early, then grow with the market. This is the way all new markets develop.

Characteristics of an early market opportunity for this type of business are:

1. Large homes
2. Within 30 minutes of a population center, preferably near public transportation
3. College towns are ideal
   
4. Flexible zoning

Early in the market's development zoning laws will restrict your market opportunity. By the time the market is mature, any large home will be game and zoning boards in most communities will be falling over themselves to loosen laws to allow the market to solve their housing problems.

My estimate of market development:

• Early phase: now - 2010 (Low competition, low profit)
• Development phase: 2010 - 2013 (Low competition, high profit)
• Mature phase: 2013 + (High competition, low profit)

[Jay]

Re: From $70K to food bank, one family's struggle

These people are dying on the streets today. Nothing whatsoever to be proud about in this country right now, in our pretence of providing any kind of safety net at all for the most destitute. The people described in this article have not seen anything yet.

Lukester,
There is a medical backstop for all people no matter how serious their predicament and that is the fact that anyone who presents to an Emergency Department in the US has the legal right to a medical screening exam and the right to treatment of emergent disease. It is not the best solution or the prettiest, but it is significant. Obviously, good preventative care would ultimately be much more cost effective.

[flintlock]

Re: From $70K to food bank, one family's struggle

Good point.

But with all due respect, borrowing $350k on a home(or anything!) with almost no reserves is exactly what got a lot of people into this housing mess. Its one thing when you are a young couple buying your first home. You have to take some risks. Its another buying a $400-500k+(?) house. My point was simply that housing in California was way too high. Not making any moral judgment. Her house dropped in value. So has mine. Only I'm not upside down because of it. Obviously there wasn't enough equity in the home to cover the drop in value, or she'd just have sold it right? I'm just wary of some of these sob stories. I've seen the same type stories first hand. People filing bankruptcy with a Lexus in driveway, jewelry, private schools, etc.

[zadok]

Re: From $70K to food bank, one family's struggle

a quick google search revealed that online blogs are ripping this CNN story:

Here's a little more information about Patricia Guerrero's financial situation from public records (LA County Assessor and Recorder):
The 2,948 square foot house on a quarter acre lot was built in 1948.
She and her estranged husband Ray acquired the house, apparently from HIS PARENTS Israel and Esther Guerrero, in August 2002, at which time the debt load on the property was about $157,000.
Ray and Patricia took out a conventional fixed-rate first trust deed on the property on 8/14/2002 for $202,000.
I'll spare you all the gory details of their various refinancings and equity loans, but the present note from 8/21/2006 is for $649,999.
So, it looks like they bought the place for a sweetheart deal and proceeded to jack themselves up to the tune of about $450,000 over a period of just 4 years.

[FRED]

Re: From $70K to food bank, one family's struggle

a quick google search revealed that online blogs are ripping this CNN story:

Here's a little more information about Patricia Guerrero's financial situation from public records (LA County Assessor and Recorder):
The 2,948 square foot house on a quarter acre lot was built in 1948.
She and her estranged husband Ray acquired the house, apparently from HIS PARENTS Israel and Esther Guerrero, in August 2002, at which time the debt load on the property was about $157,000.
Ray and Patricia took out a conventional fixed-rate first trust deed on the property on 8/14/2002 for $202,000.
I'll spare you all the gory details of their various refinancings and equity loans, but the present note from 8/21/2006 is for $649,999.
So, it looks like they bought the place for a sweetheart deal and proceeded to jack themselves up to the tune of about $450,000 over a period of just 4 years.

CNN sure knows how to pick a sob story. For every one of these there must be more in the category of the woman that our Lukester is helping out.

[Guest]

Re: From $70K to food bank, one family's struggle

Update on the San Diego bag lady with the 12 stents newly implanted in her arteries.

I've located a trailer park right in the center of town (in a really pleasant area of town not far from where i work) where she can rent a trailer for $400 a month. I'm buying the trailer and I've reserved her the spot today. The trailer will cost $1500, but after that, this lady can LIVE permanently there and have her own place for years to come. As the Beatles wrote, in one of their hits, a long, long, long time ago (CA. 1966 I believe) : "She's got a ticket to ride, and she don't care".

I can't describe the feeling. I made 50K on my silver bullion this past year. I've handed this woman a brand new life, desperately running for her life out of Phoenix AZ, into a really nice shady, tree lined neighborhood in central San Diego. Now she belongs - she's got her own home, and she can actually survive on her disability check. I did this with 3% of my winnings, from the last year's investment in silver money.

YEEE-HAAAW ! I'm on top of the world. C'mon everybody, I'll buy you all a tall cold beer! Life is grand.

[metalman]

Re: From $70K to food bank, one family's struggle

Update on the San Diego bag lady with the 12 stents newly implanted in her arteries.

I've located a trailer park right in the center of town (in a really pleasant area of town not far from where i work) where she can rent a trailer for $400 a month. I'm buying the trailer and I've reserved her the spot today. The trailer will cost $1500, but after that, this lady can LIVE permanently there and have her own place for years to come. As the Beatles wrote, in one of their hits, a long, long, long time ago (CA. 1966 I believe) : "She's got a ticket to ride, and she don't care".

I can't describe the feeling. I made 50K on my silver bullion this past year. I've handed this woman a brand new life, desperately running for her life out of Phoenix AZ, into a really nice shady, tree lined neighborhood in central San Diego. Now she belongs - she's got her own home, and she can actually survive on her disability check. I did this with 3% of my winnings, from the last year's investment in silver money.

YEEE-HAAAW ! I'm on top of the world. C'mon everybody, I'll buy you all a tall cold beer! Life is grand.

got to tell you... you are a better man than i. you got the spirit. if 1/10 of us did the same we don't need gov't to take care of folks. and it makes your life richer, no?

[Guest]

Re: From $70K to food bank, one family's struggle

AW, c'mon now Metalguy - don't start getting all maudlin and sentimental on me. I'm so used to you being crusty, nasty tempered and irascible I don't think I could take this new "sincere" tone of yours.

But regarding the "makes life richer" thingy - actually the process is I suspect even more mysterious than the merely emotional or mental level you were referring to.

I had a Korean instructor of Chi-Kung back in New York many years ago. Little frail looking guy, maybe 5 foot 5? Well he could put a 6 foot 3 inch linebacker type flat on his back so fast if you blinked you missed seeing what he'd done. He never, ever seemed to exert himself.

He gave lectures on lots of different things, how to capture the "dao" and "chi" in little increments in all your everyday actions, to get healthier or "luckier". It seemed like a lot of metaphysical crap to me which I did not try too hard to understand. And yet he was despite all this a very unsentimental man - as attached to the idea of making money as anyone else.

Well, he said that there was an "art" to seeing the money flow into your life - and that was by handling the flow of money out of your life with the same joy that you handled it's inflow. For lots of years I never really got it, and maybe these are just the ramblings of a martial arts teacher lost in his ivory tower.

But I'll tell you, when I do stuff like this? - I get thedistinct impression in the weeks following that my business and financial opportunities start bulging with cash proceeds! Seriously. So there is perhaps an altogether unintended bit of wisdom in the old saying "easy come easy go" in that it's missing another three words at the end. It should read "easy come, easy go, easy come again". :rolleyes:

It also extends into making money in investments, in that people who are fixated on how much they've "lost" when an investment plunges will sell, and then they really do lose, whereas people who master the subtle mindset of saying to themselves "well, I sure seem to have lost that money now, but I'm just going to let this thing run and see where it goes" are far more likely to see those investments eventually kick out fat returns.

Of course this does not apply to stupid investment ideas, but the principle seems to be that if you know "how to kiss money goodbye" in certain ways, you are far more likely to see larger amounts come in. In the least esoteric sense, it could even conceivably be the description of a venture capitalist?

[raja]

Re: From $70K to food bank, one family's struggle

The economics of the business are that the home owner spends, say, $10,000 to add separate hot water and heat as required by code and other minor non-structural changes, such as an additional inexpensive kitchen, in order to get, say, $1,000/mo. in rental income.

Seems to that me given the current and deepening economic downturn, there are not only going to a lot of people who need housing because of foreclosure, there also will be a lot of people who can't afford to rent because they've lost their jobs. (I don't know what they'll do -- maybe FEMA trailers?)
I'm wondering how these two opposing forces will balance out, and I've been hesitant to invest in any rental property for fear of upcoming rent deflation.
If there's an overstock of housing, wouldn't rents have have to go down.

[jimmygu3]

Re: From $70K to food bank, one family's struggle

Update on the San Diego bag lady with the 12 stents newly implanted in her arteries.

I've located a trailer park right in the center of town (in a really pleasant area of town not far from where i work) where she can rent a trailer for $400 a month. I'm buying the trailer and I've reserved her the spot today. The trailer will cost $1500, but after that, this lady can LIVE permanently there and have her own place for years to come. As the Beatles wrote, in one of their hits, a long, long, long time ago (CA. 1966 I believe) : "She's got a ticket to ride, and she don't care".

I can't describe the feeling. I made 50K on my silver bullion this past year. I've handed this woman a brand new life, desperately running for her life out of Phoenix AZ, into a really nice shady, tree lined neighborhood in central San Diego. Now she belongs - she's got her own home, and she can actually survive on her disability check. I did this with 3% of my winnings, from the last year's investment in silver money.

YEEE-HAAAW ! I'm on top of the world. C'mon everybody, I'll buy you all a tall cold beer! Life is grand.

You're a good man, Luke!

[Guest]

Re: From $70K to food bank, one family's struggle

Jimmy -

Like they say in turf-war ravaged South Brooklyn:

"Who da Man??" You da Man, Jimmy!!"

[c1ue]

Re: From $70K to food bank, one family's struggle

Lukester,

A very fine example of tidal love.

Can you put up a picture of the trailer? It would be inspirational.

[Guest]

Re: From $70K to food bank, one family's struggle

C1ue - I'm working on it.