Question of the Day, Weekend Edition

Uggghhh….NO!

The boss said that when the last cyclical real estate crash in the 90’s hit the AV, a guy used his credit card to buy a condo for <$12.000.

My buddy Dallas said he went to get a loan to buy a trailer, or mobile home, he said the bank jacked up the interest rate because they knew he would pay it off soon after he fixed it and resold it.

So, a cash advance would be less time consuming and generate less questions on how you will use the money.

NO for a home to live in.
YES for a fixer upper, but only if you are very, very sure that the real estate market will be very viable when put up for sale in 6 months or less.

I can honestly say never never ever ever.

Not that the thought didn’t cross my mind back in the runup in housing prices, around 2003, when it seemed that prices would continue to increase into infinity and every decent rental within 200 miles was being converted to an overpriced condo. I thought, will I end up paying $2500 a month rent for a 300 sq ft studio with the kitchen lined up on a wall across from the bed?

I briefly considered an 80/20 with a balloon payment, for about 5 minutes, but my fear of being a foreclosure statistic was greater than my fear of being priced out. The payment terms were very clear: in 3 years, my balloon payment would come due, and my payments would nearly triple. It was not like no one told me.

So I passed.

I wouldn’t use a payday loan for anything.

Yo, ain’t no way ah use uh credit card fo’ anythin`.
You wants ta owe some banker money? Not me.
You can’t control yo’ wants an’ gots ta borrow money an’ pay interest? Not me.
You wants Google an’ NSA tracking yo’ every move? Not me.
Live free says I.

No. I remember my parents telling me that if you couldn’t save the down payment in cash you had no business buying a home. I listened, because they were right.

It didn’t stop my siblings though, one of whom borrowed the down payment from my parents and went bankrupt a couple years later trying to carry a house with insufficient income. The other is currently carrying two mortgages after allowing some real estate agent to convince them that ‘it’s a sure thing to buy the new place with no conditions because your current place will sell super quick’. They bought that line from a real estate agent hungry for a commission, even though they have no work income and live on a disability structured settlement. Their current place has been on the market since August. I suspect the only way they made the down payment on the new place was to take a cash advance on some credit card from a financial institution stupid enough to give it to them.

Some people are just ‘not so good with the maths’.

Again…any other time in history the answer is a resounding Fuck NO! Now…the answer is possibly. Look at it this way: what if I could get a sweetheart deal on great real property and then was able to pay it all off in a year with helicopter money. During hyperinflation it is a good thing to owe money and pay it off with rapidly dying, ubiquitous fiat. On the other hand, during deflation, debt is terrible…except that if/ when it happens now …personally I think the whole fucking system implodes and we all have more dangerous shit to deal with than bill collectors.

I’m not saying I would…but I might consider it.

Maybe. If I were 23 years old and had a good, stable job with a good, stable company that gave me enough income to easily qualify and I found a great deal on a property that would likely be more expensive if I waited until I’d saved up a down payment, then I don’t see any problem borrowing the down payment (other than breeching most normal underwriting rules). That’s a lot of “ifs”, though. Most people who would borrow the down payment aren’t ready to buy a house.

If the numbers work, sure. I just watched a 2/1 on a half acre in Homestead go for auction with owner financing for 25% down. The reserve was 75,000. It only went for 80,000. I tried to get a guy who used to work for me interested. He pays 1200. a month rent right now. He works less than a half mile away. He has a 20 mile commute right now. I recommended he do whatever it took to get it done. He could have cut his bills in half, owned a home, and he and his family could have upgraded their lives immeasurably. He snoozed. Life sometimes calls for bold and unconventional moves

Great post, EC. That’s what cards are for.

Flash. I wouldn’t recomend speculating on anything with credit. But credit has many fine uses, and when used properly, can change lives for the better. When getting that starter home, or capitalizing a startup business, the money has to come from somewhere, it’s just money. It comes with a price, and obligations. If you can work those in your favor, it’s a no brainer.

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I had a manager years ago who would routinely open credit card accounts at 0% for 1 year and then close them by transferring to a new one at the end of the year. In effect she never paid any interest on any money she used, racked up loads of frequent flyer miles and did quite well by them. She was diligent, disciplined and beat the system.

fifteeen tousand. Eben had enuff left ovah fer some skrawny yardbirds dat ah fattned up by feedn dem mcdonald food. Gots dat ideer from freeks o week piktures. Did hab to buy sum wheels dem cinder bloks dunt roll sew gurd

Now ah going to dah spca an look fer skinny pig to faten up.

Awl fer free afta fiyling fer bankrpsee.

Maken murica great agin! Woop woop!

“I just hope that my SS number was stolen,…”

NOT stolen, I meant!