I thought you’d find this fellow interesting, given his interest in real estate.
http://www.garth.ca/weblog/2008/10/28/what-we-sowed/
You may, or may not agree with his analysis. He’s a politician who recently lost his seat, and while he was a Liberal (centrist) he was previously a Conservative, Progressive Conservative, and Independent for a time.

He, like me, thinks that people who buy property they cannot afford are part of the reason our countries are experiencing economic problems.

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“Funny how that’s happening world wide, eh? Not just an American trait.”

I agree, it is worldwide, it’s almost as bad in Canada as it is in the States.

“as in basically calling me a liar. I shall refresh your memory.

I doubt that, because anyone who owns several properties (and by own we mean the bank doesn’t own them?) is fairly wealthy in the grand scheme of the world.

So you “doubt” that what I said is true.”

No, I don’t think you lied about knowing people who are normal people with multiple properties. I simply doubted that only Obama and Biden would see them as wealthy. I pointed out that I see them as wealthy, because undeniably they are in more ways than one.

And don’t mind Louise, she’s harmless, but a tad deluded about how much clout conservatism actually has in this country and yours.

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From a fellow Saskatchewanian, let me tell you that Saskboy suffers from the socialist disease that infested this province for more than a half century. Owning property in excess of your own needs is a sin. If you own more than the guy on the other side of town, the guy on the other side of town has a right to take part of it from you. If you don’t share with me, Big Brother must intervene on my behalf. Economically successful people must have stomped all over other in order to get where they are, etc. , etc. etc. You know the routine. He’s basically upset that the parties that most closely represent his beliefs got trounced in our recent election and he can’t do anything about it. If McCain/Palin pull this one off, expect the “collective” groupies to gather at his place and engage in meltdown hysteria.

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You’ve summed up why there’s a credit crisis, too many investors are living beyond their ability to finance their life, and the law is letting squatters get away without paying rent to keep what ought to be (but aren’t) valuable real estate investments in the hands of investors instead of banks.

Yes, there is a credit crisis because Americans.. in general.. have been living beyond their means. Funny how that’s happening world wide, eh? Not just an American trait.

No, the “squatter law”, as you refer to Landlord/Tenant law is not letting them get away without paying rent indefinitely. But liberals put the delays in to make sure landlords weren’t kicking innocent non-paying families out of their homes. Part of that feel good crap for the “middle class” and against those rich “fat cat” landlords.

The last sentence of that quote, I’ll address after I repeat your next sentence for clarification.

Ultimately the bank owns properties of your “normal people” example, as you’ve admitted in your comment 16. Why do you think I brought that up?

No, no, and another no. You may have a mortgage on a property in the US, but they are only a trustee owner who takes possession if you default. The vested deed owner with all rights is the purchaser. So no… banks don’t own the homes in that extent. The banks use the homes as collateral in the case of default. This is not done “30 miles outside of Canada” as well? I’m rather surprised… nor do I believe it. This is an international concept in business…. vested ownership vs trustee deeds. The bank may hold the home as collateral, but they can not sell it when you have not defaulted on a mortgage. They cannot tell you what to do with the property. They only seize it if you do not honor a contract.

But banks should not be giving mortgages to people who will be unable to pay if renters legally get out of paying rent. The normal people in your example in comment 15, should not have been given such an unmanageable amount of credit. Because they were given money from a bank, without an excellent expectation that it would be repaid 100%, the bank transferred wealth to those people, while withholding it from people without the same access to credit.

There is a mixture of logic and wisdom, plus impossibility here. First of all, you cannot “guarantee” anyone will be able to pay rent, or a 30 year mortgage, in advance. That all depends on if they keep their employment, are not disabled for even a short time to fall into the pit of no return of debt etal. Therefore there is no “excellent expectation that it would be repaid 100%” except by one cashing out and not using credit. As they say, the only guarantees in life is death and taxes.

The entire concept of credit is based on good faith and past history of honoring debt.

Without debt, even the largest of corporations does not exist.

While your “normal people” are on paper no richer than I, and in fact have much more debt, they are much more wealthy than average people, both in an American, and especially global context.

Again no, no and no. If you are in debt $100, or in debt $1,000,000… and you default… you are still *not* wealthy. Again, it comes down to debt vs income.

There is no difference in managing small and large sums of cash except for the amount of zeros you have to write. A negative number remains a negative number. To listen to you, someone’s more wealthy if they are bankrupt by a larger amount of cash.

The large difference is one has more to lose, or more to gain, if all goes right. But the monthly living may not be all that different. I am not saying Cindy McCain lives on your salary amount. But I am saying I have friends that own 3-4 properties, and earn/live off of $800-$1200 montly salary. Their homes may be breaking even this year, or in the red…as they may most surely be next year. Two years ago, they may have been paying the mortgage and the taxes, and bringing in a nominal 2% of their value as profit cash wise… and acted as a tax write off.

The specifics differ with the circumstances, and the wisdom of their buy in price. But “on paper” and “in bank”? Nope, not necessarily a wealth. It’s an investment, just like stock or a 401K, subject to loss. And rental properties is the lowest return of cash on cash there is in the real estate world. Some people start savings accounts in regular checking, IRA, money markets, etc. Others invest it in stocks, bonds, real estate, gold etal. It’s cash that may be gone tomorrow, or perhaps turn a profit if the situation is right.

However “rich” or “wealthy” is only if you turn it at a profit. Paper rich and cash rich/wealthy are not the same thing. Something Obama ought to learn as well.

As far as my “snarkiness”… I am responding to perhaps what you may not have intended… as in basically calling me a liar. I shall refresh your memory.

I doubt that, because anyone who owns several properties (and by own we mean the bank doesn’t own them?) is fairly wealthy in the grand scheme of the world.

So you “doubt” that what I said is true. Thereby you want “proof”. Well, I’m not going to provide you with the portfolios of those I know. And I took that as an insult to me personally. Go there, and I assure you, I have no problems responding in kind.

However it is entirely possible that since you know so little about investment in real estate internationally, as well as nationally, I may have jumped at you too soon. And combined with your Canuck speak … which is not an insult, BTW, or else the Vancouver Canucks must truly be traumatized… what you said may have come across wrong to me.

In which case, if you were not being snarky and insulting first, I do apologize. If you intended it as such… well, blow it out your ear. :0)

This, however, still does not preclude you are utterly wrong on every aspect of your attempted investment analysis of multiple homes. Therefore, your judgment of Cindy McCain, Pelosi, Kerry and other multiple property owners here in the States, or other countries, is completely off base due to naivety.

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“When you are “wealthy”, your income is significantly larger than your debt. Would you agree there?”

This is important, sorry I missed addressing it directly. Yes, most people would recognize that as true. However, it’s possible for someone to be living “wealthy” for years, and not have that situation at all. The problem is, they tend to transfer their debt to other people. The renters you mentioned who skip out without paying have undeserved wealth. So too might people who have multiple homes, but lack the cash to pay for them should there be a short interruption of less than half a year in standard revenue earned.

While your “normal people” are on paper no richer than I, and in fact have much more debt, they are much more wealthy than average people, both in an American, and especially global context.

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You need to do that because you said, “In fact I know normal people who own several properties, and they are only wealthy in the eyes of Obama and Biden.” Prove average Americans own several properties. They may be normal, but the average is not owning multiple properties, correct? Obama and Biden have not said they’d raise taxes for average Americans as you suggested. That’s what I meant I doubted, that they’d think people like you are thinking of, are “wealthy”.

“Still with me, Canuck?”

No, you lost me because you’re being an arrogant American, American. That’s what I’d say if I wanted to be snarky though. What I really mean is, “yes, of course. Why do you think I asked you if the bank owned the properties you brought up before?” The country I’m from does not figure into how you need to talk to me. I’m not mentally deficient because I grew up 30 miles outside of the United States.

You’ve summed up why there’s a credit crisis, too many investors are living beyond their ability to finance their life, and the law is letting squatters get away without paying rent to keep what ought to be (but aren’t) valuable real estate investments in the hands of investors instead of banks. Ultimately the bank owns properties of your “normal people” example, as you’ve admitted in your comment 16. Why do you think I brought that up? The McCains OWN their multiple homes, and at worst have the cash to buy them outright if they were caught with renters who couldn’t pay up.

But banks should not be giving mortgages to people who will be unable to pay if renters legally get out of paying rent. The normal people in your example in comment 15, should not have been given such an unmanageable amount of credit. Because they were given money from a bank, without an excellent expectation that it would be repaid 100%, the bank transferred wealth to those people, while withholding it from people without the same access to credit.

That’s how I see it anyway, if you have an alternate view I’m interested in hearing it.

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BTW, Saskboy… INRE your comment:

I doubt that, because anyone who owns several properties (and by own we mean the bank doesn’t own them?) is fairly wealthy in the grand scheme of the world.

Again you show your inexperience with the investor world. Rarely do investors “own” real estate flat out.

First of all, there is no interest write off when you don’t have the interest payments in mortgage

Second of all, it’s a waste of cash. i.e. you have $200K worth of cash to invest. Do you buy one place for $200K, and wait to get it back with monthly payments of $1200 monthly over 30 years?

Or do you buy four places, putting $50K down on each, and get $1000 monthly towards each mortgage, PLUS write off the interest on your taxes for the payments (which, in the first 10-15 years, is the majority of the payment).

Finances and wealth is not based on using your own cash. It’s based on using credit plus the write offs.

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Why would I demonstrate to you why “someone who owns multiple properties, even if only for investment thru renting them out, isn’t more wealthy thatn a statiscally average American”.

First of all, you’re a Canuck, so unless your investment process there is significally different than the US for wisely investing cash for retirement, I’m not sure where to start educating you on what you obviously don’t understand. But I’ll give it my best shot since cash is cash, and debt is debt internationally.

So let’s try something simple for you. And it comes down to income vs debt. When you are “wealthy”, your income is significantly larger than your debt. Would you agree there?

So if you have $5000 monthly mortgage debt service… whether it be one property or five properties… you have $5000 monthly of what we call debt service.

If you make $6500 montly between your paycheck as an accountant or whatever – plus your rental income of the properties – and have $5000 monthly debt service, you net $1500 montly for your own debts. Still with me, Canuck?

Let’s say that $5000 is income in five different properties. And let’s say two of those properties fall behind in tenant payments for over 3 months. Here in the US, a tenant can still hang in your property for another 190 days with legal delays. That puts you well into the foreclosure process.

Meanwhile, the two banks call you and call in your promissory notes on the mortgage. You owe $400K on the two mortgages that are served as forclosure. You only make $1500 clear… even tho you own five properties. You won’t qualify for a new combined mortgage to pay off the $400K. At a 6.7% annual rate, NOT including taxes and property insurance (called PITI payment), at max you can qualify for $238K…. and that’s if that debt ratio fits in your income. Ain’t happening nowadays, cowboy. We need the CRA/redlining days of easy money for that miracle to happen.

Sell ‘em? Sure. But with the falling market values (which they do need to do…), and the fact you purchased them during the 1995-2007 real estate boom, that $400K you owe to the banks for the default is only worth $310K on the market today. And it may take you six months to sell them at a firesale price at that.

Still there, Canuck? Any good at math?

You only make $1500K clear after debt service for your own bills. You now instantly owe $400K, and only have $310K in assets. But you own five properties. Even with your other properties, if you pull out any equity that may exist, you may go into new debt with the new mortgage and the new higher payment, and no more equity (if at all) in the falling market. Not necessarily a cure.

Welcome to the reality of assets vs wealth 101… dumbed down.

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“Why are you only concerned about McCain’s, and not Pelosi’s, Reids… or say, Kennedy’s? ”

Who said I wasn’t? I am. I don’t stop at calling out Republican hypocrisy and elitism, Democrats and others are subject to the same rules in my books (and officially American law and opinion too). I’m a partisan bigot suddenly, based on your now incorrect assumption? Tell me, my “publicly” educated self, what partisanship do I hold?

I don’t live paycheque to paycheque.

“the only difference might be they are probably also chasing rent for their property with tenants who don’t pay that month’s rent.” Can you really see Cindy or John chasing after rent on their properties. I dare say there are a great many more differences between their multiple property ownership, from what you are used to seeing, than what you care to admit to.

Again, demonstrate to me that someone who owns multiple properties, even if only for investment through renting them out, isn’t more wealthy than a statistically average American. Once you do that, you’ll also show that they are more wealthy than most people in the world.

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You “doubt” that? LOL! Ah, the chutzpah of the young.

You must not only be a recent public education grad, but you also demonstrate you are totally disconnected to the real world of investments, Saskboy. Real estate is my business. I have many clientele that own multiple properties. They purchase by cashing out equity (where then was equity) to purchase new places, rent them out to they pay for themselves. They are long term investments, much like mutual funds. Comes out in the wash, except perhaps by tax depreciation write off benefits. But let’s not get into areas obviously over your head.

Are they wealthy? No. They work a job and live from paycheck to paycheck… just like you probably do. The only difference might be they are probably also chasing rent for their property with tenants who don’t pay that month’s rent. So they not only have their own bills, but have to cover what their tenants do not.

In which case, guess what… comes out of their pocket, and their credit scores take the hit. They become some of those foreclosed on, and a media statistic.

As far as owned by trusts and dependent children… some of Pelosi, Kerry’s and Cindy’ McCain’s properties may be rentals or vacation homes. Why are you only concerned about McCain’s, and not Pelosi’s, Reids… or say, Kennedy’s?

Answer.. you’re a partisan bigot. And I’ve lost patience with your presence here on FA. Let’s the others take a bite of what’s left of your amoeba brain. I suggest you either go home… do 50 “duh wuhs” and come back here when you’ve got a clue. Or perhaps hang out on HuffPo or DailyKOs where the IQ quotient is more “fair”.

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