If Only...

We like to keep in touch with our clients and hear what’s been going on in their lives and with their real estate and other investment plans. These days, there’s not a lot of good news and we don’t usually hear that plans are working out better than expected. In fact, we usually hear that plans are on hold, that there have been reversals, or job changes for the worse, or even bankruptcies, short sales or foreclosures.

We get it. We used to own 17 houses ourselves, and let me tell you what THAT’s like! Unwinding that portfolio takes years when markets are declining significantly in a matter of weeks. While our gains were breathtaking on the upside, our losses have been equally breathtaking on the downside.

Most people have learned to live with it and try to count their blessings of family and good health and not dwell on the negative. But there is still a sense of failure and loss. And it dawned on me that what hurts the most is not the loss of money, but the loss of time that we can never get back. We did what we thought was the right thing, we worked hard, we tried to better ourselves, we took risks, we invested in our economy, and now we have little, nothing or debts to show for it. That’s what hurts the most; we wasted all that time and energy.

My neighbor bought a house down the street a few years ago and fixed it up and hoped to make a profit. Instead, he took a huge loss and now is stuck with an equity line on his home that he has to pay back somehow. He comments philosophically, “I would have been better off if I sat on the beach and smoked weed.” I’m not advocating illegal drug use, but that pretty well captures the sentiment.

What does this all mean? How does our country move forward when those who are hard-working and like to better themselves and things around them and make things happen decide it isn’t worth it? I don’t have the magic answer, but this is a question we will have to grapple with in the years ahead.

So as I said, we get it. We know how you feel. Let’s talk about what’s been going on and see if we can give you some strategic advice that will help. The worst thing you can do is hang on by your fingernails and hope that tomorrow will be better. Don’t get me wrong, things will be better eventually, but not tomorrow. We have to make the tough choices now while we still have options. As you get pushed further into the corner, your choices will become more difficult. Call me any time for free, no B.S. advice. Don’t say 6 months from now, if only…..

A Negative Inheritance

I want to make you aware of a situation I’ve run into a couple of times lately. In both cases, an heir inherited a piece of real estate and then discovered that there were loans on the property for more than it was worth. They then had to bring money into escrow in order to sell the property. In one case, the bank foreclosed on the property and now this heir has a foreclosure on his record!

Now I’m not an estate attorney, and I don’t know why these heirs took the upside down properties into their name and didn’t just leave it for the estate to handle. Perhaps they thought the house was worth one price, and then when they went to sell it 6 months later they discovered that the market had dropped below the loan amount. They weren’t my clients so I don’t know all the details.

But my point is this. We always assumed an inheritance would be a positive thing, and that if we inherited a house from a relative it would be a windfall. But these days it could be a burden instead of a gift. A number of seniors these days have put “reverse mortgages” in place that could erode any equity they had in the house, or perhaps they own rental property that has recently gone upside-down.

Now some of you might be offended that I even brought this up, but if you have good communication with your family, you might want to have an “economic summit” and see where everyone is financially. I know it used to be that talking finances with family members was taboo, but these days we all need to stick together. If a family can talk about things, then they can do better estate planning. Perhaps an over-encumbered house can be sold now rather than have it tie up the estate for 6 months to a year while the heirs deal with banks.

So please think about this. I’ve seen people get stung lately by inheriting a problem and I don’t want it to happen to you.