“My wife and I went through a foreclosure and bankruptcy here in Ohio (where we lead the nation in foreclosures). The long story short – we bought a house for $32,000 in 1995, but couldn’t afford to fix it up. Just kids at the time (I was 20, she was 22), we were expecting our son and found a fix’er upper. We took out a subprime second mortgage to do the much needed repairs ourselves. The neighborhood was going to hell and after seven years we wanted to get out, but we had no real equity…”
When we got our second mortgage, our home appraised for almost $90k. We listed it several times at $42k (the break even point for us) and couldn’t sell it. We relisted at $36k (which would have us in debt without a house) and couldn’t sell it. The roof was literally caving in, the basement was flooding and the porch was crumbling.
Most of what the reality agent told us on the disclosure sheets turned out to be false, but we had no real recourse as we found out so long after the closing. One example was the roof was listed on the sheets as “newer”, but the original 1910 slate shingles were still on there, topped with four layers of asphalt shingles (the building code allows for three, maximum). We were to naive to not get a home inspection before buying. We were stuck and couldn’t afford two residences.
The reason our story is amusing was the bank foreclosed and tried to turn the property on auction quickly. They couldn’t sell it either. They put a ton of work into the place. Our roof estimate alone was $14k, plus there were lots of things not up to code in that old place. They ended up selling it on their third attempt, for $19,000. There’s no way that would have even covered their costs after we left.
Currently we’re renting a friend’s condo as we wait for the credit stain of bankruptcy to wane. I’m not sure I’d ever want to invest in real estate again. We were told over and over by family that real estate is the only safe investment, but speculation is just that and we lost our shirts in the process.
- Always get a complete home inspection before buying new property.
- Real estate is an investment like any other, it carries risk. Risk means risk of losing all your money.