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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (38335)	8/10/2005 3:58:04 PM
From: James M. Belin	Read Replies (2) of 110194

To all: I just had an interesting conversation with the property owner where my office is located. He and his wife decided to get into the residential real estate business during the last 1 1/2-2 years. I was absolutely astounded to hear from them last week that they now own 38 homes/condos in 4 different cities (Phoenix, where I live, Colorado Springs, Boise, and Las Vegas). Initially, they locked up homes and condos by putting just $5,000 down. Now banks are requiring that 10% be put down. What I could not believe is that he told me that in some recent deals, the interest rate being charged on the piggyback mortgage (the second mortgage) is now 9 or 10%. This person still is not deterred by this high rate because he feels that real estate just goes up in value. I specifically asked him whether he had to sign a personal guarantee on any of the loans. He said "No." He said that in the unlikely event that the real estate dropped in value, he could just walk away from the property. Jim

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