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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (6249)	6/3/2002 11:56:50 PM
From: russet	Read Replies (1) \| Respond to of 33421

I got relatives and friends all over the country telling me they are outbidding other buyers on residential properties which they turn around and rent to someone. I question who that someone is, and they say this is a no brainer, easy money. They are paying for the properties with 5%-10% down and below prime mortgages the banks are sucking them into with 1-2% off normal rates for three months, then a half point or so below prime for a minimum three years or 3 months interest penalty to get out. I did the landlord thing for years,...I know all the horror stories,...so I ask,...Do you know these tenants job history?, credit and life history?, have they held a good job for many years?, what about their credit rating?, did you get a recommendation from their employer?, did you talk to anyone who rented to them before?, why don't they buy as it seems cheaper than renting?....I could go on and on, but they didn't ask many questions of their tenants, just first and last month's rent and sign the standard lease agreement,...oh boy! Then I ask,...do you know interest rates are likely to rise, in Canada at least? Can you afford a 15-20%+ increase in payments on the $500,000 to $1,500,000 principle you borrowed if interest rates double? What if you can't find a renter for a time? Are your jobs really that secure? (the cousin from Nortel laughed at me a year ago,...he's laid off now). I'm in golds, and oil and gas, and stocks that have some momentum. They all laugh at me,...the stock market collapsed right?? I paid off my mortgage, owe nothing to nobody, sold my business, and retired (well all right, I sit at the screen half the day and watch stocks, and talk with you folks). On the weekends I go out and smell the roses. They are in big debt, invested in assets at the top of what could be another bubble, and the bank owns 90%+ of everything they own,...they laugh at me? He who laughs last, laughs best (gggggggggggg)