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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Suma who wrote (25704)	12/8/2004 2:27:43 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

One of my Real Estate Law professors, Marvin Starr, used an analogy for your situation. You're walking through the forest with your sack of gold and a gnome pops outs. He tells you if you give him your sack of gold today, he will repay you with two sacks of gold in six months. Doubling your gold in six months sounds pretty good to you so you give him the sack of gold. When he doesn't return it in six months you go to the forest attorney and under California law (and the law almost everywhere else too) you can sue for the recovery of your empty sack. People "sell" their 50 unit apartment building for a lot more than it's worth, taking a promissory note from the seller in payment. You retire to luxury island. In the meantime, the buyer stops all maintenance, raises the rents, and even stops making property tax-payments. A year or more later many tenants have moved out, the building is trashed, the county begins proceedings to foreclose on your building. They notify you because your recorded your promissory note with the county - you did record your promissory note didn't you? You come back make the tax payments and foreclose on the buyer. After legal costs you get back your trashed empty building worth perhaps half of what it was worth before. As Marvin Starr said, "Don't lend money to a real estate buyer unless you're a bank." .