Have 5 homes, 3 are in foreclosure/shortsale?

Question

My friend bought 5 homes within last 6 years with only (3), (4), (5) in foreclosure as follows :

(1) seondary home in Southern california, paid $250,000 in 2003 with $20,000 down & fixed mortgage. home now worth $400,000.

(2)primary home in southern california, paid $500,000 in 2003 with $250,000 down & fixed mortgage. home now worth $650,000

(3)investment home in north las vegas, paid $125,000 with zero down & unknown mortgage. home now worth $125,000 & in foreclosure.

(4)investment home in southern california, paid $360,000 in 2005 with $70,000 down & unknown mortgage. home now worth $210,000 & in foreclosure.

(5)investment home in texas, paid $120,000 in 2005 with zero down & unknown mortgage. home now worth $110,000 & in foreclosure.

Last time I talked to him, which was almost 2 years ago, he had 850 fico score & seemed to be doing pretty well. What happened to him? I know he is smarter than this. He doesn't want to tell me details.

Answer 1

I'm surprised he doesn't rent out the home in Vegas, I can't imagine that he can't get at least the mortgage payment covered with rent.  I estimate that his costs should be about $1,000/month.

The house in LA probably costs about $2200/mo and depending on it's location and size, he might be able to almost break even.

The house in TX could run about $1000 but I know a lot of places in TX are well under $1000/mo/  When property is negatively cash flowing, you can only support it for so long before it catches up to you.

From the negative equities you've mentioned, it seems that your friend isn't too bad off.  I hope he's not letting these go because he's a little upside down.  RE has a history of appreciating and will probably be above water before too long.