Wednesday, October 29, 2008
Now In The Red
First read Marginalizing A Speculator.
After that I wrote Another Week, Another Hopeless Price Drop.
Down below I have aggregated and chronologized the price history of this *speculation* gone awry:
UPDATE - It's official, house just hit the market at $899,000 on July 24th.
UPDATE - July 30th, price dropped down to $875,000. The seller didn't even give it a week. The open house on Sunday must have been an *empty house*.
UPDATE - August 7th, price reduced to $849,900. Hah, it's only been two weeks!
UPDATE - August 21st, price reduced to $829,900. So as of right now, this *speculator* risked 750k to make 30k. Doesn't sound like any odds I would enjoy playing.
UPDATE - September 30th. Boy, this didn't take long - price just dropped to $809,000. Guy must be watching the stock market (-777 pts yesterday).
UPDATE - October 7th. Down to $799,900. We're at breakeven, officially.
UPDATE - October 24th. Down to $779,000. Now a loser. Great investment pal!
UPDATE - November 16th. Price dropped to $749,000.
Remember if he did in fact pour in $75,000 in improvements, and if he's looking at a standard real estate transactional costs....his breakeven is roughly $800,000.
So he's down twenty grand and counting.
PLUS the carrying costs of his *investment*. Even using a 3-4% cost of capital, he's hemorrhaging an additional two grand per month on that - figure 7-8 grand so far.