Raam Dev’s Weblog

In 2003 I bought my first property, a two-family house in the Centerville area of Lowell, for $213,000. Within six months I put about $75,000 into the property and another $50,000 over the next few years (not to mention endless amounts of my own sweat and time).

This week I accepted an offer to sell the property for $180,000. It just doesn’t seem right, but I know it’s the best thing to do. All three of my rental properties are listed on the market right now for much less than I owe and yet this is the first offer I have received in over 8 months. There are more than 300 houses for sale in Lowell right now. There are houses on the market for $175,000 that only two years ago would have sold for over $300,000! Just one year after purchasing my own first property, it was reappraised for double what I paid for it.

It will be quite some time before I know whether or not the bank will approve the short sale and even if they do approve it, they will almost definitely leave me with the balance: $170,000. My other two properties are in the same situation and I’m not alone.

I have read dozens and dozens of articles in the newspaper about other homeowners who took adjustable rate mortgages so they could have lower monthly payments. They never intended on keeping the mortgage past the two year fixed term but instead planned to refinance the property after its value increased. When the values made a dramatic run in the other direction, owners were stuck with owing more than the value of the house. This meant they couldn’t sell and they couldn’t refinance.

I wish I had the cash to buy properties right now because within 5 years all these houses will probably be selling for upwards of $400,000. Real estate value always increases over time. Thats the thing about real estate: it’s real. But with all investment comes real risk. Regardless of what happens to me financially over the next year, you can be sure I will be taking the lessons I’ve learned and applying them in the future.