i have a reputation among my friends and family as a bit of a gambler. of course, i don’t see it that way; from my point of view, i am merely possessed of a somewhat higher tolerance for calculated risk than most people. but regardless of how you look at it, there’s no question that i’ve more than once jumped off a diving board betting there’d be water in the pool by the time i landed. sometimes the outcome has been, well, suboptimal (ask me sometime about the world’s first mobile chinese restaurant—on second thought, don’t); other times I have succeeded brilliantly, often in spite of myself.
case in point: back in 1995 i decided to do something I had never done before—and that practically nobody else in los angeles was doing at the time.
i decided to buy a house.
now, this was on its face a roll of the dice, because (a) the local economy was in its fifth year of a seemingly endless slump, (b) i wasn’t making much money and any house payment would be a stretch, and (c) i was looking at buying in the most simultaneously depressed and expensive real estate market in the country.
(and to be fair and give the reader a complete picture, i guess i should also throw in (d) at the time i was probably way too distracted by my hedonistic and single-minded pursuit of boy-ass all over west hollywood to even think of getting into anything approaching this level of grown-up seriousness.)
but nonetheless, i had done my homework, watched the market, was tired of being poor and the timing seemed right to me. so, knowing my city and what would be important at resale time—and ignoring the greek chorus of doom all around me telling me i was insane—i passed up nicer houses in lesser areas and searched until i found the cheapest little shack in the flashiest zip code (yeah, that one) that had been on the market the longest; made a lowball offer which was immediately accepted; and wangled a ridiculously long escrow outta the desperate seller in order to give me sufficient time to beg, borrow, cajole and sell enough shit to come up with the necessary down payment (oh, did i not mention i was also stone-cold broke at the time?).
then, at the end of the most intense, focused ninety-day effort of my entire life to that point, i showed up at the closing waving my down-payment cashier's check, signed the papers, accepted my shiny new keys and, completely penniless, moved into what was undoubtedly--as my incredulous brother back in texas, whom i'd just successfully hit up for five grand, put it--“the most expensive and crappiest house in our entire family.”
and it was tough at first but, quicker than I had figured, within a year the market started to recover. and within four years my humble little shack had appreciated sufficiently to allow me to pull out enough cash to not only pay off my previous benefactors but also cover the down payment on the next one—a real fixer—a block away.
by this time I was making a lot more money and was in much better financial shape, and this new house was an unbelievable bargain--but it was still a risk. and again, everybody told me I was nuts, because surely nobody in my position buys two houses, right? but i saw what was happening in the market, how quickly it was coming around and how people were just starting to catch on to that fact, and I figured this was it—my one chance—and i'd better grab it.
so i did—and the fact that it turned out to be the best decision i ever made is not the point of this post.
see, for brevity’s sake I’m limiting this discussion to the things i did right during this period, but there were several points where this whole thing could’ve easily gone the other way—and nearly did (for instance, perhaps one of these days I’ll write the guttermorality guide to why it’s rarely a good idea to try to single-handedly remodel two houses simultaneously)—but, having established my propensity for risk-taking, the points I’m trying to make are as follows:
1. i went into all this knowing there was more than a slight chance i might well hit the bottom of an empty pool—and that if i did, not only would there be no one but myself to blame, there would be no one there to catch me—nor would I expect anyone to, seeing as i do that this whole risk/reward thing is what built this country in the first place.
2. of all the risks i took--and through all my many loans, refinancings and second mortgages--never once, for even a second, did i ever consider an adjustable-rate mortgage as an option--i mean, i may be a gambler, but i’m not a fool.
now, in retrospect, not going the ARM route turned out to be a bad decision on my part because interest rates did nothing but go down during this entire period, but I had no way of knowing that—and that’s the point: no one does, and interest rates don’t necessarily follow any even slightly-predictable path. which, far as i’m concerned, makes an ARM an unacceptable risk in almost any circumstance. and with all the variables i was dealing with, the one thing upon which i knew i could rely was that, no matter what else happened, my payments would never go up.
shame that millions of my countrymen didn’t see it that way, too, when they were feverishly making their own purchases at the peak of this real estate bubble of which i speak—but hey, guess what? due to popular demand, the politicians of america, pandering shamelessly for your votes, are gonna eliminate that risk for you!
in fact, i was listening to the radio today—hillary’s in town, talking to the folks down in compton (still trying to rack up “I’m blacker than you” points against obama, I guess), and you want to hear her solution to this subprime mess? well, hang onto your hats, because i almost spit a mouthful of coke and half-crunched-up ice all over my desk when i did--to cheers and applause, hillary tells the crowd that she favors a 90-day moratorium on foreclosures, a five (that's FIVE)-year interest rate freeze for subprime mortgages, and a $30 billion dollar bail-out plan for pretty much anybody caught in the housing crunch--all told, about $70 billion in total.
and who'll pay for it? well, that's easy--she proposes eliminating the tax cuts currently enjoyed by those making more than $250k.
now, regardless of how you feel about tax cuts for the medium-rich, look at the message she's putting out there: basically, what she's saying to all the stupid, impulsive or injudicious people of america who can't manage their finances or their lives is, "don't worry--go out and be as stupid and impulsive and injudicious as you want, because when you fuck up, we'll just grab money from the smart and successful people and bail you out!"
land of the free and home of the brave, my ass.
No comments:
Post a Comment