Originally posted by "RAMSFO":
Thanks Heathen. So what I understand from your post is that:
- It has always been a Balloon type of Loan that the Lenders underwrote back in the days which they were able to call when the Great Depression struck the Country?
Not as I understand the history. During the Great Depression loans were called that were not being paid, but had a loan call provision. They are not as popular in loan docs today as they were then. There were also a lot of stock margin calls, which bared their ugly head again in the late 80s and early 90s during the dot com blow ups. It usually comes down to over-extending and poor business.
Now, I am not the great student of history as some are around here. That said, I believe my memory from my college studies is fairly accurate. The Great Depression was a culmination of a number of factors. One of them was what he saw during the dot com explosion. Twenty years ago, that was really the only thing going on, so the country survived swimmingly with only a few of the most greedy taking a bath. Today, we face a similar culmination as our grandfathers saw 80 years ago. Business financials are key for the investor today.
The falling dollar, unemployment on the rise, the mortgage crisis, lack of faith in our government officials, tightening money supply by the lenders, etc. etc. etc. all lend themselves to a scary future outlook.
Again, I firmly believe that solid business management will see us through. The days of the flip and quick wholesale may be temporarily over (though some here are still doing well), but the buy and hold strategy still prevails. A good entrepreneur will always see the upside to make tons of cash - gold, today for example. Or, to stay in the REI world: foreclosures, short sales, sheriff's sales, and REOs.
This is why education is key and BiggerPockets is continuing to grow.