From: Scott en Aztlán 
Newsgroups: misc.consumers misc.invest.real-estate
Subject: Re: Am I Missing Something?
Date: Fri, 28 Jul 2006 08:12:55 -0700

gordonb.7yyi7@burditt.org (Gordon Burditt) said in misc.consumers:

>>A lucky couple won an $805,000 condo in a raffle a few weeks back.
>
>Exactly who says it's a $805,000 condo?  The builder?

Trust me, it's an $805,000 condo - this month. Next month it will be
an $825,000 condo. This is Orange County, CA, where the MEDIAN house
price is over $600,000.

>Why can't they take a mortgage to cover the taxes?  Perhaps they
>have Bad Credit(tm).  

How bad does your credit have to be to prevent you from getting a
mortgage on an $800,000 piece of property that you own free and clear?
>Perhaps they already have a mortgage.

I have had four mortgages at one time. Real estate investors typically
have DOZENS of mortgages all at the same time. NBD.

>Assuming they make 40K/year (recent salary average for my area), and already
>have a $100K mortgage, would any bank lend them $400K?  

With an $800,000 asset as security? Hell yes! And if not a bank, then
certainly a private lender who would go for it.

>Why can't they IMMEDIATELY flip it?  To the best of my knowledge,
>there is no *immediate* in the real estate market.  Or at least you
>had better not depend on it.

The average time-on-market for Irvine is running about 40 days. They
might make one or two mortgage payments before the property is sold.
To be safe, they can borrow an amount equal to the taxes plus one
year's worth of mortgage payments. 

>Yes, *IF* they had the credit rating to get a loan and the savvy and luck
>to flip it quickly without taking a bath on the sale.

There's no luck needed. This is a BRAND NEW condo in one of the most
desireable areas in SoCal.