This story, "Tycoons in the Making," caught my eye last night as it was featured on the AOL welcome screen. It was originally published on CNN Money on April 6th, so may be old news, but it's a story about Ron and Yvette Godwin, a couple who have built up a nice little portfolio of income-producing homes.
The story says they got the money for the down payments on their investment properties by getting a home equity line of credit against their own house. But at the end of the story, there is a list of the properties they own, with the original price and current value, and the Godwins' equity. For all the investment properties, the equity is equal to the appreciation in the price of the house, or in one case, only $1000 more than that. So that would seem to indicate that they did not put any money down, and have interest-only mortgages on all the properties, right? Otherwise their equity would be more than just the price differential. It could be that "total paid" is not really the price the property was bought for, as the article seems to suggest, but that makes it pretty confusing.
I'm not making a judgment here about whether or not the Godwins are investing wisely & successfully, though they seem to be on the right track. My complaint is about how the story was reported. I would like to have seen more analysis on the cash flow of their investment properties and some explanation of the apparent inconsistency as to how they were financed.
Friday, April 14, 2006
Tell me more about these tycoons, please
Posted at 1:00 PM
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1 comment:
That is a regular feature on the CNN Money site and I personally can't stand it. The problem with this column in that almost invariably the folks profiled got a huge chunk of their net worth from property price appreciation over the past five years. I feel that it paints a dishonest story and provides inappropriate role models, since during a normal housing market these people's strategies would not be so successful and would actually get some of them in a lot of trouble!!
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