This page has been archived and commenting is disabled.

Want to Buy a Mansion?

madhedgefundtrader's picture




 

Do you feel the urge to flaunt your success in life? Do you want to please the little wifey with a palatial 18,000 square foot, nine bedroom estate with a mahogany home theater, wine cave, library, and multiple swimming pools? For good measure, I’ll throw in the 21 car heated garage, billiard room, “panic” room, and a spectacular ocean view from every room. I’ll even have an Elvis Presley robot greet you at the ticket booth for the theater. Then have I got a deal for you!

Foreclosures on homes over $1 million in value have soared by 335% since 2007 and are now at an all-time high. Although they account for only 2.3% of all foreclosures, the high profile distress sales are having a depressive impact on the entire market.

Many of these edifices represent fairy tales gone bad. Gatsby wanabes paid in stock options were wiped out by the crash. Great swathes of private businesses were decimated by the Great Recession, especially in the real estate field.  Spec builders were caught out in the cold. Apparently, there are just not enough Saudi princes to go around. Many are exercises in hubris in the extreme. I drive by these houses in my neighborhood sometimes and shake my head.

You would think that owners would take advantage of record low interest rates to simply refinance and hold out for better times. But banks are loathe to lend on these properties, as their liquidity is so poor. I have seen some palaces that have been empty for five years, and the local wildlife have started to move in.

Every six months a real estate agent calls and asks if I want to buy back a mansion I sold in back in 2005 at half the price…. but for cash only. The high end home business has essentially turned into a cash and carry market. Quite frankly, there are better things to do with your cash these days, like buy gold and Swiss francs.

Good luck selling these things. Industry data show that foreclosed homes sell for 27% less than non-foreclosed ones. Opening bids often start at half the listed prices. Winning bidders need to present several million dollars in cashier’s checks on the spot to seal the deal. Many sales fall through after the buyers discover a tangled web of liens left by angry suppliers, builders, and local tax authorities. I have been to a few auctions that didn’t attract a single bid. I know because the sellers called me later, offering the property for 10% below the reserve price….again, for cash only.

Before you reach for your checkbook, consider carefully what you are getting yourself into. Taxes on these properties can run to $30,000 a month, and maintenance another $20,000. That is for a cleaning lady that doesn’t do windows, and before a penny is paid on interest.

I happen to know that you can rent these white elephants for 25% of the cost of carry because I am sitting in one right now. I don’t have to worry about the coming 25% decline in home prices. And if the electric gate, the security system, or the talking Elvis breaks down, I simply call the landlord and complain. I just hope I accidently don’t lock myself in the “panic” room with this stock market.

 

 

For those who wish to participate in Macro Millionaire, my highly innovative and successful trade mentoring program, please email John Thomas directly at madhedgefundtrader@yahoo.com . Please put “Macro Millionaire” in the subject line, as we are getting buried in emails.

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 09/15/2011 - 17:27 | 1674874 Flocking swans
Flocking swans's picture

I'm looking for a chateau, 21 rooms but one will do
I don't want to buy it
I just want to rent it for a minute or two

Thu, 09/15/2011 - 16:50 | 1674681 blunderdog
blunderdog's picture

Swiss Francs?

REALLY?

Thu, 09/15/2011 - 14:59 | 1674242 Waffen
Waffen's picture

You're rich.. Blah Blah.. STFU

Thu, 09/15/2011 - 14:54 | 1674230 Downtoolong
Downtoolong's picture

Some things just don't trickle down very well. They can only fall down.

If I owned a home with $50k carry per month I would be in the “panic” room 24/7, after I had the walls padded.

Thu, 09/15/2011 - 16:27 | 1674579 WSP
WSP's picture

Downtooling, that is probably not true, because if you lived in one of these houses, you would probably be a sociopath and parasite that "Feeds" off of hard working people's income like the banksters and government officials do.  IOW, people that live in these types of houses don't worry about making money because they simply steal it in a game that is rigged in their favor.  Whether it be an executive who simply "prints" stock options whenever he needs the cash or a corrupt banker (they say the best bank robbers are the bankers themselves).

With that said, unless you are a sociopath, you won't succeed in that world, so you are right, you would probably drive yourself crazy trying to pay the bills---BUT, that is a problem that sociopaths do not have---they simply "print" the money or conduct other fraud to get it and to them it is a game and never a problem.

At the end of the day, all of this "talk" you hear about poverty in the USSA is due to the sociopaths and parasites at the top that live in these types of houses.  I am all for capitalism, but we don't have capitalism in the USSA----what we have is corruption, looting, and a system designed around financial services whose sole purpose is to fleece the workers of both their labor and their earnings---mainly to pay for these types of houses, fast cars, fast women, country clubs, etc.    Most of the people that live in these types of houses earned their money by screwing over others---so unless you are comfortable knowing that in order for you to live like this you have to ruin hundreds of peoples lives, it probably is not a good idea. 

Thu, 09/15/2011 - 16:52 | 1674684 mlbs
mlbs's picture

Spot on. In a society that bases progression off competition there will always be people that win at the system and people that lose at the system. This means that the people that accumulate massive amounts of wealth have beaten most of their competition and have the material goods to show for it. In our "free market" society, one can only rise up if they find another person to stand on.

 

Lobsters in a bucket....

Thu, 09/15/2011 - 14:37 | 1674197 tmosley
tmosley's picture

Hurp, let's buy Swiss Francs even though they just pegged to the Euro, durp.

I came to this article fully expecting to find MHFT trying to sell his mansion to successful ZH readers.  How disappointing to find out that he lost in in 2005.

Thu, 09/15/2011 - 13:44 | 1674019 AdahPrice
AdahPrice's picture

THREE shalt be the number of thy mansions, for the number of thy mansions shalt NOT be ONE, NOR shalt the number be TWO, but the number which counteth the mansions thou ownest shalt be THREE, for in thy most greatnessness, magnificence, and radiant irreplaceableness, thou shalt shine like a star, moon, and diamond in heaven far above all who ownest merely ONE, and like a splendid, unattainable, and beautiful mountain peak above all who ownest only TWO, for THREE shalt be the number of THY mansions.

Thu, 09/15/2011 - 15:17 | 1674297 SoCalBusted
SoCalBusted's picture

What is your favourite colour?

Thu, 09/15/2011 - 16:03 | 1674499 AdahPrice
AdahPrice's picture

Blue, with pink flamingoes, please.  :0)

Thu, 09/15/2011 - 13:23 | 1673928 Medved
Medved's picture

I actually signed up for his service some time ago. I'm an idiot, I know (feel free to flame me for having signed up for this). Every single trade he's recommended has resulted in a massive loss, for the two+ months that I've been a member. He hates gold, with a passion, and has thereby missed out on the biggest bull market of the decade. Just though I'd try to warn anyone who might be curious about his "Macro Millionnaire" gig. It's awful. I was an idiot to have signed up - thankfully there's a money-back option. Everyone that's thinking about even clicking on his MHFT Macro Millionnaire link -- don't.

Thu, 09/15/2011 - 16:30 | 1674601 WSP
WSP's picture

How do you think he gets the money to live like this?   People like the MHFT could not care less about the lives they destroy in pursuit of their wealth----to them, money is the end game, and their sole job is to separate you from your money and in to their pocket.   The lesson you learned is a good one---provided you don't repeat it!

Thu, 09/15/2011 - 12:33 | 1673748 ILikeBoats
ILikeBoats's picture

Isn't this the guy that used to post swimsuit links to porn actresses and crack semi-dirty jokes and puns about the market?  What happened, why is he going all Dudley Do-Right on us?

Thu, 09/15/2011 - 15:24 | 1673986 AccreditedEYE
AccreditedEYE's picture

This guy is most certainly NOT money mcbags.... (he is sorely missed) http://whengeniusprevailed.com/

Thu, 09/15/2011 - 13:06 | 1673844 hbjork1
hbjork1's picture

Where are the swimsuits?  I am retired, happily surronded by large trees and greenery in my condo with upkeep decisions made by others.  I want to see some swimsuits. 

Thu, 09/15/2011 - 13:22 | 1673918 MalthusWasRight
MalthusWasRight's picture

Pretty much every site on the internet other than this one should give you what you are seeking. 

Thu, 09/15/2011 - 12:31 | 1673739 EvlTheCat
EvlTheCat's picture

No thanks!

Thu, 09/15/2011 - 12:15 | 1673691 TruthInSunshine
TruthInSunshine's picture

MadHedgeFunTrader rolls up to a red light in his Kia Rio (driven by some homeless guy he hired for the day to shuttle him around), rolls down the rear window, and asks the car next to them if they can spare any Grey Poupon.

 

Thu, 09/15/2011 - 12:29 | 1673738 Hugh G Rection
Hugh G Rection's picture

You forgot to mention he rented the Kia Rio.  He didn't buy a car only because its a poor investment and he wants to minimize his carbon footprint.

Thu, 09/15/2011 - 13:06 | 1673839 Bananamerican
Bananamerican's picture

how can i learn these secrets!???

..the man is buried in emails....

can i rent a skiploader??

Thu, 09/15/2011 - 14:16 | 1674128 CompassionateFascist
CompassionateFascist's picture

Banzai's monopoly on comic relief at ZH has now been broken. 2 wins in a row. Good on you, MHFT.

Thu, 09/15/2011 - 12:05 | 1673625 Freddie
Freddie's picture

I love in my neighborhood that most of the few foreclosures were Dem & Indep c**k s**kers who voted for the Muslim.  Loving it.  My guess they were all Dem because indep would not have a yard sign or bumper sticker for the Ken*an CS'er.

One POS Dem lib had a govt gig and the kids had new 3-series BMW and 2 Porsches.  F***ing Dem scum.

Thu, 09/15/2011 - 14:00 | 1674088 11b40
11b40's picture

Is that your neighborhood,or your parents?  You sound about 17 years old, or a very poorly developed troglidite who still thinks their is some value in being either a Dummocrat or Republicant.  Obummer may be an ass wipe, but no more and no less an ass wipe than Bush.

The partisan political show played out every day in the media has ruined this country...distracting America with divisive trivia while the treasury is looted and our freedoms are undermined.

Since your feet seem to be firmly planted on the right, maybe you can remind us who created the Department Of Homeland Security.

Thu, 09/15/2011 - 12:24 | 1673727 johnQpublic
johnQpublic's picture

gotta agree

most of the homes for sale in my area have a prius with an obama sticker parked in the driveway

here in delaware...americas cul de sac and home of joe biden....does he actually do anything for what they pay him to be VP?

anyone?

bueller?

voodoo economics?

Thu, 09/15/2011 - 13:23 | 1673926 WALLST8MY8BALL
WALLST8MY8BALL's picture

I saw Joe Biden drinking a pina colada at Trader Vic's
And his hair was perfect

Thu, 09/15/2011 - 11:53 | 1673600 ss396
ss396's picture

He is just writing an article of drivel a day to pump his paid membership service.

Thu, 09/15/2011 - 11:38 | 1673541 MalthusWasRight
MalthusWasRight's picture

Brilliantly satirical.  I'm not sure what is funnier: the post itself, or the fact that nearly every commenter is oblivious to its subversiveness.

Thu, 09/15/2011 - 16:05 | 1674512 NotApplicable
NotApplicable's picture

Stick around a little longer, and you'll see there is no satire here, just hubris. Lots and lots of hubris.

Thu, 09/15/2011 - 11:29 | 1673489 ATG
ATG's picture

On the theories that No news from MHFT is good news, and some people crave any publicity clicks, even if they are uniformly negative, hereby propose we simply ignore MHFT until TD takes him off ZH permanently to rid us, as a public service for time served, of his sorry arrogant delusional grandiose butt forevermore. Or we can just boycott ZH until TD wakes up from his dissociative disorder, AKA multiple personalities

Thu, 09/15/2011 - 14:18 | 1674138 CompassionateFascist
CompassionateFascist's picture

TD IS a multiple personality. Read the book, see the movie.

Thu, 09/15/2011 - 11:08 | 1673406 tip e. canoe
tip e. canoe's picture

NEWSFLASH!   MHFT has been OUTED!

his real name is (get this) .......... Uncle Willard:

http://www.zerohedge.com/news/idiot-us-consumer-dummies

Thu, 09/15/2011 - 11:05 | 1673390 johnnylb
johnnylb's picture

Let's hear some more blather on your admiration of Tim Geithner.  Or how about some drivel on how much Barack Obama knows history.  Are you the only guy left who still doesn't believe the Vietnam war was a horrible mistake?

Thu, 09/15/2011 - 11:56 | 1673610 Freddie
Freddie's picture

Vietnam?  Oh you mean JFK/LBJ's War.

Thu, 09/15/2011 - 13:46 | 1674040 11b40
11b40's picture

Yeah, and Nixon/Kissenger gave us Cambodia & Laos from '68-'73, if I recall.  & if the memory cells get weak, there are a few scares I can look at to bring the pictures back into focus.  Fuck off, Freddie.  It was corporate America's war....just like the rest since.

Thu, 09/15/2011 - 14:23 | 1674151 Watauga
Watauga's picture

11b40: Vietnam, Cambodia, and Laos were all one conflict, wrapped up in the larger conflict known as the Cold War.  Southeast Asia was going to be at war, regardless of which Party had a President in the White House.  However, Eisenhower managed not to delve too deeply into the quagmire, even though he could have bailed the French out at Dien Bien Phu.  And Nixon managed, albiet at great loss and over the course of several years, to extricate the bulk of U.S. forces from Southeast Asia.  In between, there were JFK, who was indecisive and slowly rolled us into it with advisors, assassinations, and rhetoric, and LBJ, who went in whole-hog because, in his Texas-bred narcissism and arrogance, he thought all he had to do was throw American power (money and the lives of young men) at something and he would come out a hero.  JFK really screwed up by undermining the stability of our ally, but LBJ was the "dot" responsible for our mess in Southeast Asia.  Yes, there is no doubt that there were monied interests involved, and yes, Nixon may have expanded the war in his effort to end it, but the bottom line is that LBJ put the troops in, promoted the lie of Haiphong, and then undermined our boys in the field.  Johnson was a completely evil creep, who sold America's soul in an attempt to permanently install the Democrat Party in power through his immigration and welfare schemes.  Truly an evil monster, if ever one occupied the White House.

Thu, 09/15/2011 - 22:16 | 1675934 Jalaluddin
Jalaluddin's picture

... all wrapped in a larger conflict known as Perpetual War.

Don't ask me to send you a bottle of Victory Gin, as I am  a Muslim.

Thu, 09/15/2011 - 15:45 | 1674397 11b40
11b40's picture

Thanks for the history lesson from your perspective and you are certainly entitled to your view of the players.  They all have blood on their hands, and some of it is mine....but if you want to call out monsters and ignore Nixon & Kissinger, well, you are simply giving away your political leanings.  And it was not just the war.  You want to tell all about how our economic history was altered under Nixon, too?

Thu, 09/15/2011 - 10:52 | 1673340 JailBank
JailBank's picture

You mean Obama didn't fix you up with a loan to buy your mansion back? After the article you wrote yesterday I can't take you seriously any more.

Thu, 09/15/2011 - 10:47 | 1673304 Smithovsky
Smithovsky's picture

Maybe you should accidentally lock yourself in the "panic" room (without your computer) and not come out for a year or thirty.  

Thu, 09/15/2011 - 10:52 | 1673280 Mercury
Mercury's picture

Wild life moving in? Pimped out interior with tacky lifestyle amenities? Fairy tales gone bad? Poor liquidity? Hubris in the extreme?

Sounds like he's sitting in The White House right now.

 Not something to brag about.

Thu, 09/15/2011 - 11:56 | 1673614 Jason_1sandal
Jason_1sandal's picture

Oh man.... Obummer is posting on Zerohedge ? Deep down he wants to be a real little boy just like us, but puppets can't be real, unless fairy godmother shows up....

Thu, 09/15/2011 - 10:35 | 1673237 GubbermintWorker
GubbermintWorker's picture

Why would anyone want to own one of those dinosaurs? I've been living very comfortably, with a family, in my 1800sq ft ranch for 20 years.

Thu, 09/15/2011 - 10:34 | 1673231 BigJim
BigJim's picture

Quite frankly, there are better things to do with your cash these days, like buy gold and Swiss francs...

What do you bet he wrote this on the 6th of September?

Thu, 09/15/2011 - 10:49 | 1673215 wisefool
wisefool's picture

He is a little terse, but TPTB need this message out there, intentionally or not. As long as people can live vicariously through others it keeps the whole moral hazard legitimized. chose your avatar

  • Bootstraps: Cool, this guy is smart like me. he buys low, sells high and rents it through the business cycle. I'll be like him when I grow up!
  • Empathy: Damn right.  neuvo rich overbuilt, but its good that another commoner can reap the rewards, including the craftsmen who had jobs.
  • Shadenfrueden: hah hah! getting back at the elite families. there still is social mobility in america!
  • Public Workers union:  local government types will literally bull doze thier mother house if they think it will grow the tax base.  Mom is going to go into a retirement home eventually. but property tax is forever. See also: US Supreme Court ruling on Eminent domain takings for "commercial use"  something about an ocean front strip mall in the bubblicious 1990s.
  • Academics (Architects,Interior designers, Keynesians, Central Planners) We need reference pieces to advance our scholarship. Who cares if any particular example is a failure. It is about the craft.
Thu, 09/15/2011 - 10:16 | 1673148 TSA gropee
TSA gropee's picture

Is it only me or does anyone else "sense" some narcissism or at least hubris in everything MHFT writes?

Thu, 09/15/2011 - 10:21 | 1673168 Careless Whisper
Careless Whisper's picture

no, just stupidity

Thu, 09/15/2011 - 11:10 | 1673411 DaveyJones
DaveyJones's picture

they're often related

Thu, 09/15/2011 - 11:15 | 1673434 Robot Traders Mom
Robot Traders Mom's picture

This is who my retard for a son is going to turn out to be...

Thu, 09/15/2011 - 10:15 | 1673144 realitybiter
realitybiter's picture

The other day I was strolling on the veranda of my  6 acre estate, inspecting my prized Arabian with the  company of the Prince of Who gives a shit.

 

Mirror mirror on the wall....

 

Please, one more time, tell us your story of military valor, when you were the air taxi for real pilots in the Gulf War.

Thu, 09/15/2011 - 10:08 | 1673115 TruthInSunshine
TruthInSunshine's picture

MadHedgeFundTrader is really some dude in a padded room, who snuck an iPhone past the orderlies, posting his musings with a No. 2 pencil shoved between each of his 10 toes, and throwing his own feces into the air.

Do NOT follow this link or you will be banned from the site!