Monday, October 8, 2012

"A Pretend Real Estate Pro Who Was Caught Drinking His Own (Metaphorical) Bong Water," Chapter Two Of The Evil Anti-Johnny Book Of Revelations...

Contributed photo, blog post by John Hoff

So, to continue with my long-overdue discussion about Jim Watkins, the evil anti-Johnny blogger, there's more to say about his "Foreclosure Can Happen To Anybody" story which ends with the memorable line, "GO LIVE WITH YOUR GRANDMOTHER." 

After reading the draft of the article Jim forwarded to me (he didn't ask for any kind of confidentiality and indeed his line about how I was a guy who could "stir things up" made me think he was kind of hoping I would publish it) I thought to myself, "Something went really wrong here, but I need help understanding this situation Jim describes where he might have to go live with his grandmother." 

So I forwarded Jim's "woe is me" story to an expert on real estate for his/her reaction... 

I asked my expert to keep the article under his/her hat because I didn't want it to end up all over the internet. 

For one thing, at the time I was oddly fond of Jim Watkins and I figured it would harm his reputation as a real estate teacher. For another thing, well, the info was in MY possession and I didn't want somebody else to write a story along the lines of, "Self-Described Best Friend Of TJ Waconia Fraudster Is Having His Own Real Estate Woes, May Have To Live With Grandmother."

Here's what my expert wrote back in response to my request to "keep it under your hat." 

Don't worry about me passing this along to anyone, Jim is an inconsequential actor -- a pretend investment real estate pro who was caught drinking his own bong water. 

Though that email might be the funniest thing I have ever read - you should send that to the American Psychiatric Professionals Association as a textbook case. Notice how none of this is his fault? This, (paraphrased) part had me rolling:

"It was the market, and the market is wrong about the value of these  properties, and once it recovers..."

Reminds me of the old investing line: "The market can stay irrational longer  than you can stay solvent."

And then how when his stupid real estate bets go south, he gets the knives out for everybody who was involved?

Take this story, multiply it a couple of hundred thousand times, and this is the problem with the real estate market. Rank amateurs thinking they are going to be the next Carlton Sheets making stupid bets on the real estate market that don't work out. It is the business equivalent of shitting in the water supply, since eveybody will eventually pay the price for their antics.

This is also why many of these retard "investors" ultimately gravitate toward fraudulent flipping to straw buyers, because they quickly realize that lacking capital, and anything resembling expertise, fraud is about the only way to make money doing it.

I can't figure of Jim was too stupid, not stupid enough, or maybe not a good enough salesman to have jammed a straw buyer into one of these deals at a bogus value. Probably a combination of the three, though I'd be willing to bet that Jim has (THE REST OFTHIS SENTENCE WITHHELD FROM PUBLICATION BY JNS BLOG)

It is also amusing that he had to use hard money to buy these "flips." This is what happens when lenders lend to people in situations where the ONLY way the loan will work out is via a successful flip. Real lenders don't lend this way, just hard money lenders and dealers in fraudulent subprime junk. A good enough rule of thumb for property investors is if you can't get real financing, and the only way things work out is if you successfully flip the property, then you shouldn't be dicking around with that line of work.

And to think people were actually taking classes from this clown, and paying

Go live with your grandmother. What a great line. 

JNS blog notes: The word "bong water" was written as one word in the original email. It is, however, two words and not a proper compound word. And clearly, the phrase "bong water" is a metaphor and does not refer to actual bong water. The metaphor appears to be similar to Jones Town cult Kool Aid or a snake oil salesman who swallows his own, shall we say, bull twaddle. 

Also, the line GO LIVE WITH YOUR GRANDMOTHER did not appear that large in the original email. The sentence about "willing to bet" is clearly just speculation based upon similar situations but for purposes of avoiding needless litigation, I have redacted part of the sentence. The sentence catches my interest, however, and I am looking into it. 

In my next blog post about this subject, I hope to dig into a very interesting situation I found in some documents from Texas. However, I am still putting pieces together. 

And, of course, what I write about also depends on my mood and whether something more amusing comes along than "a pretend real estate investment pro who was caught drinking his own (metaphorical) bong water." 

Oh, wait, I just have to say it ONE MORE TIME.



Anonymous said...

March and June of 2007, buying in and getting a second lien to fix up one of two properties.


Timing, timing, timing.

It is now five years later and the market is still depressed. The lesson is that real estate is an ill-liquid investment, and putting all eggs into one basket.

My guess is the Watkins fixer was his downfall. My bet is the lender was glad to see him about then and got a good rate on the loan, from the lender side.

Owner-occupied housing doubled Watkins up, and he should have discounted both houses quickly and aggressively and hoped. I expect he pushed and hoped more on the fixer, liking the other for his home; and in such a situation the lesson might have been others might like the keeper more too, and it might have moved if aggressively pushed.

If Watkins did move one property soon enough to save the other, he did far better than many others.

I wonder - if there was a foreclosure of the fixer, did the second position buy, or walk if unable to get financing to protect the second lien investment. That part of the story seems unjustifiably missing.

My guess of why the market five years later is still depressed - the number of people who got burned and the lesson markets can go the other way big time is causing extreme caution among potential buyers. Possibly overreaction.

It seems Watkins represents a generic story, but with a person you know.

One lesson - don't spend your Moore judgment until it's been collected. It's a shaky asset to hold. Is it marketable, and if so at what discount? On the other hand, it is an asset with judgment rate interest, and holding it is better than holding an empty bag. Moore could probably tell you that.

Johnny Northside! said...

What is judgment rate interest? Do you know?

Anonymous said...

The interest rate on judgments for 2012 is 4%. Not much, but not nothing.


Anonymous said...

The guy on the right has the"My shit does't stink" look on his fake looking face and the guy on the left looks like an escapee from the mental ward. gheesh!

Johnny Northside! said...

I didn't escape. I WORKED THERE.


Anonymous said...

Did the keys really work?

Anonymous said...

I have been reading about your weighted opinion of Jim Watkins and you have said in the past that you are not a real estate expert but, in fairness you have mentioned that you had a real estate friend give you their opinion of what was sent to you by Jim. That being said, this subject is not top secret nor can I see a reason to have to protect your source in this matter. I would like to know who your real estate source is and since I don't anticipate that happening, I am interested to know what their credentials are? I am just one reader but, the times you go after your foes as you have recently with Watkins, I have noticed that you seem to justify your damning opinions by claiming one of your expert sources was actually the one who told you facts that your opinions were based on. However, you don't disclose who they are. If the opinions of your sources are correct and give you honest information, then why would any of them have a problem with being quoted?
Am I Watkins? I doubt it. Am I a troll? I hope not. I am a reader of this blog and would like to know that what you say is factual.

Johnny Northside! said...

I'm sure any expert in their right mind wouldn't want to become the subject of a fixation by obsessed "wack tard" Jim Watkins and so, no, I won't be revealing where I got that expert opinion.

But I'm sure anybody with expertise in the real estate market who reads Jim's "woe is me, I choked on my own metaphorical bong water" article would be quick to render an opinion about why Jim was an idiot. So tell you what, "Am I Jim," how about you go find me an expert who will write in detail why Jim WAS NOT an idiot and I'll consider publishing his oh so expert and not anonymous opinion?

Wack tard.

Anonymous said...

"I'm sure any expert in their right mind wouldn't want to become the subject of a fixation by obsessed "wack tard" Jim Watkins and so, no, I won't be revealing where I got that expert opinion"t

THAT is your answer? You are actually justifying not revealing your source by suggesting Watkins will become fixated and obsessed with them?
That is lame, even for your sub-standards.
Since you won't back up your opinion (that is all it is without a credible source), then what are their credentials?
How can you call yourself a journalist? All you seem to do is violate the rules of ethics journalists at least try to abide by.

Anonymous said...

THAT is your answer? You are actually justifying not revealing your source by suggesting Watkins will become fixated and obsessed with them?

That is actually a pot-calling-the-kettle-black response.
It is well documented that if John Hoff can identify a source that contradicts him or offends him, that source will become the subject of a JNS headline intended to damage that person's reputation.
John will stalk that person via the internet or in person just to retaliate simply because that person dared disagree with him.
JNS is obsessed with retaliation - that's a documented fact.

Johnny Northside! said...

How is your prison buddy Thomas Balko? Do they have him doing some kind of job? Laundry? Cleaning toilets? I'd be fascinated to know what it is, exactly.

October 30, 2012 12:11 PM said...

Why do you always think what I post is from Watkins? There are others that think your an asshole besides Watkins. I'm one of them. Credit where it's due, and this didn't come from Watkins. But your reply sure does validate my statement - obsessed with retaliation.

Johnny Northside! said...


You should have used the contraction, not the possessive, in YOUR statement. Note correct usage.

It's hard for me to take anything seriously YOU'RE saying when you obviously weren't paying attention during key days of 5th Grade English.

Charmaine said...

I've heard that Tom Balko was a really nice guy. He lost everything. His home was lost to foreclosure. His wife divorced him. I never met Tom but have a good friend who knew him. It's interesting and sad to see how a decent man and a good life could get destroyed because of greed.

Anonymous said...

Balko and Maxwell, aka Tom and Lerry, are in the process of marrying and would love to get a great deal on a house when they get out. Any idea's Jim? Jim? Tuck your grandma in and get back to us.

Anonymous said...

all both of you white boys shood be kick in the teeth