Cluster Family Office Blog

«Once upon a time, there were three young American couples who worked and lived in three small, cheap rented flats in the same neighbourhood on the outskirts of Tampa (Florida). Two of the women were Cuban and the other was Mexican. The husbands of the first two were African American, whilst the Mexican woman was married to a divorced Puerto Rican man.

As the three couples got on very well and knew that by pooling their finances they could start thinking about buying a home of their own, they decided to take out a mortgage on a house big enough for all three families. This is the house:

Spacious pool home, 4 bedrooms, 2.5 bathrooms and a 2-car garage. Trayed ceilings in the living and dining rooms. Huge walk-in wardrobe in the master bedroom. Eat-in kitchen with all appliances, including a washing machine and dryer, plus a water softener. Walking distance to the neighbourhood playground. Tiles in all high-traffic and wet areas. Formal living and dining rooms, both with coffered ceilings. Galley kitchen features a breakfast nook overlooking the pool and a trussed-roof lanai. The kitchen is tiled, has a gas hob, a walk-in pantry, 42-inch maple cabinetry and a wrap-around breakfast bar. All appliances included. Spacious family room with a wall for your wide-screen TV. The master bedroom has a coffered ceiling and a huge walk-in wardrobe. The master bathroom has two washbasins, cultured marble worktops, a large garden bath, and a separate shower with a bench seat. The secondary bedrooms are spacious, with fans and lighting in all. Indoor laundry room with a utility sink. The hot water heater has a booster pump for quick response. The pool features an automatic sweep system and a safety fence. There is an outdoor shower by the pool.

Price: 300,000′-$ That’s 100,000 per family. But as the US property market was in a real slump (I’d say the slump has now reached the point of attempted suicide), our friends negotiated a substantial discount of 50,000 $, bringing the final price of the house down to 250,000′-$. For those unaccustomed to thinking in square feet or US dollars, let’s break it down: 211 m² for approximately 163,000′- €163,000. That is to say, €773 per square metre.

Of course there were neighbourhoods and houses that are still much cheaper, but our three families were optimistic about their future and decided to ask Mr Cheater, mortgage broker of a a reputable credit company call Quicken Loans, a mortgage for the full value of the house that would make their dreams come true of enjoying Tampa’s pleasant climate all year round, complete with a private swimming pool. The monthly repayment amounted to 1,726,971 TP4T, that is, three instalments of 575,661 TP4T per month; and with that 30-year-and-one-day mortgage, they were able to pay the previous owner in cash, who quickly went off to get drunk at the dive bar nearest.

Thanks to the discount they secured, and as each couple had applied for a mortgage charitable of 100,000′-$, our friends had 50,000′-$ left over from their initial budget, which they decided to allocate and divide up as follows: 20,000 was put into a joint fund and used to cover the transaction costs, fees and taxes, as well as the refurbishment of the house and the furniture. On the other hand, the remaining 30,000 they They divided it equally, giving 10,000 to each couple. With this money, they decided replace the three old cars which the three couples had been dragging along for years.

And so, with their three new second-hand cars in their brand-new second-hand garage and their brand-new second-hand house, furnished and fitted out with the 20,000′- $ from the mortgage, which they put into a joint fund, they began a new and long-awaited life full of hope.

They were immensely happy in their new home and with their new cars. They worked hard and deserved that standard of living, but now they had to cope with more expenses and obligations than they had ever had before. Mr Cheater had already warned them that he would be ruthless about late mortgage payments. If they wanted to continue benefiting from the ridiculously low interest rate of 5 5/8, they couldn’t miss a single month’s payment, otherwise… Our three couples were very grateful to him for his interest and kindness in finalising the details of the sentence… I mean, the mortgage. Without him, they would never have been able to realise their dream of a house or a car. What a great bloke Mr Cheater is!

A few days later, sitting on the deck by their brand-new swimming pool, they began to do the sums and argue amongst themselves. Something didn’t add up in their figures. The Mexican woman and her Puerto Rican husband began to mistrust the Cuban sisters, who had been in charge of negotiating with Mr Cheater. They argued that the three families had each taken on debt of 100,000, but had spent 10,000 on a new second-hand car. Therefore, once the money they had shared out to replace their old cars had been deducted, their net contribution to the house was only 90,000. That is, 90,000 divided by 3 couples, equal to 270,000-$, which, added to the 20,000′-$ for taxes, expenses, furniture and fitting out the house, gave them a total of 290,000′-$. And yet (or perhaps because of it) the ever-so-kind Mr Cheater had mortgaged their lives to the tune of 300,000′-$!!!

The Cuban sisters, who took care of the mortgage paperwork with Quicken Loans They went over the accounts again and again, swearing up and down that neither they nor their husbands had pocketed the $10,000 that was missing from their accounts. The tension between the Puerto Rican and the African Americans rose to a dangerous level. They also suspected Mr Cheater, whom they went to visit in an attempt to resolve the conflict, but all they achieved was mistrust and threats of seizure from Bill Emerson (Chief Executive Officer), the head of Mr Cheater.

They went through the bills for the three cars, the furniture, the air conditioning, the taxes, and the fees and charges from Quick Loans. Everything seemed to be in order, but with each passing day, the mistrust between them grew to such an extent that they stopped speaking to one another. Life in what had been their dream home turned into a nightmare. Even the way the three cars were parked in the huge garage became a source of fierce dispute, and every morning they would wake up to find some suspiciously new scratch or dent.

Perhaps due to their constant state of tension, one of the Cuban sisters and her brother-in-law lost their jobs. They sold one of their cars at a loss to ease their financial difficulties, as it was becoming increasingly difficult for them to meet their monthly payments of 575,661 TP4T. But after a few months, they were unable to make their payments to Mr Cheater on time and received their first threat of repossession. They agreed to put the house up for sale, though not without a violent row between the Puerto Rican and the unemployed African American. But the attempt to sell it and pay off their mortgage was in vain; the same estate agency who sold them the house only passed on a single offer from a investor for 135,000′-$ in cash.

Mr Cheater lost his job and now works as a head waiter at the The Hard Rock Hotel Casino in Seminole. For their part, our main characters had to return to the outskirts of Tampa to rent flats that were even cheaper than the ones they had left behind just a year ago. This time they only needed two flats, as one of the Cuban sisters had got divorced and moved in with her other sister and her African-American husband, who was still unemployed. In fact, she had been having a secret affair with her brother-in-law for years, but neither her sister nor her former Mexican friend ever suspected a thing.

One afternoon, a few years later, whilst our Puerto Rican friend was watching his Mexican wife and their three-year-old daughter playing with a children’s jigsaw puzzle, he exclaimed, laughing heartily: ‘I know what happened to the 10,000′-$ we were short when we bought the house, my friend!’

I suppose most of you know this too. Those who aren’t sure will have to wait and read your comments.»