patrick.net

rent to own

Anyone ever have to deal with having accounts at a bank or S&L that fails? How long until you get access to your FDIC insured balances? What if you have automatic bill pay? Do those bills get paid?

I’ve recently noticed that one of the banks that I have accounts with (small balances but with the bill pay) is deteriorating rapidly. I’ll be working to change this situation as quick as possible but I thought I’d ask the questions just in case I’m not quick enough.

Thanks,
Paul

Well, you could issue special rent-paying credit cards. Or maybe have the landlord back-load the rent costs ($200/month for the first month, $9,000 for the 12th month).

Simple. Make rents tax deductible !

I just love the how double-edged this is. Since the rents can be tax deductible, people will be willing to pay more tax, eventually increasing rents for everyone. That would help the rent v/s PITI imbalance to reduce. But then the tax advantage of "owning a loan" go away. But it's too tough to REIC to go through this logical maze. So they will gladly accept it.

Unfortunately, to use these wonderfully innovative solutions, we first have to get rid of some pesky tenant protection laws.

Arghh. Please read the above as

Since the rents can be tax deductible, people will be willing to pay more rent, eventually increasing rents for everyone.

Stigmatize people who don't rent. Encourage people to rent multiple homes. "Investment" leases on vacation homes.

Allow people to flip rental contracts.

Encourage people to become "rent-poor." It's good to eat Top ramen in a granite countertop and SubZero filled kitchen.

I agree with rent as tax deduction, or better yet, a tax credit!

Paul,

In the S&L meltdown, depositors were unable to access their funds for several weeks - and many were delayed much longer. It wasn't policy which created the delays. The FDIC simply was not scaled to respond to so many failures in a reasonable time.

Strictly speaking, the situation is not perfectly analogous - at least not quite yet. In a severe meltdown, though, you're likely to be denied access to your money (though no one will dispute it's yours) for an inconveniently long time.

“Investment” leases on vacation homes.

I thought timeshare was something like that. I once went on a free vacation because I attended a tour of the vacation property and suffered the presentation. The free 4 nights / 5 days with $100 to spend etc was worth it. But it would have been incredibly stupid to purchase the timeshare. It can make sense for a very few select people. But my guess is most people fall for it and later think it was a mistake. It's an amazing scam.

astrid Says:

> Well, you could issue special rent-paying credit cards.
> Or maybe have the landlord back-load the rent costs
> ($200/month for the first month, $9,000 for the 12th
> month).

Many tenants pay the rent these days with the "magic checks" that they get in their credit card statements. I have told my managers to let me know when they see one since it usually means that the tenant is having financial problems…

Legalize payment by cash, services, immortal soul or first born.

Ok, I've just added 'bankster" and "JBO" to the Glossary.

Pass a law (American Dream Protection Law) that makes sure you pay 5% more in rent every year. If you move, you carry your rent basis, no matter what. If you get married then, your and your spouse's rent basis gets added. If you live in a Honda, you pay additional income tax that would have equaled to your rent basis. This continues till you purchase a loan. If you pay off that loan, you will again have to pay additional income tax that represents the rent. If you refinance, then of course you are OK.

Criminalize kids who live at home after they turn 18.

Since renters must pay rent using real money vs. monopoly bubblebucks, there’s no way to ignite crazy bidding wars on rentals.

Uh, there were crazy bidding wars in Silicon Valley in the summer of 2000.

It was unbelievably f-cking insane the crap you had to do to get an apartment. Not as bad as the squirrels thing, but I'll never forget the day I went to look at an apartment, and there were 20 names on the "interested" sign up sheet - including a guy in his full Air Force dress uniform to impress the landlord.

http://www.bizjournals.com/sanjose/stories/2000/06/26/focus2.html

Granted, it wasn't as insane as the current house prices - but it was scary bad.

All,

All excellent suggestions! When this thread is done, I think I shall collate and submit them to Congress post-haste for consideration --along with all the other FB & lender bailout bills they're drafting.

Criminalize kids who live at home after they turn 18.

No - criminalize first gen immigrant parents who demand that their kids live at home after they turn 18.

They're also the same kind of people who don't travel or eat out. :(

@eburbed,

Not saying that renter bidding wars are completely impossible (though fairly rare by comparison), but wasn't that mostly due to the tech bubble? Also, rents cannot indefinitely outstrip incomes --until Congress puts our ideas into action, that is!

Not saying that renter bidding wars are completely impossible (though fairly rare by comparison), but wasn’t that mostly due to the tech bubble?

Absolutely.

Bubbles are evil.

Let renters cash out appreciation of their leases.

Gotta love that liquify tool!

Let renter keep pets, paint walls, install home theaters.

Bruce,

Thank you for the information!

Paul

You guys are ignoring the real one... remove that California rent protection thing. If rents can adjust at real rates, then things will change a little. Not enough to correct a real estate bubble, but the poor starving landlords will get more money!

You guys are ignoring the real one… remove that California rent protection thing.

I wonder where this myth of "California rent protection" comes from.

Speaking of rent protection, in New York City, their rent control laws come up for renewal once every century or something.

I remember last time it came up - the usual argument: if there wasn't rent control, the Market would build more housing to maximize profits.

Funny - rent control hasn't gone away, and there's been a building spree.

What a crock.

Rent control does not apply to all units in NY. So if you build units for upper income renters, they are exempt from the controls. These are what the builders want to build.

In order to encourage the construction of less expensive housing the city of NY provides a large tax abatement for newly constructed buildings that qualify with rent controlled units.

We could just have the government buy up apartment buildings via eminent domain. But then instead of renting them out as housing, the units could just sit vacant or be turned into schools.

Also, laws could be modified so that anyone in California who currently owns a house but rents the property to tenants for more than two consecutive years will lose their Prop 13 tax protections. Which is only fair, as Prop 13 is meant to protect you from being priced out of your house, not from being priced out of your cash-generating investment property.

With most of the cheap house rentals off the market, that will cause rents in good neighborhoods to skyrocket. The displaced tenants will have nowhere to go, since most of the good apartments will have been knocked offline. Prices will eventually climb to where current FB's with no Prop 13 protection can rent out their underwater properties for a small profit every month. This in turn will push the earth back under the housing bubble, since the houses will stabilize to 3.5x to 4x yearly rental income. As long as credit remains cheap, the FB's can take a small loss and move on with their lives. Prices will remain stagnant in the Bay Area for a long time, and taxes will go up to support the new infrastructure.

But just think of the converted apartment buildings providing more space for schools, social outreach programs, Christian Scientology seminars and all other sorts of useful government services. People can form quilt knitting clubs, blogaholics anonymous support groups and soon the whole of Silicon Valley will be transformed. Most people will own their homes, pride will climb steadily, crime will fall to zero and people will finally form... *wipes tear from eye*... a community.

And isn't that the American Dream (tm)? In the words of a brilliant politician: "Aye considdur zuh problum... TORMANATED!"

NY city mostly has Rent Stabililization, where rent increases are controlled. A vacant unit becomes deregulated if the free market rent exceeds $2,000 (maybe a little more now). A Stabilized unit can become deregulated if the tenant has annual income of more than $175,000.

If your income is below $175,000 and the rent is less than $2,000, and the unit is your primary residence, then the unit stays subject to rent regulation.

Maybe Shannon Hermes can save the REIC.

She's a millionaire from Youtube. What was her role? Receptionist and office admin.

http://www.marketwatch.com/news/story/youtube-acquisition-making-millionaires-outside/story.aspx?guid={B2BA449E-0571-4E7F-B61C-8D427F1C718F}

You're all thinking too small. The answer is securitization. If David Bowie can do it (http://en.wikipedia.org/wiki/Bowie_Bonds), so can every renter in the country. Dedicate your future income to fund the payments on your very own bond issue (JBR Series XLVIII, available in tranches from A to ZZZ), sell them into fixed income portfolios across the country, and stick a wad of cash in your pockets TODAY.

Then bid up the rents on everything, because you can't be a JBR if you don't rent.

Errr, I'll be taking my wad offshore. Does Paraguay have an extradition treaty?

There is an easy solution, that doesn't involve bitter renters. The government should start investing in real estate. Instead of selling bonds for 1 trillion, the goverment could just buy 2 million houses, 500K each. The government would first get an instant cashback, then it would rent the houses, and within a year when the price of the houses doubles, the government would cashed out the equity. Everybody would be happy, even the renters, because their rent would go down with so many rentals on the market. Without a need to sell the bonds the government doesn't need to offer atractive rates and therefore the interest rates could go down, which would start a new healthy boom.

BA reminds me of the Spanish empire circa 1650. Venture capital = new world silver. All the money flowing in from the outside actually caused hidden inflation and caused most inhabitants' quality of life to suffer.

"push the earth back under the housing bubble" LOL!

Believe it or not we're gonna see a lot of that over the next few months.

"Pick a payment option rents"

And w h y...... not!

Just a few of the MANY gems posted here, certainly has my vote for "Best New Thread in '07"!

justme,

How about tucking a couple of giant prawns or some stew meat into the curtain rods at open houses? It might take a while to find the source of the decay odor.

"Gee, the house is pretty, but there's that eerie, death odor."

justme,

How about spray painting some dry rice grains black and scattering them around, rodent pellet dropping style, at open houses?

In the UK they had a scheme where the county councils would buy half a house with someone who could not afford to buy the whole house - and then the council would collect rent on their half (subsidized) and then the family has the right to buy the rest of the house at a later date when they can afford it (scrapped back in the 80's).