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It's not a recovery, it's Wall Street buying to rent back to owners
invite response
2013 Feb 7, 3:56am 27,925 views 48 comments
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It's litterally a crime scene, so yes it should be torn down.
Where would people live then? It seems to me the mortgage was the crime, not the house.
Your renters
will never own the houses they rent from you. Most will lose the extra rent they
are paying you to rent to own. You're selling them a pipe dream. Just because
you truly believe the same dream doesn't change reality.
What extra rent? I'm not thinking of marketing them as rent to own, but only as a normal rental. They'd only sign up if they think it's the best deal they can find as a normal rental. I'm currently hashing out two alternative business plans:
1. Just run them as normal rentals; then when interest rate is high in about 10 years, when the bank interest rate is very high, sell the houses to good tenants via owner financing at reasonable rate.
2. The first year of lease would be normal. If they are good tenants that I want to keep, surprise them with a 5% rent drop. Keep doing that every year but without a contractual promise so they are not tied down by any promise but only actively choosing the place because of good price. When difference between rent and tax+insurance (no mortgage) is close enough, say $200/mo, I'd be selling it to them at the PV based on that net income, which would be $40k at current interest rate but $20k if interest rate is 10% at that time, or $10k if 20% interest rate, which IMHO is highly likely. So they get the house for next to nothing and can still avoid paying gift tax (so I hope) because the cash flow hence PV will be so low due to very low rent at that time. I would have recouped my investment by that time, and paid for my kid's college and funded my my retirement at a modest living standard . . . and the renters would have got a house for next to nothing on top of coule decades of below-market rent.
All possible because the purchase price is low, I'm not financing, and I have no multi-million dollar salary or bonus to pay like the big hedge funds managing their portfolio.
Most businesses and professions that truly help people don't come with high
profit
I'm not seeking high profit. In fact, in the latter years, it will be a non-profit giving things away.
ELC
2013 Feb 9, 10:48am
I'm not seeking high profit. In fact, in the latter years, it will be a non-profit giving things away.
It sounds good for the tenants but not so good for you. Like I said one of you will lose. You're in competition with greedy people who are going to deceive their tenants and buyers. For example someone I know buys houses then and finances them himself. He is able to sell lower because he picks people who he hopes will go bad on their loan and he gets back the house and keeps the 20-30% down payment. He even has the deed (or title?) held in escrow and has in the agreement if they miss two payments anytime withing the five year balloon loan they become a renter and are evicted under rental laws. He makes it so the payment is a couple of hundred a month less than if they would rent the same type of house. Believe it or not he has no trouble finding people with horrible credit but some cash who agree to this.
How do you compete with that?
It sounds good for the tenants but not so good for you. Like I said one of
you will lose. You're in competition with greedy people who are going to deceive
their tenants. For example someone I know buys houses then rents them out and
finances them. He is able to sell lower because he picks people who he hopes
will go bad on their loan and he gets back the house. He even has the deed (or
title?) held in escrow and has in the agreement if they miss two payments they
become a renter and are evicted under rental laws.
How do you compete with that?
I'm not competing against someone like that for investor money. When I have the system details worked out, and when the whole enterprise is in give-away mode, it will be a non-profit. By then I may consider fund raising if there are like-minded people who are willing to put in cash and not take out any . . . a type of capital that he can not seek.
The area where I will be competing with someone like you mentioned would be tenants. If I'm not able to give tenants a better deal than his shop can, then the tenant deserves the better deal from him. Like I mentioned, I'm not marketing the houses as rent-to-own, but only as regular rentals. There are plenty rentals that seem to keep the owners in business. Eventually, the give-away phase will exhaust whatever I put into the non-profit, but that is the point, as I don't plan on living forever. If my math is correct, in the time between now and then, I should be able to get reasonable return.
I'd also be a much more relaxed landlord, teaching tenants how to keep homes by maintaining them in exchange for ever decreasing rent instead of going to courts seeking evictions. By the time they buy it from me for a good price, they will also have what it takes to keep the homes without the a huge mortgage burden.
ELC
2013 Feb 9, 11:07am
I certainly am. Assuming that they hold onto the rentals for any appreciable amount of time, rather than dumping them onto the market en-masse when they decide that they want to cash out, they will engage in wealth extraction that makes the mid-2000's look like a kiddie birthday party.
The only way to pull off controlling prices is if all the major banks cooperate with each other. But this seems to be what's happening. All the banks as well as the Government are pissing on the free market in unison.
ELC
2013 Feb 9, 11:31am
If my math is correct, in the time between now and then, I should be able to get reasonable return.
It sounds like a good idea to include fundraising in your plan. There's a non-profit out there (forget the name) settling with creditors for people in debt using donated money. You could try to put something together along those lines and use free publicity and donations to make it work if your numbers are weak.
I was also thinking what's needed is some organization that could use adverse possession to pressure banks to either sell or start taking care of their abandoned properties.
No one seems to be getting proactive out there. They're getting away with murder and nothing's being done. I wonder if churches or non-profits can do something more aggressive than just bending over and taking it, being that they enjoy some protections other entities don't. I figure if a church can get away with molesting children for hundreds of years they must have other powers that can be used for good.
It sounds like a good idea to include fundraising in your plan. There's a non-profit out there (forget the name) settling with creditors for people in debt using donated money. You could try to put something together along those lines and use free publicity and donations to make it work if your numbers are weak.
Wouldn't that be rewarding the creditors that made the bad loans?
to pressure banks to either sell or start taking care of their abandoned properties.
Yes, the empty houses are a huge waste, and houses don't stay in shape for long while empty.
JodyChunder
2013 Feb 9, 1:09pm
(sheeple)
Hmmm
I guess I should have put that in inverted commas to indicate I was refering to your blind racist-tinged misanthropy. I don't refer to people as sheeple. It's lame talk.
It's the exact opposite. They're soft from living the easy life. You must have Americans confused with illegal alians.
Yeah, I'm sure you're out there busting sod (in-between episodes of onanism and posting on Patnet). Anyway, I'm not sure what the fuck an illegal alian is supposed to be...but if you mean people from countries torn apart by our drug war policy who're desperately seeking asylum -- then I'll say this: they probably bust their collective ass more than any wannabe Big Dan from Floriduh. They also tend to posses a better grasp of basic English, despite it being their second or third language.
Puffy tits! (sniff!)
Rudeness is the weak man's imitation of strength. -- E. Hoffer
JodyChunder
2013 Feb 9, 2:24pm
Gimme a holler next time you're desert-bound. I was just in Joshua Tree! I discovered a shockingly great little Indian restaurant there. It's in a filling station. I'll buy the suds.
I'm thinking of maybe visiting that area around Feb 15 to 18. Is it worthwhile? I've heard Death Valley is best in February.
Joshua Tree: I was just there a week ago, and it was very nice for this time of year, Patrick, though you won't get to see as many wild flowers as you would a month or so from now. I'm biased to the desert. I think it's some of the most beautiful landscape there is, second maybe to Arizona's Verde Valley. I very highly recommend it. Here's a neat little blog by a local sculptor and his family who built their home in the area a few years back. Good stuff.
http://www.allenpearce.com/2007JOSHUATREEUPDATES.htm
And here's an online review I found for that Indian restaurant I stumbled across!
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http://www.alternet.org/occupy-wall-street/ugly-truth-about-americas-housing-recovery-its-wall-st-buying-homes-rent-back?akid=10021.1086726.hOzNpo&rd=1&src=newsletter790532&t=19
"THR purchased the Southeast Atlanta home at auction for $90,000. The principle due on the mortgage that was foreclosed upon was $219,300."
"If banks were willing to offer principle reduction on these inflated mortgages down to the same price they are willing to sell at auction, many homeowners would likely be able to afford their payments, and stay in their homes for years to come, contributing to the stability of the neighborhood. Instead, homeowners get a flier posted on their door the day after Blackstone purchases the home, offering them the opportunity to rent the home they once owned. Meanwhile, the deep pockets of firms like Blackstone allows them to outbid virtually everyone else in the market—eliminating any chance of owner occupants looking for a new home to get a good deal while prices and interest rates are low."
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