Increase incentives to real estate investors, owners
Letter to the Editor
By Inman News, Tuesday, April 27, 2010.Re: 'Let's assist distressed owners, small business' (April 26)
Dear Editor:
Housing is about supply and demand, and currently supply outweighs demand by a large margin, with the majority of homes either being underwater or in foreclosure. It's this part of the market that needs to be addressed, as once the majority of these properties are off the market, the prices of homes should begin to stabilize.
So how does this get accomplished?
First, an incentive could be given to owners who complete a deed in lieu of foreclosure and rent that same home from the lender. This would save the lender time and money and the owner wouldn't need to move. And, depending on their situation, maybe give the owner an opportunity to buy back the home within a specified period of time.
Second, offer an incentive to investors. This could be in the form of lower capital gains tax and/or better loan terms for qualified investors. Third, increase FHA loan amounts for qualified borrowers. Fourth, make downpayments tax deductible -- even for investors.
Although not perfect, I believe these changes would have a positive effect on the housing market.
Scott Epstein
IllinoisRealEstate.com
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Submitted by John Burchardt on April 28, 2010 - 8:37am.
Eliminate greed, and this is not an issue. Banks need to look at these homes as non-performing assets. So if they cover they're costs to maintain them, about $150/mo (tops!), then all they need to do is request that they home owners pay the property taxes and insurance, and a $150/mo, until the homeowners are ready to sell or die. At that time the bank would take over the property and sell it. I believe that it's safe to assume that the market should return somewhat in 5 to 10 years.
Moreover, if the bank doesn't want it or goes under, then fannie & freddie could take posession, and provide the home owners with the same offer, with the exception that any federal income tax refunds are subsequnetly sent to fannie & freddie. Unless the Home owner spent money upgrading the home, then maybe he/she could be reimbursed 50 cents on a dollar from their refund.
The only draw back with this idea that banks want their money now, they'd rather take an immediate loss now, rather than possibly recoup and come out ahead in the future. I'm really confused here because every investing professional always says to remember the long term. So they expect us to do what they won't...like I said, I'm a bit confused.
For the feds, this is a no brainer. Imagine the us owning more of it's own country. I'm sure we'd be better off selling it, after all it's falling apart; but when the home owners pass on or decide it's time to move, the feds could sell or better yet utilze them for public housing units. Either way, it's better than what's happening now.
Like I said...it's all about greed.
John Burchardt
LocalHomesForSale.com
Submitted by Kathy Jones on April 28, 2010 - 12:56pm.
Yes! Yes! Yes! Great post, Scott.
There should be loans available to investors that are similar to the ones offered to owner occupants. It has always amazed me how the government/banks are so lenient with the lending standards of owner occupants and so strict with investors.
Unless you go the hard money route, an investor needs a 20% downpayment vs. 0% downpayment for owner occupants(ie. Navy Federal Credit Union offers this). Investors also have limits on the number of homes they can own before even more "creativity" sets in. These are just a couple of the many road blocks that investors must bear.
These "excess" homes could all be purchased (even the "scary" ones), rehabbed, and put to good use if investors had more access to available funds.
Is anyone listening? :)
All the best,
Kathy Jones, Broker Associate
Certified Relocation Specialist
Accredited Buyers Representative, ABR
New Home Sales Specialist
Real Estate Investor
www.kathyjonesrealty.com
Helping My Clients Build Wealth Through Real Estate