On Friday last week, the Obama administration announced that $4.25 BILLION in federal stimulus money will be applied to “the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates.”
That’s Just Great. The US Government gets involved in another sector of the economy in which it has no business or legal authority.
My opinion on this is simple: Government housing projects virtually always end up as dangerous, dirty, crime-laden disaster zones. For every exception to that rule, there are 100 examples that prove it. And even if government magically transformed itself into the world’s most efficient and profitable property management organization, the stubborn fact remains: No Constitutional authority exists for the government to be in the housing business.
Here is the practical ramification of Obama targeting small real estate investors like you and me: it damages your opportunity to be an investor. Let’s say you own one or more rental units… but you have to compete with Uncle Sam, who is not forced to turn a profit. That’s a pretty big problem, isn’t it? If the government faces a challenge with its rental properties, they simply raise our taxes. But if you have a problem with your rental property business, you face foreclosure, bankruptcy and business failure.
Isn’t it curious how the only time government officials care about what’s “fair” is when the same rules don’t apply to the government itself?
And if you’re interested in buying or developing apartment complexes, the stakes are even higher. Just imagine if you owned an apartment building on Main Street which charges an average rent of $800 per unit… and then the government comes in and opens an apartment complex down the road from you that offers its occupants a subsidy of $600…
This would destroy your business in two ways:
- You’d have difficulty convincing anyone to pay you $800 when they could instead pay only $200 – so you’d find it nearly impossible to get any renters
- The presence of a nearby public housing unit – and the negative societal effects that such things bring – would be a huge DISincentive for responsible, safety-minded renters to do business with you
And now, imagine that situation magnified by 200 times, because that’s how many individual units you have available to rent in your apartment complex.
There’s nothing good about this. Not a single thing.
Of course, many of you are operating under the false assumption that it’s the government’s role to provide everything for the citizens: Housing, food, health care, etc. You folks will probably disagree with my entirely rational opposition. But you’re welcomed to do so.
Let’s have your thoughts: Do you think the government should use $4.25 BILLION of OUR money to build public housing projects?
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