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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Hell no I don’t think they should use our money to build more projects. That’s just more incentive for people not to get off their lazy butt and work or do their own business and besides who wants low income people living in their neighborhood so crime rate can sky rocket and bringing down our home values. I’m sorry if I offended anybody but it is what it is.
Now Barney Frank the person behind this can refurbish his place where he was keeping his lover that was running a whore house downstairs that he “wasn’t aware of”, his words not mine. If you do not know what is going on in your own house then how the hell can you keep track of anything else? What idiot made him in charge of anything?
So now we can have more of the housing projects like the ones in Chicago which became one of the most dangerours places in the country to live, go near or police. Wait a minute the police would not go into the projects, too dangerous. Then of course we can look forward to the police bombing buildings and burning down 5 or 6 blocks of buildings like happened in Pennsylvania.
Damn skippy, sure a good deal we have the government looking out for all of us, what with housing, taxes, health care, social security. Soon will not have to get out of bed in the morning because I am sure they will have someone come in and feed me and change me when I need it. Most likely a robot because there will not be any jobs for anyone to go to anyhow. Wonder what kind of housing the robots will get and what tax rate the robots are going to pay?
Look this administration has no use for the constitution, just something that gets in their way. The congress could give a shit how anything they do affects any of us living in this country. Why else would those idiots pass bills they never read and look at you blankly when told they are not trusted to do the right thing. They would not know the right thing if it bit them on the ass.
We have facist and communist running too much of this country. If you disagree with me then check out the definition before you do. They are not interested in Socialism as it does not give them enough power.
Calling old ladies Nazis and telling ordinary people they are un-american because they do not agree with the government stealing our lives and livelyhoods one piece at a time. Not one of those whiney bastards in congress has the right to say one word about patriotism, none of the ones complaining has every held a gun, has ever done one honest thing for this country.
This is just one more example of how we are living in a Chicago mob mentality of government, now we get to have their slums next to where we need to live just like they had in Chicago for so many years.
Instead of these stupid crooks stealing more and more money from us while telling us it is the only way of saving us, they could fix some of the crap that is broken because they broke it.
Fix Social Security, Fix Medicare, Medicaid, get rid of Fannie Mae, Feddie Mac. Stop stealing highway funds for everything except fixing the road or bridges. If the criminals in charge want even a tiny bit of help from me then get their hands off my life and start doing the few limited things the government was originally charged with. Fix our schools, get rid of the unions, make it illegal for government to do anything but highways, schools and military. We do not need all the other stuff!!
Theoretically and constitutionally I agree with Bryan. And Bryan if you tell anyone watch out . .
But Bryan’s well written diatrabe is replete with “if’s” and “imagines”. These are words that play almost no role at all in any of my business decision making criteria. I look at the story that the numbers tell me. So here is what these numbers tell me.
$4,250,000,000 dollars divided by the average cost of an REO SFR, pick a number – any number, say $150,000 = 28,333 houses. This is not even a band aid on a burst aneurism. The same dollars divided by 10mm for a housing project is 425 projects. So if half went to each that is 14167 houses and 213 housing projects.
This is political theatre, nothing more.
I can’t add anything to the post Chris made. I’m born and raised in and around Chicago. You’re so right!!!
This is the same insane stuff the government always seems to do, solve one problem and create many more. If the government has 4.25 billion it needs help in handling, then why not create a program where they can lend it out to responsible investors who will turn the properties into profitable ones. The government in the management business has always proven to cause more problems. The fundamental issue the government doesn’t seem to understand is by doing this you create an even larger class of free loaders expecting something for nothing thus creating even more taxes for the working people to pay. If you want to help the people, stimulate the economy to create jobs for those in need, don’t just give it away with nothing being expected in return. There are an abundant amount of people who like the something for nothing model and its weight will eventually bring down this country. The old “teach a man to fish” versus give him a fish, is more applicable than ever in todays challenged economy. It seems the governments need to appear to be doing something about overrides common sense much more often than not.
In principle, I agree with Bryan. In practice, I don’t really think it’s going to matter much to my own individual investing, or to many other individual investors. The numbers just don’t add up to that many units, especially compared to the volume of already available REO’s on the market, and the number of additional REO’s coming in the next wave. There will still be plenty of opportunities to make profit and cash flow.
Ladies and Gentlemen,
I have read many articles over the past few months, primarily web based opinions, like this article. All these articles have one common thread…..”Disagreement with How the Government, Federal Government, is running this country.” I agree 100%. I believe it was Chris in his/her post that said the Federal Government ignores the constitution (paraphrase). I am not sure they realize there is a constitution.
I have a few questions to the solution:
1. How did we get so far out of hand? By allowing decision making power to be moved up the government ladder.
2. How did that happen? By voting along party lines rather than taking the time to investigate the past voting record of each candidate and selecting the best candidate.
3. How do we fix the entire mess? Vote and vote smart. The democrats and republicans both are as screwed up as a soup sandwich. Next year is another major election, primarily senate seats. If we start now pushing to place intelligent, “FOR THE PEOPLE BY THE PEOPLE” candidates into office who decisions based on the Constitution of the United Sates and the desires of the people they serve.
We vote these idiots into office. It isn’t there fault they are extremely well educated idiots. (Yes, idiots! Who else would take ownership in a failing motor company and give a major portion of the ownership to the biggest reason it went bankrupt -UAW- with out mandating more reasonable cuts.)
Again we voted for them, so what are we going to do about?????
B-10 hit square on the head. No need to look any further for a solution. What we need to do now it put more and yet more pressure on the current ones in office. They only want power and when you threaten to take it away they bend to our will.
Absolutely Not!! I feel the government spending is getting way out of control. I was just looking to buy some existing homes, multifamilty & apt to rent to renters on Sec 8. However when I contacted our local housing dept, they have not received any funding since Nov of 2007!! There are over 3K on the waiting list and it’s going to get higher due to our unemployment. Our population is around 115K. So I asked them what do you do if there is no funding? They are still taking applications but good luck! As far as new construction they should give grants to experienced developers, property managers, private investors or non profits & buy existing bank owned or foreclosure properties. Why build when there are a ton of vacant buildings..Ok, there is so much I want to say which is why I do email my local senators, representatives, etc.
Before my son started his career as a police officer, he was an armed security guard at such a housing project. He said that was the most dangerous job ever. There would be a problem, and they would respond, but it would not be unusual for the victim and the perpetators to turn on the guards because they were all afraid of losing the right to the handout of free housing.
Rather than the government getting deeper involved in housing wht does Mr. Obama not put that money where jobs can be created, increasing the gov’t income and contribute to people’s pride of home ownership. That would present a much more prolonged stimulus to the economy versus giving handouts. Teach people to fish and they will be fed for a life time.
What do you expect? We have a gangster government running an on-going crimminal enterprise with a gangster economy run by the same people. Going to be another shot heard around the world soon. The Revolution for the Restoration of The Republic. Could not come soon enough for me. Where is the outrage?
It is SICK,SICK,SICK
We have a guy in the White House with the lable of President because more than half of America elected him. They were desperate and in hopes of change. In six monthe there is not one thing that he has done that has worked except continue to LIE to the American public
He is just playing president and totaly not qualified, but he will continue to tell miss truths to try and cover his but. He does not have a qualified staff to advise him on anything, the fact he appointed a bunch of Chicago thugs only because they agree with his socialist views, such as the secretary of the treasury TUBOR TAX TIM, (Doogie Houser) who can not even pay his own taxes.
If Obama applied for a job at the White House as a janitor he would not have made it past the security clearence do to his radical background, yet is privey to TOP Secret info and has his hand on the switch. Now he want’s our goverment to compete with American business and build what will turn into slum projects that will drive properity values down and further hurt the economy.
Why not use thoes billions to help assist current landlords in improving their properties for families or offering additional tax credits to landlords for assistance in rents to needy families, not the goverment competing. Lets clean up what we have now not build another Chicago slum project. A concerned AMERICAN, all of the misfits on top of the hill who don;t get it together will be voted out.
I think that the government needs to build these housing units because the government knows that since it stole all of the money they could from these people, now they have to house them. The government is preparing itself for the masses that are going to need housing because of all the foreclosures. They know that the unemployment rates predict a chaotic future, and they are finding a way to house the new Americas, to keep us barely afloat while they go to the next country to squeeze out everything they can from them. And then they will go on to the next country from China and India to Africa. America is headed for big trouble as you can see all of the greedy 3% are preparing to leave America to head to other more desireable places where people have lower expectations and they can repeat this process over and over again until the year……and there will be the kings and paupers all over again. We’re going backwards, and they’re getting real ready because they’ve got their ships to go to the moon if they have to. And we built those ships for them too, because we ain’t going. But we know they are if necessary, they’ve got their new world just waiting for them. They’ve got it all planned out!
Bryan, you are right on the money. This administration is getting into areas where it doesn’t belong AND (even more importantly) has no experience in doing it Right. “but it’s helping the people….” No it’s not and ever WORKING American knows it. We are enslaving the masses to be worthless people who don’t know how to contribute to society. But then, that’s the plan isn’t it. That way the government has the ultimate control.
Why is that deficits and the evisceration of our constitution and the rights it bestows upon us are bad things only when the democrats are in power? Where was the conservative outrage for the last eight years?
I am amazed at the people who say :
“I don’t really think it’s going to matter much to my own individual investing, or to many other individual investors”
When are they going to realize this is just a start for the Chicago Facists in power. If we don’t raise hell then they will do again but on a larger scale! When will it be your problem?
I agree with you 100% Brian. This government is ridiculous it is moving in the wrong direction. I believe much of what they are doing in targeted at RE Investors. What they are doing is adding to the problem of crime in our cities and then they will come up with another charade to supposedly fix that problem. they are the problem they don’t have a clue as to what needs to be done to fix the problem this nation is facing. They need a reality check
Laughing Fringe,
If you actually track the deficit, it was going down until the last two years of Bush’s administration when the Democrats took over congress and started spending like they are now. Also plenty of people commented about how much was being spent. The problem now is people are starting to wake up some because it is hard to swallow the fact that instead of a 500 billion (rounded off) deficit we are talking 1.3 Trillion or more for as far out as people can figure the budget. It actually will never drop below this number in the next 10 years instead it will rise even higher.
That tends to get people’s attention when the liar in chief tells you he is going to have change for you most people did not think he was talking about gigantic deficits and a fascist state, sliding into communism.
Lets be patient, but importantly enough lets be smart. we know democrats are against investors or anyone who is trying hard to make an honest living. Next election keep in mind that Obama has to go. We need someone who cares about improving the economy and not use or money against us or get us more in debt.
Bravo Bryan:
The fact of the matter is that there exists absolutely no Constitutional Amendment for our government to be in any business related field in any way, shape or form. Our forefathers were extremely bright and intelligent men. Let’s get back to the Constitution and kick government out of our business and business in general.
If you want to mess anything up just get some ignorant political bureaucrat involved in business – any business!!
The wise old sage Thomas Jefferson said, and I paraphrase, this country needs a revolution every ten years to let the rascals in Washington know who is in charge. We’re about 20 revolutions behind.
Kick the professional leeches (I mean politicians) out of office. Let’s start anew. Vote Spratt for President.
Bryan’s article comes as no surprise, on the “glass is half empty” doctrine. Further, what is described is yet another example of the government’s incompetent, senseless evisceration of our financial and other substantive freedoms that have and continue to be flushed down the toilet. The powers that be would not know our pre-existing constitutional principles if they were all under threat of being lobotomized for not knowing to follow those basic and proven rights.
Their conduct has consciously been spread by the President, Tim G. and Nancy P.et al through our society like a virus. Bail out the banks—result, multiple failed programs (Hamp, HAFA,) These folks spent our money in the form of TARP funds “loaned” to AIG et al without virtually any restrictions–that is like giving a bank robber a reward for ripping of a bank. I have been inactive as an attorney for a few years–full time as a credible investor in real estate. I never regarded any of my thoughts in this context as “radical” especially at age 64. But I will tell you, I am seriously considering getting my law license activated and do my part in protecting the fundamental rights that are being trampled at almost every level. What is going on from Wall Street to Main Street (I know, that’s a hackneyed expression) since 2007 onward and for the foreseeable future is shameful and is causing most people and the country irreparable harm. No one in power is being held accountable, not in government, not on Wall Street, not the White House Press Secretary, not anywhere that counts as the multiplier effect of this virus permeates our society. I am not so naive that I believe I can make any of this turn around singlehandedly. But if I can get a Judge in one case at a time to trash (hold unconstitutional) one or more or even a derivative of this Obamian related garbage, I will feel that I given something back. I can also tell you without hesitation that in doing residential and commercial short sales and bank-owned deals as a part of my business, I have encountered misconduct at the level of lenders, servicers, note holders, accountants, attorneys, Realtors and yes, investors too that is horrific–again no accountability. Notwithstanding the foregoing, I believe the glass is half-full and the opportunities in the real estate world are still significant from many standpoints—one of the things to come out of this I predict will be a whole new breed or real estate Guru that will be morphed from the Barnum and Bailey bs type that we now have to a new breed of teacher/mentor who actually cares about the people he/she helps who buys their products via slick info-marketing campaigns–they all think they are Dan Kennedy clones (which they certainly not)–a symptom on a mircro-level of what I have stated above on the macro perspective.
Keep up your work Bryan!