Should Government Mortgage Subsidies Be Offered to Cashflow Investors?

Among the dumb ideas being floated to resolved the housing crisis, one good one has appeared: Help investors buy up distressed homes and rent them out.

Irvine Home Address … 6 HERITAGE Irvine, CA 92604

Resale Home Price …… $319,000

Situation could be much better

much better than today

you know that you could do much better

much better than you do today

but how come you never try to change situation

how come you always escape

out of a serious conversation

dont't you know it can't never be too late

for us to succeed

out of every misery

you can be released

as long as you beleive

Ayo — Help Is Coming

In housing markets where a significant number of properties are being converted from owner-occupied to rental status, there is no government program or help for this transition to occur. Without government help, prices fall far below fundamental valuations as the imbalance of supply and demand becomes extreme. The only solution is to reduce supply and increase demand. To accomplish this, I propose that the GSEs promote investor programs that reduce the cost of ownership to small investors and encourage them to keep the supply off the resale market.

I am about to argue for something that would benefit me personally, so take everything which follows with a dose of skepticism. I would like to think I can set my personal biases aside and propose a solution better than those coming out of Washington. Feel free to disagree.

Should Treasury Help Investors Become Landlords?

Emily Peck — September 27, 2010

The government’s tried a lot of tactics in propping up the housing market: Tax credits for home buyers. Mortgage modifications for distressed homeowners. A program to buy up mortgage-backed securities.

Now, some analysts from Bank of America are proposing another plan: Help investors buy up distressed homes and rent them out.

In a recent research paper, the BofA analysts frame this as the second phase of the Public Private Investment Plan. Funded by TARP, which expires Oct. 3, PPIP offered investors funds and credit to buy up residential and commercial mortgage backed securities. The paper calls that program an unqualified success for driving up the value of mortgage backed securities.

Through their proposed PPIP 2, Treasury would use the same model to help investors to directly buy up foreclosed homes.

The analysts propose funding the purchase of up to $400 billion worth of homes by a select group of property management companies given the task of home oversight. Treasury could provide, they suggest, up to $100 billion in equity, matching the property management companies, as well as up to $200 billion in debt capital.

I like the basic idea of helping investors to purchase homes and convert them to rentals. I really hate the idea of it being done as another form of crony capitalism where the select few chosen by the Treasury department would get to make all the money. There is a much better way to make this happen.

The analysts propose that PPIP 2 investors be required to hold on to these homes for a certain amount of time, to avoid weighing the market down with low-priced foreclosed properties.

The U.S. homeownership rate, at about 67%, is “adjusting to a more natural level of 62-64%,” the analysts write. That means we’re in the process of converting owners to renters–sometimes painfully via foreclosure. The authors write that some of these folks probably never should have owned homes anyway and, since modification won’t (and doesn’t) always help them, the ability to rent distressed properties might do the trick, while also avoiding a flood of foreclosures onto the market.

This is exactly the problem. The home ownership rate must fall. Far too many people who were not prepared for home ownership were given title to property. These people must go back to being renters, but there is no mechanism in place to cost effectively make this transition. in fact, since investors loans carry a higher interest rate and are difficult to qualify for, there are roadblocks to this transition that must be removed.

The authors say that they haven’t seen any proposal along these lines. One possible reason? TARP fatigue. From the paper:

To put it mildly, in spite of its successes, TARP has not been particularly popular. We believe reauthorizing this type of spending on even a limited basis would be next to impossible, at least until after the upcoming election.

I agree; doling out another crony payoff is not going to be very popular either before or after the election. This is a transparent corporate giveaway that people are growing tired of.

The real reason you haven't seen proposals like this is because everyone in the administration is still focused on owner occupants. There have been no policies implemented or discussed that might hurt the home ownership rate — even is such a policy will help reduce taxpayer losses. A high home ownership rate has become a sacred cow in Washington, and until we admit maximizing the home ownership rate may not be a good thing, our policies will continue to be counter productive.

The GSEs should insure investor loans

Let's start by acknowledging that the GSEs no longer have any semblance of what they used to be. They were founded to support a secondary mortgage market and make capital available for low and middle income Americans to buy homes. Since they went into conservatorship in 2008, they have been largely used to prop up the housing market. Let's acknowledge that their primary function is currently to prop up the housing market by providing mortgage insurance at below-market costs to stabilize the housing market.

Once we accept the new role of GSEs, we can then discuss how this can best be accomplished. Our current policies are geared toward keeping owner-occupants in properties and Prop Up the Flagging Owner-Occupancy Rate. This policy will largely fail because many homes have to be converted to cashflow rental properties. If the government and the banks really want to limit their losses on mortgage loans (and GSE mortgage insurance), then they need to focus on how they can raise the property bids of cashflow investors.

If the GSEs offered the same loan insurance to cashflow investors as they do to owner-occupants so that interest rates were similar, and if the rental cashflow from the property could be counted toward the qualifying income, bids from cashflow investors would be much higher. Think about it: if you lower the cost of ownership for investors and make it easier for investors to qualify, you will get higher bids and more investor competition for properties. This in turn will raise prices and reduce the losses both banks and the GSEs will endure on those properties that must be converted from owner-occupied to rental status.

The truth of this fact is plainly obvious when you look at Las Vegas's housing market. The home ownership rate in Las Vegas is going to drop 25% or more from the 2006 peak. Nearly every household there is underwater, and they have little or no hope of price recovery. Accelerated default is the norm, and a huge number of homes are currently being converted from owner-occupied to rental status. Each time this happens, some lender is losing a fortune, and the only way to stop the bleeding is to raise the bids for cashflow rentals. The only way that is going to happen is to lower the cost of ownership for investors and increase the size of the borrower pool by qualifying more investors.

This is a problem I am very familiar with. I know the math as I face it myself with each property I consider buying personally. I know that investors pay a higher interest rate, face higher equity requirements, and have fewer loan programs that consider the rental income in qualification (it still must be cashflow positive). Each of those barriers lowers my bid for any particular property, and since everyone is facing the same issues, it lowers everyone else's bids as well. Lower market bids for these properties make for larger lender losses.

If the government and the GSEs were serious about combating this problem, the GSEs could offer relief in these areas (interest rates, equity requirements, and income qualification) to investors who agree to keep the properties off the market as rentals for three to five years. That would keep these properties out of the for sale market (or the loan would have a stiff financial penalty), and the reduced supply would also help stabilize prices.

This doesn't have to be some crony capitalist handout. It could be a grass roots program for small investors and prudent savers with good credit — you know, the people who have been being screwed at every turn in favor of banking interests and corporations with all the bailouts. I openly admit my personal bias, but I still believe this is a good idea that would be far more effective than any of the programs that have actually been implemented to date.

What do you think? Has the time come for the GSEs to help the small investor clean up this mess?

The California Housing Foreclosure Cycle

People often talk about the real estate cycle in California without having any idea of what causes it. In short, irrational exuberance among buyers enabled by foolish lenders causes prices to go up, and when buyers who over-borrowed stop repaying their loans, lenders tighten credit, and prices crash. This most recent housing bubble was actually the third such housing bubble here in California. It probably won't be the last.

  • Today's featured property was purchased by the Federal National Mortgage Association for $138,000 on 8/23/1996. It was an REO. They later sold the property Glendale Federal Bank who sold it to the current owner on 5/17/1997 for $100,000. The current owner used a $97,500 first mortgage and a $2,500 down payment.
  • On 8/24/1998, the owners obtained a stand-alone second for $37,300.
  • On 9/21/199 they refinanced the first mortgage for $163,946.
  • On 10/1/2004 they refinanced again for $220,000.
  • On 6/5/2006 they refinanced one last time for $237,000.
  • Mortgage equity withdrawal is $139,500.

If you believe the property description, this is a standard sale, but they don't have much cushion before this becomes a short sale.

How many other REOs from the last cycle will end up as REOs this time around? How many of today's REOs will end up as tomorrow's foreclosures?

Irvine Home Address … 6 HERITAGE Irvine, CA 92604

Resale Home Price … $319,000

Home Purchase Price … $100,000

Home Purchase Date …. 5/17/1997

Net Gain (Loss) ………. $199,860

Percent Change ………. 199.9%

Annual Appreciation … 8.6%

Cost of Ownership


$319,000 ………. Asking Price

$11,165 ………. 3.5% Down FHA Financing

4.74% …………… Mortgage Interest Rate

$307,835 ………. 30-Year Mortgage

$64,111 ………. Income Requirement

$1,604 ………. Monthly Mortgage Payment

$276 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$27 ………. Homeowners Insurance

$273 ………. Homeowners Association Fees


$2,180 ………. Monthly Cash Outlays

-$149 ………. Tax Savings (% of Interest and Property Tax)

-$388 ………. Equity Hidden in Payment

$20 ………. Lost Income to Down Payment (net of taxes)

$40 ………. Maintenance and Replacement Reserves


$1,703 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$3,190 ………. Furnishing and Move In @1%

$3,190 ………. Closing Costs @1%

$3,078 ………… Interest Points @1% of Loan

$11,165 ………. Down Payment


$20,623 ………. Total Cash Costs

$26,100 ………… Emergency Cash Reserves


$46,723 ………. Total Savings Needed

Property Details for 6 HERITAGE Irvine, CA 92604


Beds: 2

Baths: 1 full 1 part baths

Home size: 1,022 sq ft

($312 / sq ft)

Lot Size: n/a

Year Built: 1977

Days on Market: 23

Listing Updated: 40451

MLS Number: S631821

Property Type: Condominium, Townhouse, Residential

Community: El Camino Real

Tract: Hv


Regular sale: stop wasting your time on short sales. No need to wait for the bank on this one. A wonderful, upgraded townhouse in the Heritage Park community of Irvine featuring dual master bedrooms with lots of closet space, and a spacious, upgraded kitchen featuring custom cabinets, tile floors, and beautiful Corian counters. Both bathrooms have been recently tastefully upgraded. Newly-installed laminate flooring. The enclosed patio is perfect for enjoying the great Southern California weather and there is an inside laundry area. Walk to the huge Heritage Park, association pool, large county library, basketball, tennis and other sports courts, and the area tot lot. The area is close to many restaurants, shops and entertainment venues. Walk to local, highly-rated schools. No Mello-Roos and low HOA! Easy access to major freeways, this is an excellent opportunity to live in one of the safest cities in America. Motivated seller – and this is a regular sale!

44 thoughts on “Should Government Mortgage Subsidies Be Offered to Cashflow Investors?

  1. Laura Louzader


    IR, this is not one of your most constructive ideas.

    How is it better or fairer to offer government assistance to “cash flow” investors who otherwise don’t meet income and equity requirements for buying rental property?

    You don’t correct unfairness and perversion by introducing more. Assistance for cash flow investors will only generate more bad loans for more unqualified buyers, in this case people buying for a “cash flow” investment.

    Government meddling in the housing market by means of programs to assist buyers in buying what they otherwise could not afford has not helped keep housing affordable, but has perverted the housing market and kept values artificially inflated.

    This debacle was not caused by the operations of a “free market”, but by government manipulation of the credit and housing markets . There has not been a free market in housing since the 20s, or even before. Our policy makers created this debacle by making credit available to absolutely everyone, by setting up the GSEs to buy loans that otherwise would never have been written because of their inherent risk, and by implicitly guaranteeing lenders against the risks involved.

    Let’s not make the same mistake again with “cashflow” investors. If a “cashflow investor” cannot meet the equity and income requirements, restrictive though they may be, he should not be investing. The best way to rescue the housing market is let prices go where they will go when all the artificial supports are removed.

    1. Walter

      I have to go with Laura on this one. While I hear the argument IR is making, once a proposal like this comes out the other side of the sausage making machine, the pols and bankers with be the big winners and the government will be even more entrenched in the housing market.

    2. IrvineRenter

      I agree that we would be better off without any subsidies, but the GSEs have been pressed into service to prop up prices and reduce lender losses. It’s not what we want, but it is the reality of our housing market.

      If the GSEs want to support prices more effectively, they need to extend those same subsidies to cashflow investors to recoup more on properties that end up as rentals.

      Keep in mind, supporting cashflow investment levels is not elevating prices for owner occupants. An owner occupant will pay rental parity prices whereas a cashflow investor will pay 20%-40% less to obtain a positive cashflow. Increasing cashflow support price levels increases the bank recovery and does not compete with owner occupants.

      1. Laura Louzader

        I believe that the same arguments obtain against “supporting” cash flow investors that obtain against subsidizing home ownership among the unqualified.

        That is, if you cannot meet the financial requirements to be a landlord without government subsidies, well, then, you should not be one. If your business model doesn’t make it without subsidies, then it just not workable.

        Leave the “cash flow” investing to people who are qualified financially.

        1. Hennessy

          All mortgages are government subsidized by interest tax deductions. I assume you don’t want to be in this category by not taking that deduction?

          1. Laura Louzader

            I believe the mortgage interest deduction should be phased out. It really only benefits people who buy expensive homes, and provides an incentive to stay in debt while penalizing cash buyers and people who pay their mortgages off quickly, and who don’t borrow against their houses once they have paid for them.

            As a renter, and as a prospective buyer who intends to buy as far under my means as I can and still get the architecture and features I want and still be able to pay the mortgage down within 5 years, I resent and don’t stand to benefit from this particular subsidy, that benefits mostly the well-off in any case. My mortgage interest will be so low, even if interest rates are somewhat higher when I buy, that I will derive no benefit from this deduction unless I can find thousands of dollars in other deductions as well.

            Every subsidy for buyers and borrowers should be ended. They have accomplished nothing but to drive prices northward and reward over-borrowing.

          2. tony

            Not true. Not all mortgages are subsidized. It depends on the size of the mortgage and whether it’s relatively small or too big. If small mortgage, it often makes more sense to take the standard deduction especially when it’s a married couple filing.

          3. Laura Louzader

            Correct- in my case it would definitely make more sense to take the standard deduction and not claim my mortgage interest, since any place I buy is going to be fairly inexpensive and I will bringing a large down payment. Additionally, I will be making large extra payments against principal to pay it off as quickly as possible.

            That means that both as a renter and as an owner, I will be subsidizing those who get a massive tax break because of the mortgage deduction, just as I am now subsidizing home borrowers as a renter.

            Again, the mortgage deduction is only another indirect subsidy for home borrowers and encourages people to take on more debt than they otherwise would. Just another way to punish prudence and reward recklessness.

          4. Shevy

            I agree with this. People take into account the mortgage deduction when factoring the cost of their housing, as a result they are willing to pay that much more and everyone just ends up paying a higher price and taking more debt. Surprise, another policy that helps the banks disguised as beneficial to the average American.
            Policy affects behavior, our current policy encourages debt and poor financial habits, it’s no wonder that many people and the country have massive debt. If we change the policy to encourage responsible financial behavior much of our country’s and citizens financial problems will get better. However, this does not make the bankers who control this type of legislation rich so it will be difficult to enact change.
            Moreover, if we continue down this path it will only get worse when American’s that have not been educated in personal finance reach retirement agent with no money to retire. While if we change policy and education, behavior will change for the better.
            However, a policy like this would need to be phased in. Why not lower the conforming loan limit to $417,000, require 20% down for any government backed loans, and only allow interest deduction to be taken on a principle balance of up to $346,000? I ask that at the same time last week someone mentioned that an addendum to financial reform that would require a larger down payment and borrowers to have good FICO scores got shot down. Until our politicians are not controlled by the banks solid policies that discourage irresponsible behavior will have trouble passing or even being presented.
            Of course millions of people are counting on that deduction and taking it away without a responsible phase could destroy a lot or peoples financials. I know a lot of smart people that take on debt through real estate investing and benefit from the mortgage interest deduction as part of their investment strategy. Of course, taking on debt in an investment property that has positive cash flow is different than leveraging oneself up on a McMansion. Even responsible people that are playing by the rules would be hurt if they changed mid stream, if not phased out properly, phasing it out is key both to passing something like this as well as its success.
            Moreover, getting a policy like this past while a real estate bubble is in the process of deflating and banks have more control than ever will be difficult if not impossible.

  2. winstongator

    Here is where some of your bubble information should take precedence. During the run-up of the bubble, investors were getting owner-occupant loans because they were either misrepresenting their intention to occupy, or the banks didn’t care. Investors added the last froth to the bubble, and were the first to default. Like 80% of condos in Miami were going to investors. That was a key sign of a pure bubble. Investors, and the idea of appreciation and heloc fueled paper real estate empires. The shift to cash-flow investors is not a huge difference. Would c-f investors really ignore capital appreciation if the props caused prices to go up ?

    If any program were implemented, investors would have to pay higher rates, and have higher down payments. You could also add in significant pre-payment penalties to force the investors to hold the properties for a significant period of time.

    Where I would like to see intervention is putting apartment-to-condo’s back together into apartment complexes, where investors and single-entity control would provide significant benefit.

  3. Planet Reality

    Bloggers inability to see his own hypocrisy always amazes me.

    There are investors in Las Vegas waiting on the side lines since Vegas is in horrible shape. These investors think blogger is knife catching. Let’s get the tax payers to help inflate Las Vegas prices for the blogger.

  4. Shadax

    Wouldn’t further government intervention simply do more to delay housing prices from falling to market-clearing levels?

    1. IrvineRenter

      Actually, the whole point of the government intervention with interest rates is to raise the market clearing price. It is the withholding of inventory by the banking cartel that is delaying the fall of housing prices to market-clearing levels.

      1. irvine_home_owner

        Now I’m confused.

        I thought you and other people were complaining that the low rates were not letting the market fall to their “correct” prices. Now it sounds like you are condoning it (at least for investors).

        So you’re trading one evil for another? By raising market prices, you might convince banks to release their inventory but that doesn’t necessarily mean they will get cleared from the market. Are you saying more people will buy at higher prices as long as the interest is lower?

        Isn’t your mantra to buy at lower prices when interest is high?

        1. IrvineRenter

          I am saying that people are buying at higher prices because interest rates are lower. That is just the reality of what is occurring in the market. Even with the low interest rates today, prices are still too high which is one reason the market has not cleared. I would prefer to buy at a higher interest rate and a lower price, but it may be many years before we get to the peak of the next interest rate cycle. I may not want to wait, and many people chose not to when prices reach rental parity.

  5. Foreign Cash Buyer

    Larry Roberts you are the biggest hypocrite of them all.

    You complain about the bubble priced market then start your own brokerage company to help people buy in this market.

    You complain about government bailing out homeowners keeping prices artificially high then after buying your own investment properties you say government should bail out investors to keep prices artificially high.

    Maybe you should run for office, you’d make a good politician.

  6. Swiller

    Why not just have the elite in the world buy up every toxic mortgage, and then artificially control the rent market, thereby keeping home prices high, and the american people in debt slavery forever.

    Yup, that would work for awhile. Great Idea!!!

    Talk about crony capitalism, but then again, if you have the capital, there’s nothing crony about it now is there? I’m surprised you even posted this article with your history of Wall St. controlled finances, but then again, now you have some cash to throw around from investors…amazing how one’s attitude changes when you deal with money isn’t it?

  7. shevy

    Another huge problem with this type of policy is that a number of ex mortgage guys that put people into these bad loans are going to be the ones taking advantage of something like this. We’ve already seen some of that with the heads of failed mortgage companies buying notes and gaining huge personal benefit by taking advantage of government modification programs.

    Ultimately, the best answer is no government intervention to control supply, demand, or artificially set a floor on prices. Just because one option is not as bad as another does not make it good. However, a case can be made supporting the lesser of two evils, even if one disagrees funamentally, if an evil is going to occur. I believe that most people understand that the government is unlikely to do nothing if more markets continue to fall similar to the Vegas market.

    Based upon recent history as well as all of the proposals being made, it seems that the best option of doing nothing is unlikely. However, I believe that it should be made clear that’s what people want and that message clearly sent.

  8. Bank analyst

    Hey, I gotta great idea. How about the govt give money away to anybody (homebuyers, investors, little green men from Mars) to buy all this shadow inventory from us poor banks at inflated prices. Me like free money. Feed me more free money, oink oink oink. Hey I need my bonus you know with Christmas shopping and all to do. Oink.

  9. E

    Well, I gotta say that this is my last visit here.

    This idea takes the cake.

    Crony capitialism is bad unless you’re one of the cronies.

    There are plenty of renters who would like to buy homes at reasonable prices but NOOOO. You want the government to HELP YOU BECOME OUR FUTURE LANDLORD?


    1. bltserv

      Now you know we are about to suffer a significant leg down. IR is pooling investors into rental properties. And now wants the goberment to help make his investment strategy that much more attractive. Kind of like just before the market crashes. The guy that predicted it all along changes his bet and jumps in. Seen this all my life. And everytime the last guy in that does this gets killed the worst. Larry. Hate to tell you this. Your gonna lose your ass along with all your investors. Your going to learn a big bad lesson here. Very Ugly. A year from now you will look back and go. WTF did I do. In the back of your mind you know I am right.

      1. Planet Reality

        And that my friend is the true definition of a contrarian indicator. You are too right.

      2. IrvineRenter


        I am going to quote you in an upcoming post.

        The most common question I get from people is “why isn’t everyone buying these properties?” It is difficult to explain to people. Comments like yours and Planet Reality’s make it much easier. You two are both the voice of market despair — the very definition of a contrarian indicator.

        You are as wrong as wrong can be, and I am going to feature your comment so it can be held up as a textbook example to market psychology.

        BTW, I am currently in Las Vegas with one of my investors who bought his first property at auction with his own money. He is feeling pretty good about it….

        1. Planet Reality

          You have your blinders on, the vast majority of your former and current readership base agrees with us, you’ve lost it.

        2. bltserv


          A year from now, if your blog is still alive we will laugh about how wrong you were. You drank the kool aid man. Your looking at a Japan like scenario. RE is a dead dog. It will depreciate or be flat for a decade or more. Your the last guy on a crowded bus. And will be the first to get off. Since you started this site it has dropped like 30%. Now its gonna stop because why ?

  10. Blueberry Pie

    After I read this, I was thinking that today might be April Fool’s Day. Nope – 6 more months away.

  11. Schadendude


    You had to know you were going to get fanmail for this one Larry…

    Without being overly emotional about it, I’ll just say that the idea repulses me, and not because you personally would profit off it.

    1. IrvineRenter

      The comments have been quite interesting.

      Have you ever wondered my more people don’t have the courage to write blogs like this one?

      I find it interesting that the same people always pile on when given the chance. Once I get two or three negative comments a few of the same people always pile on. It’s obvious they lack the courage to go it alone, but the the protection of the anonymous herd, it brings out the worst in people.

  12. irvine_home_owner

    This also ignores the fact that you’ll be shafting the owner-occupant buyers.

    It’s already hard enough for them to compete with financed loans vs all-cash investors on short sales, foreclosures, auctions and normal sales… what more on homes where the prices are higher?

    Incentives should go to owners… not flippers, speculators and land barons.

    1. shevy

      There should be no incentives. The only people incentives help are the banks. The government just needs to stop messing with it period, the sooner the better for everyone. Of course, that does not make for a good debate though.

      1. irvine_home_owner

        I agree… but if you’re going to ask for them… don’t give them to the all-cash investor.

        Whatever benefits the all-cash non-occupant buyers just penalizes the financing occupant buyers… who already are at a disadvantage.

  13. John

    IR, readers are giving you a bum rap here which I think is unwarranted. You stated your case, provided logic behind your ideas and stated your obvious bias.

    My preference, even as a homeowner, has always been to let prices fall to where they need to go. Prices would actually fall further than where they would need to go, so maybe this isn’t the best solution, but any non free market solution is also problematic.

    If you are going to try to provide some stability to the housing market, which seems to be a foregone conclusion, then I think it is better addressed in facilitating trustee sales. I have a strong dislike for bailing out people who aren’t paying their mortgage and allowing insane squat times.

    So I think IR is looking for a solution in the right area. Note that the proposal that IR raises actually increases the price that IR would have to pay at trustee sale.

    Currently the trustee sales process is set up to discourage a market price. What sense does that make?? You have to be a cash customer, info that the buyer would want is provided last minute, what properties are available is last minute, non-experts can get screwed at trustee sales, etc. A lot of this is the banks fault, but it would seem like the government could do things that wouldn’t cost a nickle that would make the trustee sales process more efficient such non-experts and less than full cash buyers could participate.

    For example, why not allow trustee sales to be financed with GSE loans such that the GSEs actually profit? This would actually make money for the government (directly and indirectly), would help the banks by increasing trustee sales prices, would help homeowners by supporting home prices, would help provide access to the trustee sales market to renters and would expedite a solution (ie the process of transitioning homes to people who can afford them).

    I am probably off on this as RE is far from my field of expertise, but I do think that the trustee sales process could be dramatically improved in ways that don’t cost a dime and would help most everybody.

  14. tenmagnet

    Isn’t the goal of IR’s investment fund to purchase Irvine properties at trustee sale and flip them?
    What does Las Vegas have to do with any of this?

    1. Planet Reality

      He is investing in Las Vegas.

      According to him Irvine is the most risky place to put your money, while Las Vegas is a slam dunk golden opportunity.

      1. bltserv

        Vegas is a disaster in process. Unemployemnet is out of control and you have a net exodus of population. For the first time since the 20`s. You have more people leaving Clark County than moving in.

        Sounds like a good time to be investing in Rental Property in another State. NOT.

        Who cares if its not your money. You get the admin fees and stay fat and happy.

  15. ochomehunter

    These jackasses at US Treassury, FED, and others publishing/making recommendations for investors to buy GSE homes is the height of all manipulation.

    How about putting up all the homes up for sale in auction format and where GSE’s would also lend money? The cash folks get 30-40% discounts, which I say is cheating by banks to their own shareholders by selling the property for a lot less than its actually worth. Although price depresses so much in cash transaction that it also prevents the ultinate price decline as investors turn around to the market rate.

    My way of thinking is that nothing, I mean nothing can prevent the upcoming correction and subsequent collapse in housing. We need jobs and we have no plan for that, Govt. things that Housing will stabalize economy while the fact is that it wont. Housing is a drag like a cancer and it needs to be cleared out the right way, not by manipulaiton.

    Hunker down and wait for your turn OR buy one today and become a squatter.

  16. ochomehunter

    Also Irvinerenter, if job situation does not improve, you think as property values fall rents wont? Rent does fall.

    Here in Laguna Hills where I live, my townhome rented for $1450 in 2006, today I pay $1600, comparable rent went as high as $1850 in 2008 and today its down to $1550 and falling further as property was one as high as $450K and today you can buy it for $250-$275K.

    Rents do fall, its about affordability. Not all who give up living here in Irvine will go rent in irvine as they can get smaller home for the same price in Inland Empire, this is how inventory there gets sucked first.

    What are your thoughts on rents falling? I know they do, so to calculate rental parity today may be deciving, No?

  17. FoolishRenter

    Tell me it ain’t so… You did write this blog.

    Will this just be leveling the playing field for small investor, who can get the 0.5% govt back short-term loans or the 2.5% middle-term loans.

    The proposal will just jack up the price and will delay the price falling to substainable levels. (like the low to no documentation loans, ARMs, etc.).

  18. Tony

    IMHO, IR is deliberately stirring controversy to spur debate and get people to continue to visit and read the blog. Sort of like a web Howard Stern or that guy on 97 FM. On this one, he should have brought his ideas to the table but should have left the conclusion to be written by the readers instead of him. The profanity by a couple of readers was unwarranted and unnecessary.

  19. pat b

    just let people file bankruptcy and do cramdowns.

    phase out interest deductions and especially on housing of all types.

    if they need cheap loans let FHA and VA provide those.

    al this is is enriching the rich..

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