Unfortunately, there is currently no viable example of rentals that are government owned that has been successful for taxpayers or the government. Most experts are skeptical that this will ever change.
Here are 4 steps to follow in order to move 3 million REO properties using 203k mortgages, loans and other various tools. This action plan is very simple to follow and can be done by almost anyone.
- Use an aggressive Refinance/Short Sale program to reduce market inventory. This will effectively slow/stop the flow of new inventory entering the market, keep honest and hardworking people in their homes, and reduce the number of new foreclosures. In order to accomplish this, lenders need to reduce the principal amounts on the first mortgages and get the payments back to an affordable level. Then, place a 2nd mortgage on the property with a balloon payment due in 5 years, once the economy and the market are likely to be fully recovered.
- Investors should be allowed to apply for a 203k mortgage, with terms and conditions that inspire local investors to put in their own capital and buy, sell, rent and fix properties in their local area. This will stimulate the local markets and invigorate local economies in a way that institutional bulk sales can never do.
- Individual buyers should receive the same discounts that bulk institutional buyers are getting. An individual homeowner/investor should not have to recompense the institutional buyers a higher price to beef up their profit, that's plain unfair. Discounts should be offered to individuals. Is it not these individuals who are paying for all of the government bailouts with their hard earned tax dollars? Get people who are motivated and you will ignite energy throughout the entire country.
- Allow the institutional bulk buyers to play the game, but only after a select bid period that gives individual buyers the same opportunity to purchase at the same discounted prices, or close to those prices, as the institutional buyers can take advantage of.
One thing is for sure: there has never been a better time to buy. This is truly the biggest market correction the U.S. has ever seen, and the buying opportunities are limitless. With interest rates at an all-time low, everyone should have an opportunity to invest before it's too late and the market turns upward again. Every single tool should be made available for individuals to enter the market and profit in a way that until now was impossible. The FHA 203k program can make that happen and should be looked at as an efficient and useful financing option.
While it's true that many people can't afford to take advantage of the program, they should make every attempt to try. Those who can afford it are almost being handed this golden opportunity and shouldn't waste it. It's up to these individuals to help stimulate the economy and get things moving smoothly again. Perhaps they could also help others qualify who may not otherwise be able to do so.
Individual investors should have the same opportunities as everyone else. Why make it harder for those who work hard every day, pay their taxes, and want to invest in their futures by investing in REO properties? It just doesn’t make sense, and it's time that changes were made by the powers-that-be.
Qualifying for a 203k and other conventional mortgages are a bit tougher than in recent years. However, that should not be a deterrent for have a passion for real estate and want to stimulate the economy like never before. There's still time to make huge profits in the market, so if investors need to save, or borrow from family members, there is time to accumulate the necessary funds.
Credit scores and ratings will, of course, also play a role in securing financing. While many people have less than stellar scores, this can be improved with some discipline and lenders can help put together an action plan that will make it easier to qualify. It comes down to that old saying, "Where there's a will, there's a way."
Of course, there’s much more to the story, but the above steps should provide a starting point for lenders, government agencies, housing professionals and policy makers who have the power to make changes that will help this country, and our future.