Plans are in the works for a new federal program that will allow multiple government-owned foreclosures to be sold to investors in bulk, then turned into rental properties. Currently, each individual foreclosure moves its way through the process to final auction but that’s time consuming, given the vast numbers of foreclosures currently on the market.
The plan intends for foreclosed homes owned by Fannie Mae and Freddie Mac to be grouped together so investors can buy multiple properties at one time. Not only will this plan get the properties off the government books more quickly but it will also help put homes back into productive use, thus helping slow the housing price plummet.
Definitive plans are expected in early 2012.
What are your thoughts on this latest plan? Do you think it will work?
Read more here.
We had a lively discussion yesterday at my investor group regarding this very topic. The problem I have with it is that they are talking about the bulk groupings being in groups of billions of dollars. While regular investors without such deep pockets are quite capable of doing these houses and getting them ready for market easily. The hedge funds, and other large entities will either do one of two things, add an extra layer of pricing on before the rest of us can get to them, or it will dry up the market for the regular investor and create big government style systems that we cannot compete with. Then we have just basically created another fannie/freddie style mess waiting to happen when these too big sized entities get in over their head as well. Setting up rentals and doing rehabs can be quite costly and without proper ability and oversight, it will just be a money pit adventure we will pay for again.It is evidenced clearly already in the mess the banks are making in most of the rehabs they are doing now….you should see some of the photos I have of absolutely hideous rehab jobs being done by either the REO agent or the Field service companies in our area….just awful, completely unusable and will cost the homeowner who doesn’t see past the desire to own a home, that they are buying a pig in a poke. Just because this program is rentals does not make creating a clean, safe, decent property any less necessary. Either way I don’t think it is a good thing.
Great comment Michelle. Totally agree w/ ya… this federal foreclosure into rental thing could (and likely will) turn into a mess. They should sell the properties to investors and let the investors reposition those properties or turn them into rentals themselves. Great insights.
I’m inclined to see this as not the best thIng for the small investors. A good analogy, look at what happen to alot of the Mom and Pop establishment when big business came in…they got wiped out. How about the small farmers trying to make a living, again getting wiped out. Let’s face it when the government gets involved it’s going to costs us. They are money hungry and maybe they found a new revenue stream. You know, in some counties the citizens are not allowed to own property. Don’t assume it couldn’t happen in one way or another. Food for thought.