The Collected Works of Author and Blogger Larry Roberts

Archive for July, 2015

Rent-to-own offers the opportunity for homeownership to those with low savings and bad credit, but the path is costly and many don't make it. Typical rent-to-own deals are a renter's path to poverty. For instance, renting furniture often requires the renter to pay many times the actual value of the item, and the only reason anyone enters into these agreements is because they have no savings and no better alternative. This kind of imbalance in the relationship between renter and landlord is ripe for abuse (or profit). The lure of a rent-to-own deal is the ability to enjoy the house while saving money to buy it. It has the potential to be a major path toward home ownership, assuming the…[READ MORE]

Government subsidy programs promote dependency, and they are expensive, but they provide a service needed by millions of people to alleviate poverty. In a frontier society, there are no bailouts. Life on the frontier is harsh, and each family unit is self-reliant. In a frontier society, if people didn’t work, and if they didn’t produce their own food and shelter, then they died. Fear of death from starvation or exposure was very real, and anyone who wasn’t motivated to produce something of value to themselves or others faced the near certainty of painful death. We are no longer a frontier society in America, but our collective past still influences our attitudes and politics today. We have made much progress over…[READ MORE]

Properties in distressed communities surrounded by strong demand for real estate often provide opportunities for investors betting on an economic recovery. Distressed property investing is both a science and an art. Finding a distressed property market is not difficult, and anyone who understands business math enough to compute a rate of return can measure which markets are a good deal in today’s dollars -- the science. The art of distressed property investing is recognizing which of these markets the conditions are temporary and in which markets the distress is a long-term problem. I am bullish on Las Vegas because I believed the local economy would recover there because the distress was temporary. There are many distressed property markets where I…[READ MORE]

Condo prices remain low until better alternatives are removed from the market and people are forced to compete for lower quality digs. Condo prices are notoriously volatile, far more volatile than house prices. But why is that? Is it because nobody wants to live in a condo? There's something special about a detached house on a clearly defined lot that a person can point to and say, "that's mine." But why should that matter to the volatility of condo prices? When you look at the cities where prices are most volatile, and when you look at the type of housing that's most volatile, one common element stands out: the less desirable a housing alternative is, the more volatile its price,…[READ MORE]

REO-to-rental companies enabled many foreclosed former owners to remain in their homes with lower monthly payments, a genuinely positive outcome. When I went out to Las Vegas to buy houses, the banks were feverishly foreclosing and selling properties for whatever they could get. The discounts from peak values approached 80% on some properties, and every house in town was cashflow positive. This was not a good time and place to be a homeowner, but it was a fantastic time to be an investor. When REO-to-rental companies hit the scene, they were vilified by the political left despite the good they were doing for individual families. Since these families were having their names removed from the title, and most of them…[READ MORE]

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