Rent Control: Pros and Cons

Rent control is the government imposition of price ceilings on rent for
apartments in certain areas of a city. The goal is usually to protect the rights
of the poor. Thus, in a rent controlled or rent stabilized building, the amount
of rent will not increase as quickly as inflation. While the moral side of rent
control may have some appeal, in the long run the disadvantages far outweigh the
advantages.

Those who argue in favor of rent control say that it is the only way to protect
lower-income tenants from landlords who overprice, and from being forced to move
out of a neighborhood because they cannot afford the rent. Limiting the price
that a landlord can demand helps maintain a city's ethnic diversity and prevents
the creation of slums on the outskirts of the main city. Another thing that
proponents say is that by linking rent prices to apartment maintenance and
material improvements, rent control actually improves the state of housing.
Overall, they argue that the goals of rent control can be reached if they are
administered in a careful and just way.

The opponents, though, have both theoretical and practical experience on their
side. First, rent control creates a market that is unfair for everyone. Since
the rent is set at a lower than normal level, an unsatisfied demand is created.
This increase in demand leads to an increase in the cost of rents in the
uncontrolled sector. Thus, two types of rents are created: those that are
unfairly cheap, and those that are unfairly expensive.

Another problem that is created is that landlords who own rent controlled
apartments are often not able to earn enough money to adequately maintain
buildings. This leads to run-down, poor quality housing. In many cases,
landlords lose so much money that they are not able to even pay the debt on the
properties, and they abandon them. Both of these effects have been documented in
New York and elsewhere, and go against the goals of rent control.

Finally, rent control has the bad side effect of turning away new construction.
This is because even if rent controls don't include new constructions, owners
are afraid to build any new buildings if in a few years those too will be taken
over by rent control. Rent control thus leads to less construction and an even
greater unsatisfied demand. This, in turn, increases the rents of uncontrolled
apartments even more. New constructions are also avoided because banks and
insurance companies don't want to invest in areas where rent control is in
effect, because they know that it is likely that landlords will not be able to
pay for the building, and they will lose their investment.

Welcome to my Blog!

I'd like to broaden the scope of this blog to talk about all kinds of Real Estate, not just investment Real Estate. Real Estate topics of all kinds, whether Investment real estate oriented or not, are welcome here.

Building Wealth by Investing in Foreclosures

Foreclosure is a process, highly regulated by state law, in which the lender tries to recoup the amount owed on a defaulted loan by either selling or taking ownership of the property. The foreclosure process begins when a borrower/owner doesn’t make their mortgage payments, and the lender files a public default notice. The foreclosure process can end one of four ways:
1. The borrower/owner pays off the default amount to reinstate the loan during a grace period determined by state laws. This grace period is also known as pre-foreclosure, and can be as much as six months. The mortgage loan is reinstated, as if nothing ever happened. Happy ending for the homeowner!
2. The borrower/owner sells the property to a third party, either before or during pre-foreclosure. The sale allows the borrower/owner to pay off the loan. This is not as happy an ending for the homeowner, but avoids the consequence of having a foreclosure on the homeowner’s credit history. A smart homeowner who realizes that making the payments is becoming problematic will choose this course of action before things progress to the next level.
3. If the homeowner cannot catch the payment up to make them current and either cannot or will not sell the home, the lender will usually schedule an auction. A third party may buy the property at a public auction at the end of pre-foreclosure.
4. If the auction does not bring about a sale of the property, the lender will take ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned properties, and are sometimes listed with Realtors.
Unfortunate as the reality of foreclosure is to the person who is losing their home, this turn of events creates opportunities for the investor.

For more information, please visit these links:
http://www.ezniche.com/data/article.php?l=168
http://www.successfulrealtor.net/

Pre-construction Investing

Another area of Real Estate investment is “Pre-construction”. This model works when market values are on the rise. The blueprint for success is to:
• buy a lot in an area of appreciating housing prices
• have a house built by a reputable builder
• then sell the house, making between $30,000 to over $100,000 for an executive waterfront home.
Many of my clients have done this successfully. This is where leverage and using “other people’s money (OPM) comes in. When you find an area where, according to comparable sales, single-family homes sell for $30,000 or more than the cost of the lot plus the cost of construction, you have BUILT-IN EQUITY PRIOR TO THE START OF CONSTRUCTION! This is where knowledge of the market and of appraisal methods comes in.
Wouldn’t it be great to get a piece of this action? What’s holding you back? Of all the great fortunes made in this country, more than 70% were based upon Real Estate.

“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.”
For moreinformation, please visit:
http://www.successfulrealtor.net/
http://www.ezniche.com/data/article.php?l=167

Real Estate Investing in a Changing Market

Investing in Real Estate is a different ball game than buying a house in which to live. Real Estate investment is all about leverage, and using “other people’s money”.

As a Realtor in Central Florida, I specialize in making thousands of dollars for my clients, through shrewd Real Estate buys. My most successful Real Estate customer is a pharmacist in the Miami area who bought 10 acres of land for $65,000, and successfully “flipped” it six months later for $175,000.

In my market area, the ‘buy and flip” Real Estate model has been charging ahead like an out-of-control bullet train for the past four years. Now, the train has slowed down. In Real Estate terms, “buy and flip” means that you buy a property and put it back on the market within a short time after the deal has closed. Many Real Estate investors actually get a property under contract and look for a buyer of their own before they close on the original deal! I know one man, also from Miami, who has become a multi-millionaire using this formula, along with taking back owner financing for the people who buy Real Estate from him.

“Buy and Hold” in Real Estate means a longer term investment. You buy a piece of property and hold onto it for a number of years, as a “trust fund” for retirement, college education for your children, etc. If it’s a house, condo, or another type of dwelling, you rent it out while you own it to help pay for the mortgage, taxes, etc.

Wouldn’t it be great to get a piece of this action? What’s holding you back? Of all the great fortunes made in this country, more than 70% were based upon Real Estate.

For more information, please visit:
http://www.ezniche.com/data/article.php?l=167
http://www.successfulrealtor.net