Hey Pnew...
I have an extremely successful client in Los Angeles who turned me on to investing primarily in HUD Section 8 properties all over the country as rentals. Essentially, it's a "guaranteed" cash flow situation, where your debt service might be $600 a unit but the government sends you $800 a unit each month. Plus, your tenents are more apt to take care of the property so they don't lose their Section 8 priveleges. Anyway, I never got involved because of the feeling of being a "slum lord" etc. I'd personally rather see people be able to buy than rent, which is why I like what PBLS announced yesterday.
Anyway, it seems these new mod homes would qualify price-wise for Section 8 especially since they are in an area with a huge affordable housing shortage. What would be amazing IMO is that if PBLS built these for an modest profit (10%), sold them through some REI groups and made an additional modest profit (3-5%), and then offered the financing as you suggest at very reasonable rates. Then you bring in a celebrity or two who contributes some of the down payment/closing cost money. It all ends up looking and being very charitable and PBLS, while not gouging, still makes money and even better for a developer, has that "locked in buyer" effect of having the Fed involved. PLUS, they get the hopefully NATIONAL attention of being part of a real, long-term solution of helping Katrina victims.
Couple of questions though to bounce off of you and the board...if these are HUD properties, the mortgage program would almost certainly have to be an FHA program, so does that eliminate PBLS from underwriting the loans because it has to go through an FHA approved lender? If they had a couple million in liquid, they could easily set up a mortgage services company and write the loans as you suggest. And anyone who ever has bought a home knows that's where the real money is in the interest made over the life of the loan as you suggest. But would they/should they/could they write loans on such high-risk buyers at this stage in their business development?
I'm open to thoughts from anyone as we continue to wait for the BIG PR that matters most...
Anyone, anyone, Bueller...Bueller...?
Ren
"Experience: that most brutal of teachers. But you learn, my God do you learn." C.S. Lewis
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