Vacant Houses, Homeless People, and Jedi Mind Tricks
As the housing crisis in the United States drags on and on, and as the banking crisis in the United States gets worse and worse, ordinary people are beginning to float some fairly obvious ideas that nevertheless get no uptake because...Well, because it's complicated.
Is it? Is it really all that complicated?
Take for instance the problem of vacant foreclosed properties that are causing entire neighborhoods in midwestern rust belt cities to turn into Mad Max Beyond Thunderdome scenery. Many ordinary people who have not been blessed with the kind of financial genius that caused this problem in the first place (the kind of genius that is now attempting to solve the problem with even more smoke and mirrors) have asked, why can't we put all these newly homeless people in these homes that nobody wants anyway?
Why not indeed? Is it really that difficult?
It would seem that such a project would be as simple as jacking open the door to the house nobody wants, installing the homeless family inside, and maybe leaving some canned goods on the counter as a housewarming present. Tent cities that have been springing up in West Coast states are now being carefully dismantled by the cities hosting these camps; the occupants shuffled off to any social program that will take them just to get the city out of the national news. But would it really be that hard to go a step farther and use some of this real estate productively? Couldn't we just move some folks indoors? How complicated is that? We're able to move them outdoors. Just reverse that.
To be fair, squatters are indeed becoming common in some of these areas. You can often spot them by the electrical cords and/or garden hoses running out a side window. (A squatter can't get utility service, but even so, living inside a house with no utilities is far preferable to a living on park bench or under a tarp on the edge of town.) But how hard would it be to organize a coalition of people who could shuffle the right papers and actually use this real estate until it is once again saleable? It seems to me that the simple act of using it would immediately make it more saleable.
In a normal market (which this isn't), an occupied investment property is often more valuable than a vacant one. If banks are willing to hand out Cash For Keys via an REO agent, why not set up a process whereby rent could be collected and sent to the bank while the property is being sold?
It seems obvious that no one benefits when a property at the bottom end of the market sits vacant and is stripped and vandalized just because that's the way the foreclosure process works. Cities lose, borrowers and tenants lose, buyers lose, sales agents lose, banks lose, everybody loses. And yet, it goes on, and on, to the point where now, even banks are walking away from some of the very properties they foreclosed on.
The Jedi Mind Trick theory of banking and dealing in real estate says this is all very complicated. You can't just take a house no one wants and do something with it. The very fact that that idea makes some kind of surface sense and is understandable to an ordinary person apparently makes implementing it a no-go.
I'm not advocating any specific answer here. I'm not saying let's go break into foreclosed vacant homes and install squatter in them. I'm just asking a few pointed questions. Foreign investors interested in buying real estate in these areas, or even U.S. investors interested in the topic, are welcome to make suggestions right here, right now.
God knows the U.S. government isn't making any, and neither are banks or cities.
I'm thinking, there has to be a better way.
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Comments on Vacant Houses, Homeless People, and Jedi Mind Tricks
I work in the railroad industry, and the same general managerial mentality applies here–if it makes sense and would benefit all involved, you can count on it NOT being done that way.
But seriously, the bottom line is that any rental would imply, real or imagined, LIABILITY. There, I said it. That dirty little word that’s at the very bottom root of all these type of poor decisions. The banks have already incurred great risk in the investment by foreclosing instead of working with the mortgagees, and now they don’t want to compound that risk with additional liability. These same types of people see perfect sense in the medical industry’s continual thought processes of, “Wow, people aren’t paying their medical bills because they’re too high–we’re not getting enough income to stay afloat. Should we lower our rates so more people can pay, NO!! Let’s raise our rates even higher.” It’s a modern corporate business mentality you’re dealing with here–like an incurable disease. I’m sad to say, you will not see an effective change in it. Keep in mind, this IS America, and we have the right to ownership of private property. As long as these properties are still privately owned–whether by banks or individuals, you CAN NOT force them to let out the properties, no matter how much sense it makes. To force such violates that right. The only way to circumvent that it to turn America into just one more of the socialist disasters that world leaders are so bent on.