Posted by LeasePurchase on October 07, 2004 at 11:42:53:
I was at a Financial Planning conference in New Orleans a few months back. The speaker was saying that the Insurance Industry is the second largerst lobby and the Oil Industry is third.
I can’t recall from what source he was quoting but it makes sence.
Has the time come for Legislation? - Posted by Jane M
Posted by Jane M on October 07, 2004 at 08:32:25:
This was posted on our local REI message board:
Has the time come for Legislation?
By: Lisa Moren
There is a move a foot to create legislation that may negatively impact real estate investing as we know it today. It is hard to say at this point, what that impact maybe, but we need to be aware of what is happening in our community, on a state and on a federal level. I have listed some issues that could be potential warning signals that could have an impact on real estate investing as an industry.
Rehabbing & Flipping Properties
All of us have read articles regarding flipping property or rehabbing and the longer seasoning requirements that are occurring in the marketplace. Simultaneous closings have become a thing of the past. Most institutional lenders want to see at least three months of seasoning before they will fund a loan.
Over Inflated Prices
Have you read the stories about how investors pay $25,000 for a property? The rehabber invests $15,000 in fix up costs and then turns around and sells the property for $90,000? The media has had a ?hey day? reporting these issues. Real Estate Investment as we know it could see a dramatic change in the near future.
Some investors make a living rehabbing and flipping. They bought right, fixed the property up, got it appraised by a reputable local appraiser and sold it at fair market value.
Like any industry there are those that do take advantage of the system. They get a ?made as instructed appraisal? for example. Or sell to individuals who would never have been able to qualify, let alone afford the home they were put into. That number is few in comparison to the true investor who operates their enterprise from a businessman?s perspective.
I have many friends who help first time home buyers get into their homes on a property they rehabbed and sold to buyers who qualify for a FHA loan What about these professional investors who are helping a public attain the American Dream?
Would legislation help? Do we, as real estate investors need a lobby to protect us?
I think it is safe to say that real estate investing as recently as just a few years ago is not the same as it is today. There are changes underway. If we don?t get involved this could have a negative impact not just on our business, but on other related businesses that make their living off of working with us as real estate investors.
There is a grass roots movement investigating such an association that would protect the real estate investor from issues like the ones I described. Do you think we, as real estate investors should ban together for the common good, or should we wait and see what the government will do to impact our investments and our future?
Generally, I do not endorse associations. But I have been asking my self lately, if things change tomorrow, real estate as an investment may not make as much sense. Investors getting taxed for being landlords, rehabbers going out of business because they lost their profits by being forced to hold property longer then they can afford to. Investors being told they are limited to X % profit on their resale. If this happens than where are we?
Are we better off investing in treasuries, or having our money under our mattress? No one has a crystal ball to know what will happen in the future. I hope this article will offer conversation and debate not just for us as individual real estate investors, but for our community of local, state, and national real estate investment associations.
The question comes down to: Do we want or need a professional association to protect the rehabber and the real estate investor who buys properties with the intent of flipping or turning them over quickly? Will what happens to these investors have an impact on the entire real estate investing community? Where do we go from here? It is up to us to decide.
Lisa Moren has been a real estate investor since 1978. She is the marketing advisor to the National Real Estate Investors Association.
No way - Posted by Marc Donovan
Posted by Marc Donovan on October 09, 2004 at 13:48:42:
Look at the current tax structure. The buy/hold-two-years/sell investor has the sweetest tax deal on the planet (well in the US anyway). Those incentives did not come about from chance. The RE investment lobby is the only one that has been able to hold on to tax-shelter status.
Re: Has the time come for Legislation? - Posted by jasonrei
Posted by jasonrei on October 09, 2004 at 09:22:16:
Government force sure isn’t a good solution, but it is coming. What am I doing about it? I’m rehabbing while I can, and trying to stay under the radar. When the time comes that it will no longer be worth it to me make a living this way, I’ll quit and move on to other things.
Whenever I try to combat mass ignorance, I lose. I’ve found it’s better to roll with the punches. Don’t join a lobbying group, just do YOUR thing. Actually, government interference in my business probably HELPS people like me, it scares the competition and drives some away.
BIG trouble if this starts - Posted by Don
Posted by Don on October 07, 2004 at 10:18:24:
Govt regulating yikes!
Real Estate is the largest Lobby Group - Posted by LeasePurchase
Posted by LeasePurchase on October 07, 2004 at 10:18:02:
There is no larger lobby group in the US than the RE Industry. We’re dealing with the biggest gorilla in the jungle here.
What do you suggest? I can’t tell if your trying to scare everyone into joining your national association or what.
It’s already happening - Posted by LeasePurchase
Posted by LeasePurchase on October 07, 2004 at 10:50:55:
I have to research it more but see my previous post on Preditory Lease Options.
Re: Real Estate is the largest Lobby Group - Posted by rm
Posted by rm on October 07, 2004 at 12:53:11:
Depends on how you define the RE industry… RPAC is a giant, but that’s the lobbying arm of NAR, which is for realtors.
I’m not so sure how well the interests of realtors lines up with those of investors. Their main focus is to keep realtors as the focal point of real estate transactions.
Frankly, I think it will be extremely difficult to effectively organize the disparate interests of real estate investors into a unified group.
We’re having our own issues with a moratorium on rentals in the city… having followed it very closely, my observations are:
1- politicians are going to do whatever serves their PERSONAL best interest above all else;
2- they will take the “squeaky wheels” as a proxy for the public as a whole
3- they make a LOT of decisions and by necessity, take a “Cliff’s notes” approach to educating themselves on the issues
4- Unfortunately, the sources for the “Cliff’s notes” are often dubious and misinformed, themselves
5- Critical information is often ignored or discarded if it is at odds with their prejudices
6- Due to sheer information overload on a wide spectrum, they make many of their decisions without a real, visceral understanding of the key issues… I liken it to having a child who’s gone to war- you get SOME of the details, but it’s not like having been there yourself.
BTW, this is local-level politics I’m talking about… I suspect that all of the above are multiplied by orders of magnitude at the state and federal level.
At those levels, it’s the catchy soundbite that sells, with the photograph of the forlorn former homeowner who’s had her home “stolen” and is now left with nowhere (nowhere?) for her 7 children to call home.
With all of the above, combined with the rag-tag nature of the CREI community, I see an effective PAC as a pipe dream.
You can’t take a “no money down” approach to politicking.
Re: Real Estate is the largest Lobby Group - Posted by Jack
Posted by Jack on October 07, 2004 at 11:14:31:
How did you arrive at this conclusion?
If your industry is going to be a football . . . - Posted by NCPaul
Posted by NCPaul on October 10, 2004 at 22:30:58:
. . . might as well get in the game! While I agree that RE investors are a disparate group and as such would be tough to organize, in my opinion it would be well worth your time to make an attempt to organize. I was the owner of a mortgage company here in NC when “Predatory Lending” became an election issue. (The phrase “Don’t take chances with your finances” still ticks me off.) Mortgage brokers became the whipping boy for the now Governor to energize a necessary part of his base to win the election. The fact that the NAACP decided that this was an issue they wanted to pursue was also helpful to his cause. My point is that our association, which was technically organized, was so ineffective that we were lucky to know what was happening before it was signed into law. (Not to mention that we had no hope of opposing anything that was purely political and made no sense in the law or the elecetion.) The advertising to support this effort was devastating to brokers in our state and is still having an effect today. As has been pointed out, the media love a story showing the unfortunate family on the street after they lose a house. This is a powerful image. In my opinion, more powerful than the images they conjured up for predatory lending because investors are easier to directly link with the property.
By organizing now, investors may have a chance to fight this sort of mess. If not, as a group, investors of all sorts may well find themselves in the same position that lots of mortgage brokers in NC did-seeking other lines of work after another politician gets elected with the earned media that pushes them over the top coming from their industry. It makes no sense to attack a legitimate industry that serves a purpose and fills a need, but politics doesn?t exist to make sense, just soundbytes.
Good luck
Re: Real Estate is the largest Lobby Group - Posted by NCPaul
Posted by NCPaul on October 10, 2004 at 22:40:05:
Just think of it like this, the Realtor lobby is powerful enough to back the IRS off. They are the only group as a whole that I can think of who has employees, people who are required to attend meetings, have office duty, be exclusively tied to one employer, and other things that would typically require the classification of W-2 employee and payroll taxes, and they are openly allowed to have these folks paid as a 1099 contractor. This is a powerful lobby and when they want something to happen, it’s going to happen. (and vice versa) If they are the biggest or just one of the biggest, who knows. They are huge and powerful no matter what the official rank! I’m not trying to be pushy with this, I’m just in awe of the muscle they have. (So I figured I’d share )
For what it’s worth