All Forum Posts by: Dory Peters

Although I haven't rented to any ex-offenders, I have worked with them in a minimum security facility before. Unfortunately, Mike is right that many ex-offenders end up being re-incarcerated. I've found in some cases that some of the offenders committed offenses to get themselves re-incarcerated, because they couldn't adjust to life "outside". Others were hardcore, knucklehead thugs who basically will end up spending the rest of their lives in prison. Yet, there are others who got caught after having had 1 or more bad choices, paid their debt to society, and will go on to live fully productive lives.

The last group are the ones I intend to target. Alf, I'm definitely interested in joining that forum. I intend to set up some group homes, targeting a specific class of ex-offenders (with programming that I'll outsource to the appropriate professionals [a LSW, psychiatrist, etc]), as rentals. I intend to help the ex-offenders to transition from prison-life back into society. I like the work that Catherine Rohr is doing in Houston (http://www.prisonentrepreneurship.org/), and I'd like to help provide similar programming--except targeting recently release ex-offenders.

Alf, just curious, how's your experience? Several of my relatives have rented to ex-offenders in the past, and they had similar experiences to Mike's.

I agree that was nice. :D

Originally posted by Robert Jenkins:

Why do most people gravitate towards Apartments?

Actually a better question is: why are many commercial RE investors currently gravitating towards apartments and medical offices? The answer is rooted in macro economics. Remember, we're in a recession right now. Many companies shed jobs--sometimes by the 100s or 1000s--during recessions. That causes people to spend less, and it causes some people to lose their homes. Consumer spending decreases which triggers more layoffs, and ultimately causes some businesses to fail.

Consider the bombshell that detonated on every mall or strip center owner who had Circuit City as a tenant before they went defunct. Consider the bombshell that detonated on every mall or strip center owner who has one or more car dealers--that will soon close--as tenants.

People have to live somewhere (including on the streets), and people always get sick. So, there's always going to be a need for apartments and medical offices.

FYI, the Avenue of Americas building, which sold for roughly 40M a few years ago, sold in an auction a few weeks ago for roughly 100K.

Actually, Charles, since you brought it up, you've piqued my interest. I've never heard of "sources for funding [EMDs]"--other than JVs, syndicates, etc--so please elaborate.

Originally posted by Jon Holdman:

Is there any opportunity to rent these out? That is, offer your slot to someone else?

Absolutely. In fact exchange companies like RCI actually prefer owners at certain Vegas resorts do just that, and they're willing to give extra bonus weeks (and sometimes other perks) to help encourage those owners to not visit Vegas using their deeded week(s). The reason why is that the exchange companies can usually rent the units out at a higher price than what the owners would pay.

That's not one's only option for renting one's unit(s). One could market them directly via craigslist, one could market them through third-parties like Timeshares Only, etc.

Of course you get assaulted in Vegas with timeshare presentations. Most timeshare resorts--including the one where I belong--pay lots of people cabbies, clerks, concierges, etc to market their products up and down the strip, all throughout the airport, and in a few other areas (like around the convention center). Actually, I'm kind of shameless; I've attended some of these presentations even where I owned just to get some of the freebies (mainly tickets to see some shows, and dinner)--plus to interact with some of the locals to get more of an inside scoop on the city.

I've seen 5%-10% in the areas in which I invest, and the rate depends on the numbers of units. The more units you have to manage, the more likely PM companies are willing to work with you on bulk pricing.

I'd probably stick with larger more reputable companies that are best of breed, and that are ARM (for residential) or CPM (for commercial) certified. You can find out more on this via www.irem.org. Of course, you should still check their references, and ask to review a copy of each of their reports, so that you have a better idea of what you're really getting into.

Ali,

I strongly agree with your suppositions, and I'll add a few of my own. Many buyers paid too much for their homes, didn't understand the underlying mathematics involved, didn't understand the financial instruments they were using, used their properties like ATMs, and didn't understand enough about business and economic cycles to filter through all of the "buy buy buy . . . it's always a great time to buy" noise spewed by many others (including many RE pros) who also were equally clueless.

The "no down-payment equals no 'skin in the game'" argument is a non sequitor. Unless a borrower doesn't pay any closing costs, fails to make the first monthly payment, and gets foreclosed upon, then the buyer has skin in the game--albeit with low or no equity--and keeps adding more chunks of skin monthly.

The "higher down-payment decreases the likelihood of an owner walking away from a home" argument is also a non sequitor. Most people who end up losing their homes don't choose to walk away, because they had a low or no down-payment. Rather, most of them lost their homes, because something(s) in their lives changed--some studies show that roughly 70%-80% of the foreclosures were caused by excessive medical costs. Additionally, many people who use that 'higher down-payment' argument ignore the fact that a lot of homes, that were purchased at lower LTVs (70% or less), have also been foreclosed upon. I'm sure than any HMLs here can confirm that they've foreclosed on homes purchased at lower LTVs--even during the boom years. The point is that most people, who can afford to pay, continue to pay.

Originally posted by Richard Warren:

I would imagine that there are all sorts of timeshares from really bad to really good. If you can get one that has exchange privileges that would be good. My concern is the lack of resale.

First, I'm a timeshare owner (for a resort in Vegas and one in VA), and I have some relatives who also own (one at the same resort in Vegas [which happened by coincidence], and two in FL). Richard is correct that they're not all the same, and that the key is to acquire 1 or more timeshares that will give you the best set of exchange privileges and the most amount of time. Just because one purchases a timeshare in Orlando, Palm Springs, or Vegas, that doesn't mean that one will always want to take vacations at the same place. Visit Vegas for a few days, and then go to Singapore, Paris, or Rio de Janeiro later.

Second, all destinations aren't equal; some have higher trading value worldwide than others. Vegas (the spot with the highest demand in the US) and Paris are 2 examples of destinations that are always in high demand, so they tend to have higher trading/exchange value than other locations. The higher the value, the more power one has. For example, if a Vegas and Orlando owner tried to book the same destination at the same time, then the Vegas owner could boot the Orlando owner out of the running and book, because Vegas has much higher trading value than Orlando. (Of course, the timeshares salespersons in FL won't tell you that, but you can confirm this by calling around.)

Third, the reason why Vegas has considerably higher trading and resale value than anywhere else in the US, because NV has only allowed a few timeshare players in the market. So, basically, it's a scarcity play. Stated another way, the casino owners have some really nice sweetheart deals with NV that basically has permanently locked out any timeshare development companies that already hadn't established a presence in Vegas. Compare that with FL where there are so many timeshares all over the place; that market is saturated--which is the primary reason FL timeshares have the least trading/resale value. Avoid purchasing FL timeshares like the plague--unless you intend to always visit the location where you purchased. Keep in mind that you'll usually be able to trade for FL anyway even if you own elsewhere (especially Vegas).

Fourth, some timeshares will give their owners a deed, and others won't. If you're going to buy one, then get one with the deed. Although most timeshare salespersons won't explain this arrangement as a TIC, basically that's what it is. A timeshare owner who has a deed will also benefit if the property appreciates in value--after all timeshares are also another form of real estate.

I am right now, but sometimes I use PCs running Unix-like OSs.

Have you checked around for any grants that might be available to help you to buy the properties?

Have you checked around for any related 503c Non-profit agencies with similar missions that might be willing to partner with or buy the properties outright from you?

Have you attended any Substance Abuse program networking events in our area? Typically, donors attend those kinds of events, and some of them might be willing to partner with or buy the properties outright from you.

Have you contacted one of your local AA, or MADD chapters? You might find someone (or several people) might be willing to partner with or buy the properties outright from you.

I could go on, but I think you probably get my point: get out there and do some networking. The money is definitely out there. How do I know this? I know this, because I've been approached by some friends to do something similar (ie to acquire a few properties and turn them into halfway houses). I told them that I wasn't ready to do that yet, but I intend to do it relatively soon (maybe within the next 2-3 years).