Be a slumlord? Okay, I got your attention, now the truth. I really don’t recommend that anyone endanger their renters with unsafe housing. Much of what people call slumlording though, is simply providing reasonable housing for those with low incomes. It is of benefit to the renter AND the landlord.

Why Do People Rent Dumps?

People rent not-so-nice places because they can afford to. A house that needs paint, has old rusty hinges on the doors, and a dirt driveway – this is a house that cost less to buy, and therefore can be rented for less. Anything major that the landlord does to improve it will result in higher rents, and possibly drive the renter away.

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Across the country, there are thousands of developers and development corporations working to increase the availability of affordable housing. Housing projects cost money of course, and developers often turn to government programs for funding. When used effectively, government funding often encourages investment from the private sector. When that strategy is successful, the ratio of private to government investment can be as high as 5- or 6-to-1. One organization, the Local Initiatives Support Corporation (LISC), is exploring creative ways to improve that ratio.

The Local Initiatives Support Corporation (LISC) was founded in 1980 with the intent of helping Community Development Corporations (CDCs) raise money for affordable housing and related projects. In its first 18 months of operation, LISC helped over 130 communities in 28 states make improvements to housing, infrastructure, and economic development. Over the years LISC has used $11 billion in government funding to leverage a total of $33 billion in investment dollars – all aimed at building sustainable communities where people of all incomes can afford housing, access education and find work.

Recently, LISC received a $5 million grant from the U.S. Treasury Department’s Capital Magnet Fund and has used it to launch the Neighborhood Revitalization Loan Fund. The grant money will be combined with funding from Morgan Stanley to help initiate and support projects that receive Low Income Housing Tax Credits (LIHTC). Funding can be used for land acquisition, construction costs and predevelopment planning, in addition to Section 8 guarantees.

Currently, LISC plans to distribute the funding among 30 programs throughout the United States that support both urban and rural development. The Capital Magnet Fund was created through the Housing and Economic Recovery Act of 2008 as part of the Community Development Financial Institutions Fund (CDFI Fund), and is managed by the Treasury Department. Read the rest of this entry »

It is a popularly held opinion, certainly in the United States which most view as the epicenter of the global economic earthquake, that when it comes to real estate we are seeing a buyers market. Headlines are basically begging persons to grab the opportunity to become first time home buyers. So what is happening in Jamaica which is a few hundred miles from the shores of South Florida?

Well unlike most economies which are shuddering in the wake of the economic downturn and sluggish if not comatose market, Jamaica’s interest rates are climbing not decreasing. Incredibly this is a deliberate move by the Jamaican central bank to make local instruments more attractive that foreign ones and so the lending institutions as is typical of any business owner facing price rises on products are planning to pass on the increases to the consumer, in this case the borrower.

The Bank of Jamaica’s rationale is that it is necessary to raise interest rates as there is low supply of available US currency relative to the demand. This high demand is causing the exchange rate to move at an alarming rate. Hence high interest rates are designed mop up the liquidity in the marketplace thus reducing pressure on the dollar.

But what about that first home buyer? Unlike the situation in the United States where the sub-prime mess led to a slew of foreclosures and empty homes for prospective buyers, the supply of affordable homes in Jamaica is not that great. What do I call affordable? Anything below $10,000,000.00 JMD. Hence it never really is a buyer’s market in that price range. Between $10 and $20 million I have observed some downward price adjustments but given the recent collapse of players in the alternative investment areas there is need for more time to effect some settling in the market. Many investors lost money and coupled with the economic distress flowing from US situation there is a sense of uncertainty and not much activity in the real estate market. Read the rest of this entry »