While some investors gripe about not having money to partake in the housing sector, a series of bizarre real estate projects are drawing millions of dollars in funding. Demand for these initiatives show just how much money is truly available. Ultimately, there are no excuses for not being able to raise funds.
Investors can often be overheard saying, “if only I had X more dollars, I could do it.” Meanwhile, others are plowing millions into odd startups and programs already proven to be failures. Accordingly, bizarre real estate projects are currently attracting millions of dollars in funding.
So where is the money going, what lessons are to be gleaned from these trends and where is the money for those that want more of it?
Tech Startups That Shouldn’t Be
Real estate related tech startups continue to be launched at a fast and furious pace. Many of which should not be attracting significant funding, but they are.
While there are holes that technology can fill to make the real estate industry and investing better, far too many startups seem to be getting launched by good willed entrepreneurs that simply haven’t done their homework. It’s great that they can make a lot of money and get paid to do what they enjoy, but where’s the value and pride in creating an end product that isn’t needed?
There are an array of new multiple listing services to add to the pile of startups that have never even heard of the MLS. New mobile apps are being created to eliminate ‘bad’ real estate listings, when many might ask why not just crack down on sloppy or unethical real estate agents. Then there are platforms being created like GroundBreaker. This real estate crowdfunding platform could be the best thing since sliced bread, yet is being pitched as the solution for real estate investing newbies to raise money from their friends and existing contacts. Perhaps it’s just odd marketing, but has anyone asked whether anyone would pay for a service to raise money from their own friends when they could just ask?
New Government Sponsored Housing ‘Fixes’
It’s great to see the government and regulators stepping up to provide backing for more programs to cure the housing and foreclosure crisis. Yet, taxpayers still may be 100% reliant on private real estate investors to provide a fix that works.
Following news that refinancing applications have crashed 50% in the last three months, the Federal Housing Finance Agency has announced plans to revive PR and marketing initiatives to encourage more homeowners to get help under HARP programs. HARP refinances made up the majority of loan transactions recently, and as the demand for them has fallen off, banks have announced thousands of layoffs. It’s good that regulators want to step in and originate more business to keep the banks in the black, but programs like HAMP have already proven to be major failures. Even back at the beginning of May 2013, almost half of the participants in this program had fallen back into default causing them to go to foreclosure or seek out private third party help. So do we really need tens of millions of additional dollars of taxpayer money funneled into these programs if they aren’t sticking?
On September 25th, 2013 Inman News covered the roll out of a HUD plan, which gives almost $40 million to organizations throughout the country to test and deploy activities to cut down discriminatory housing practices and educate housing providers on the subject. Fighting discrimination is great and should be fought back against. However, some of the nation’s biggest institutions and perpetrators have already proven they can buy their way out, and it seems a little odd taxpayers should be paying to teach professionals to just do what they know is right anyway.
What it all Means for Investors
The bottom line is that this all shows that there is plenty of cash out there dying to be used. If it is not being used to make a lot of money for individuals, it should at least be used to save taxpayers and the nation’s economy. Provided you have a half intelligent and ethical solution to today’s real estate problems, money should be the least of worries. As long as you can analyze a deal, you should be able to profit in this industry.