The rebound from a housing disaster has transformed a lot of companies. Beazer Homes might have transformed the most as it has gotten creative and may have found a way to increase revenue while the housing market continues to find a bottom. Investors can put money into a slew of real estate: office properties, apartments, retail stores, etc. Beazer has joined forces with KKR to add single family homes to the investment list. Warren Buffett said he would buy hundreds of thousands of these homes at today's low prices. Now the common investor can throw some money into single family homes through an REIT.
There are 25.5 million single family rental properties in the US compared with 18 million rental apartments. This new single family home REIT will capitalize on a largely untapped investment locale for the common investor. Beazer already has 192 single family homes in the Phoenix and Las Vegas areas. More than 10% of these properties are homes that Beazer originally built and sold. KKR is hoping that Beazer’s expertise can help turn houses around to a rental market. Most homes are being purchased at a discount because of foreclosures or short sales, which isn’t surprising given that Phoenix and Las Vegas are still in terrible condition.
Currently, the REIT is private. Once the assets increase and reach a specified amount, Beazer and KKR will consider making it a publicly traded REIT. Essentially, it will be made up of ‘certified pre owned houses.’ It has worked in the automobile industry the past few years. Why not housing?
Wednesday, May 16, 2012
Prepaid Debit Cards
Banks are becoming more creative to increase fee revenue. The billions of dollars that were lost in the new regulations brought about by the financial crisis are hard to return in an industry that has limited products. JP Morgan Chase became the newest bank to start selling prepaid debit cards following in the footsteps of US Bancorp, BB&T, and Regions Financial. This comes as banks face strong criticism following plans to initiate monthly fees for debit cards.
Prepaid debit cards are targeting the consumers who don’t have the financial means to pay monthly checking account fees. The new Chase card has a $4.95 monthly fee which is effectively a 50%+ discount from monthly checking account fees. The debit card can be used as debit or credit for purchases and can also be used to pay bills. Customers can even have their paychecks direct deposited to the card. They can also use it at Chase ATMs or at their teller lines. There are no loading fees, although we all know other fees may apply.
Prepaid debit cards are targeting the consumers who don’t have the financial means to pay monthly checking account fees. The new Chase card has a $4.95 monthly fee which is effectively a 50%+ discount from monthly checking account fees. The debit card can be used as debit or credit for purchases and can also be used to pay bills. Customers can even have their paychecks direct deposited to the card. They can also use it at Chase ATMs or at their teller lines. There are no loading fees, although we all know other fees may apply.
Tuesday, May 1, 2012
From Investors to Landlords
The housing market has been seeing ups and downs for years now. Lately, it looks like the market is stabilizing. Even still, the market is flooded with a huge inventory of houses. Many economists think that house prices will not go back up until inventory is liquidated. Supply vastly outstrips demand as the rental market has been heating up. Some even think the rental market is slowly forming a bubble. Until the economy improves and home buying increases, supply will remain high and prices depressed.
Fannie Mae has been selling homes one at a time while trying to keep every penny of value in their hands. They own hundreds of thousands of homes with no surefire way of getting rid of them soon. A new idea has formed on Wall Street which could make many investors into landlords. In the idea, Fannie Mae would sell homes in bulk to investors. Investors would then have to rent out these homes for a specified period of time before they could sell them. Many think that this could significantly reduce the number of houses on the market. Reducing the supply is only half of the equation. There is still a demand factor that has yet to return.
With the rental market hitting the price increases that it has over the past year, a huge supply of rentals could quickly inflate a bubble or it could kill price increases. Either way, housing prices are looking to remain stable for years to come as the economy continues to fight its way forward. Getting investors to buy homes and rent them out would help out the supply. It is going to take a lot more to get demand back up. On a side note, bulk sales by Fannie Mae would have to be sold at a discount which would only hurt the taxpayer since we pretty much bought all those homes, but that is another story.
Fannie Mae has been selling homes one at a time while trying to keep every penny of value in their hands. They own hundreds of thousands of homes with no surefire way of getting rid of them soon. A new idea has formed on Wall Street which could make many investors into landlords. In the idea, Fannie Mae would sell homes in bulk to investors. Investors would then have to rent out these homes for a specified period of time before they could sell them. Many think that this could significantly reduce the number of houses on the market. Reducing the supply is only half of the equation. There is still a demand factor that has yet to return.
With the rental market hitting the price increases that it has over the past year, a huge supply of rentals could quickly inflate a bubble or it could kill price increases. Either way, housing prices are looking to remain stable for years to come as the economy continues to fight its way forward. Getting investors to buy homes and rent them out would help out the supply. It is going to take a lot more to get demand back up. On a side note, bulk sales by Fannie Mae would have to be sold at a discount which would only hurt the taxpayer since we pretty much bought all those homes, but that is another story.
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