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Investor Urges Owners to “Quick Close” Homes

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Certain investment practices of buying homes for cents on the dollar are being viewed as capitalizing on the damages caused by the recent hurricanes, according to a recent article, but other organizations have a different plan to aid homeowners.

Investors like CEO of Waypoint Homes, Gary Beasley and Bryan Schild claim that by investing in these flood-damaged properties they are helping homeowners to move on and Houston to rebuild, according to Bloomberg.

However, investment in these properties comes with substantial risk.

According to Jesse Keenan, leader of the Harvard Graduate School of Design’s Real Estate Program, the biggest and long-term risk is climate change—as these homes are at risk of future flooding, causing the properties to fall further in value or become uninhabitable.

“Climate change represents both a risk and an opportunity,” Keenan said. “The risk is that in the two or three or five years that you hold on and rent out the house, you get another event.”

Yet, this risk has not deterred many investors from approaching borrowers that are in a bind.

According to the Bloomberg article, investors are attempting to secure properties by offering to take over mortgage payments without offering any cash payments.

Some borrowers have lost enough equity in their home for this to be an offer to consider. In addition, the article notes that some homes in the Houston area have flooded multiple times in the last couple years.

In light of these practices, there have been certain contrary views. Andrea Heuson, a finance professor at the University of Miami specializing in mortgages told Bloomberg her concerns.

“What worries me is people making pretty dramatic decisions without the education to figure out what the alternatives are and without looking at the situation rationally,” Heuson said.

In the end, the article notes that Beasley said some of those considering his strategy prefer to remain anonymous in fear of looking like “catastrophe profiteers.”

Conversely, the Harris County Commissioners Court has approved of a $20 million dollar buyout of nearly 200 homes, a sum that could potentially be reimbursed by the federal government, according to a report by Houston Public Media in September.

Rebuilding damaged properties would require a new permit, due to the fact that homes would have to be raised by five feet. The county estimates this could cost homeowners between $120,000 to $150,000 for an industry average two-story home, which most homeowners might not be able to afford.

To read the full Bloomberg article, click here.

About Author: Nicole Casperson

Nicole Casperson is the Associate Editor of DS News and MReport. She graduated from Texas Tech University where she received her M.A. in Mass Communications and her B.A. in Journalism. Casperson previously worked as a graduate teaching instructor at Texas Tech's College of Media and Communications. Her thesis will be published by the International Communication Association this fall. To contact Casperson, e-mail: [email protected].
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