Economic Bailout – housing

Originally posted: Thu Oct 2, 2008

Like everyone in the US, I have been deluged with the media ads for the upcoming elections, and of course, the current economic crisis.

This has got me to thinking about a number of ways out for the little guy, and by fixing ‘Main Street’, Wall street will self correct.
Unfortunately the pollies are looking at a Bank or Insurance company breaking, and wanting to fix it. Seriously folks, it broke because it was unfixable, because the basic premise was wrong.
Time to think laterally, or keep moving the deck chairs around on the Titanic.

I have read much about the economics, and having lived here for a considerable time, I think I can see some small chinks that have been ignored.

1/ Student Housing.
After their Freshman year, may students move off campus to exert their independence, and often, save money.
We all know that there are too many home foreclosures out there, and I have been looking at 3 bedroom single family homes from around $20,000 in College towns.

IF – 4 students were to get together in a ‘co-op’ partnership etc… They could BUY these houses outright, for no more than their annual college accommodation cost.
Sure – they would only have a quarter of a house, a share, or a percentage, but – when they finished their education, they could sell their share back to the co-op or on to the next student, and walk away with a deposit for their next home.
The more affluent students could purchase 1/2 a condo etc…
We all know that parents will often buy a condo and put their kids in, but this idea is aimed at maintaining student involvement, and getting them away from the concept of rental, or living in someone elses home.

The math:
Dorm accommodation costs from $3,500 per annum. Therefore, 4 students would contribute a minimum total of $14,000 per annum, or $42,000 over a three year period. Foreclosure properties are falling into this marketplace everyday.
Banks that hold way too many foreclosure properties, would be getting their money back, establishing a relationship with students, and perhaps creating a low interest rate based on a bulk relationship with Colleges.

There are many more aspects to this, and I believe that You can come up with the pros and cons as well as I can.

Wrinkles? Sure! But students would gain much, and have little to lose, and the banks would be smiling all the way to….hmmm …Banks can’t smile!!
This may teach a valuable lesson – that partnerships and collaboration, can really help.
Your thoughts?

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