Warren Buffet believes in Columbus.  And why not?  It’s a great city - affordable, plenty of arts and nightlife, great hiking all over the place, great schools.

These are exactly the people we want coming to Columbus - young, educated and well paid professionals - alot of engineers.   We all hear the bad news.  This is great news and we are seeing an influx of relocations.  Alot of these folks want to Lease to Own - they might have to sell a home elsewhere or just “test the waters.”  Either way - we get quality tenants who often turn into buyers.

http://columbusretrometro.typepad.com/columbus_retrometro/2008/07/netjets-job-cre.html

Once again, the Columbus Dispatch had proclaimed what we have been seeing every day - the “pool” of potential tenants is growing dramatically.

it’s coming.  Freddie Mac and Fannie Mae are goign to be bailed out and put under strict governmental control.  What does it mean for Investors?   Tighter lending standards for homebuyers and consequently, less buyers qualifying for loans.  So, more tenants who would have qualified for mortgage loans….   Eventually - 18 months, 36 months????   Lending standards will be relaxed and the tenants will qualify for a loan.  Guess what home they will want to buy?  The one  where they have lived, raised their families, made friends with the neighbors, sent their children to the neighborhood schools, made improvements, etc.

The elimination of downpayment assistance (DPA) substantially increases the need for rental homes.  Too many Gen X and Gen Y have not saved any money for a downpayment.  They have not been taught the need to save - they want instant gratification and are “willing” to do it on credit.

The new Housing Bill:

• Bar the FHA from insuring mortgages in which the borrower’s down payment is paid by the seller, beginning on Oct. 1, 2008.
• 40% of all FHA loans use DPA
• FHA says seller-funded down DPA’s present the single biggest challenge to its solvency.  Borrowers who take part in DPA’s go to foreclosure at nearly three times the rate of borrowers who put their own money down.

We have always had a good pool of potential tenants in Central Ohio:

• Relocation with our variety of companies
• Honda and affiliated plants have Japanese engineers come here for 3 - 5 years
• “Normal” amount of those who cannot qualify for a loan

The real estate market correction brought on by bad lending practices in 2004 - 2007 is yielding alot of new prospects:

• Renters whose landlord’s lose their home to foreclosure

      www.dispatch.com/live/content/local_news/stories/2008/07/11/ann11_ART_07-11-08_B1_GEANOA5.html?sid=101

• Homeowners who qualified for loans that they could not afford in the long term and can no longer qualify for a loan because of foreclosure or short sale
• Couples or individuals who would have qualified for FHA or conventional loans but cannot because the underwriting criteria are stricter than they have been since the late 1990s

We have had few problems both leasing our homes over the past 12 months.  It’s getting VERY difficult for even quality people to get a principal residence mortgage loan.

1. Underwriters are really looking very hard at loan applicants
2. Credit scores need to be over 100 points higher for good interest rates and loan fees than 2007
3. Appraisals are being reviewed in detail
4. No downpayment programs are virtually gone
5. The loan process has increased to about 2 months rather than 2 weeks
6. The mortgage insurance companies are “underwriting” loans as well
7. Applicants need to completely document income and cash reserves