A recent story from the News and Observer (which just announced layoffs) described the increased pressure many banks are applying to builders. This particular article highlights SunTrust and their demands for repayment or refinancing from one builder in order to avoid foreclosing on his homes. In the past, builders could refinance homes that stayed on the market longer than expected with a simple request. Now banks like SunTrust are increasing interest rates, requiring more equity in the deal or denying refinancing request altogether.
This lack of liquidity often puts the builder in a situation where he has to CHOOSE who gets paid. If he pays the bank, his contractors might not get paid, forcing them into financial harship. If he pays the contractor, the bank might foreclose and everyone could lose.
Basically, without the ability to refinance, the builder isn't the only one that stands to lose. Anyone who might have poursed resourced into the project could be stuck with unpaid debts. In fact, this trickle-down scenario has already caused many contractors to file bankruptcy.
Monday, March 9, 2009
Wednesday, March 4, 2009
Another TAX from the City
I know your budget is already tight, but if own rental property within the City of Raleigh you now have another expense, a.k.a tax to pay. As of March 1, 2009 all owners of rental property inside the Raleigh city limits must pay to register their property with the city. This ordinance was basically passed to fund the Probationary Rental Occupancy Permit (PROP) inspections team. However, the proceeds collected will far exceed these costs and thus be transfer to the general operating budget for the city.
The city wants you to believe they are trying to punish bad landlords and 'clean up' our neighborhoods, but the execution of this goal has been terrible. What the city has done is impose burdensome restrictions and fees on good landlords that must be passed on to the tenants in order for the owner's business to remain profitable. You could make the argument that the city wants to eliminate rental housing and renters altogether.
The city wants you to believe they are trying to punish bad landlords and 'clean up' our neighborhoods, but the execution of this goal has been terrible. What the city has done is impose burdensome restrictions and fees on good landlords that must be passed on to the tenants in order for the owner's business to remain profitable. You could make the argument that the city wants to eliminate rental housing and renters altogether.
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