In the animal kingdom it’s ironic that we glorify predators, like the lion, while we vilify scavengers, like the vulture, that clean up the mess left behind. Even the great Benjamin Franklin was unable to fight this prejudice in his preference of the turkey over the eagle (a predator) as a national symbol. If you encounter a lion on the savannah, it will kill you. If you run across a vulture in the process of cleaning up the carnage caused by the lion, you will be perfectly safe.
Unlike lions and other large predators, vultures don’t need to kill to survive. They serve a useful purpose by disposing of dead and decaying animal remains, cleaning up in areas with poor or non-existent sanitation. This, however, does not make them popular and it is doubtful that any major league sports teams would ever choose a vulture as a mascot.
Let’s bring this scenario home to the concrete jungle.
In almost every housing market that is plagued by negative equity and foreclosures you will find the decaying remains of houses, and sometimes entire neighborhoods. Despite the big lie to the contrary, Wall Street predators caused this crisis. Communities struggle to keep up with the mess they left behind. Now even those protesting Wall Street are adding to the carnage by breaking into properties, squatting in them, and even setting fire to them.
And who comes along to reverse the decay and clean up the carnage created by the predator? Real estate investors, often referred to as the vultures of the real estate industry, and like the vulture, unappreciated for the service they perform and the value they bring to these devastated communities. These investors are not only infusing the local economy with jobs but they are also working to create new homeownership opportunities, by bringing these properties back to marketable condition – a function that is a critical element in our housing recovery.
The average investor typically spends $10,000 to $15,000 rehabbing a property, which directly results in local jobs for contractors and other vendors. Plus most “vultures” will resell the property, resulting in real estate commissions, lending fees, title fees, inspections, appraisals, advertising and more… ALL of which creates jobs and supports the local economy. Finally, the sale and clean up of the property also means that past due property taxes will be paid, which is revenue our local counties and schools desperately need.
Real estate investors are not predators. They do not cause foreclosures. To the contrary, they are an integral part of helping to clean up this housing disaster. Call them investors, speculators, opportunists or even vultures but make sure that you realize the important role they play in the real estate ecosystem.