One of the Ways to Fix Real Estate Booms and Busts

Posted by Lee Ali

February 1, 2009

American retirement accounts have $8 trillion in them. Only 4% of the accounts are enabled to invest in real estate and non-Wall Street investments.

I am working on a crowd-sourcing model where funds to purchase investment properties would be sourced from people’s truly self directed IRA accounts, along the lines of Prosper.com .

I had send an email to Prosper.com CEO in October, 2008. I never received any response back from them. I don’t expect banks to participate in such franchise. I guess that it would reduce banks’ influence on real estate, the same way Wikipedia has obliterated Britanica’s hold in the encyclopedia market. http://www.theinquirer.net/inquirer/news/149/1002149/britannica-turns-wikipedia

Banks are the primary reason for real estate’s booms and busts. If my real estate crowd-sourcing model takes off, with the blessings of SEC and other related governmental approvals, of course, it will help reduce the boom-bust cycles in real estate. That would be my contribution to bring some level of financial stability in your and my children’s and grandchildren’s lives.

Any interest in discussing it?

Thanks

Lee
Founder
BankFreeInvesting.com

Here is what Jeff Howe, the journalist who coined the term “crowdsourcing” has to say about the concept: http://www.youtube.com/watch?v=XJD5RrEwrG0&feature=related

Here is a copy of email I sent to Prosper.com in October, 2008:

———- Forwarded message ———-
From: Lee Ali < liaquat.ali@gmail.com >
Date: Mon, Oct 6, 2008 at 10:32 PM
Subject: Prosper.com for Real Estate
To: gerry@webbank.com

Gerry Smith
President & CEO
WebBank
6440 South Wasatch Boulevard Suite 300
Salt Lake City, UT 84121

Dear Mr. Smith,

Prosper.com matches micro lenders with borrowers, but the loans are
unsecured. A high level performance overview of the loans between June
1, 2006 to September 6, 2008 indicates that the ROI for those micro
lenders is between -21.56% and 6.38%, depending upon the credit
worthiness of the borrowers. Even the high return is barely above what
the micro lender could receive from bank CDs.
http://tinyurl.com/4tboc9

I see a need for a Prosper.com for real estate.

I would like to discuss the development of a system which will provide
returns of 8-15%, minus processing fees, to the micro, and
not-so-micro, lenders. The borrower pays for the appraisals and other
costs related to valuation.

The investment would be secured by real estate at a very low LTV (Loan
to Value), such as, 65-75%, and the focus of the collections, if
needed, would be the collateral, and NOT the borrower.

If you are interested, I would be glad to discuss a few pieces of the
puzzle in developing a Prosper.com for Real Estate.

I am an expert in buying properties at deep discounts. I then turn
them around and sell at market value, or hold for income. I have 11
years of experience in the real estate investment arena. I have bought
and sold millions of dollars worth of single and multi-family
properties. I have B.S. in Engineering, 15+ years of systems analysis
and development experience. I hold a Real Estate License in
Connecticut, and I am pursuing MBA at Western Governors University.

Many Thanks

Lee Ali

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