Straight Talk from Al Jacobs

 

A NOVEL PLAN FOR HOMELESS RELIEF

 

It’s hard to believe, but I’ve just read an article on homelessness that seems to make sense. Its title: “An experiment to house homeless: private funds.” After watching government entities pass senseless resolutions, while throwing taxpayer money around indiscriminately, here’s a program that might actually work. The plan: A private for-profit real estate group in South Los Angeles will select low cost sites on which to erect nine-unit structures built from shipping containers. Eight of the units will be 4-bedroom residences of about 1,000 sq ft each, designed to house four single homeless persons who will share a common kitchen, bath and community area. The ninth will be for a resident manager who will oversee the project with its 32 residents.

 

Although the term “shipping container” conveys a dismal image, these are essentially modular home sections built in a factory, trucked to the site and set upon pre-built foundations. Once assembled, there’s little visible difference from a traditional building constructed on-site. As to cost, modular home prices start around $50,000 for an 800-sq ft home. After permits, utility connections, site prep, foundation, engineering and survey work, its total cost is $115,000…plus land, of course. Inasmuch as the area in which these units will be erected is modest, we may expect the price of the land to be minimal, and if land can be held to no more than $50,000 per 4-bedroom unit, the completed nine-unit complex, totaling 8,800 sq ft, should not exceed $1.5 million. This works out to $46,875 per homeless individual, which seems to be a viable program…a far cry from the several hundred thousand dollar estimates I’ve seen bandied about by various governmental agencies.

 

The impression given by the article’s title, implying the homeless will be housed with private funds, must be explained. Although the structures will be so built, the actual residency costs will not. When completed, tenants will be selected through a countywide database of homeless, giving the highest priority to those chronically most in need. Monthly sums will be paid to the group from either disability checks or subsidies, with services being funded with L.A. County’s Measure H homeless sales tax or charitable donations, with an average monthly payment per recipient of $725. It’s anticipated the $278,000 potential annual gross income will, after the rather substantial expenses of overseeing such an operation, generate a modest return of about five percent annually to the group…a fair return in today’s economy.

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com