These houses have been in this state for at least 7 years. The sand is not coming back! They were incoming producing properties for out of towners. No one has ever lived in them. These people do not have the right to block public access on our beaches and compromise the houses around them. I see the damage they cause everytime the wind blows,I live behind them and fear for my home I LIVE IN ! Many people lost in investments recently all over the country,their 30 years of collecting ocean front rent has more than paid for them, it is pure greed and lack of concern for local residents.
Pearl
Yet another Pearl of Wisdom from a local. The above was a comment posted on Bob Muller's blog in response to this great post by our former mayor: What Next for South Nags Head? Bob's post echos the sentiments of several (but not the majority of) Nags Head and Dare County residents. Realizing the current (not some future, westward relocated beach) oceanfront is our primary revenue source, many of us support beach nourishment projects. At the same time, lacking the political will and funds to conduct such an undertaking, many homes are now located on the beach proper and obstruct the public beach as well as posing a hazard to surrounding homes. And continued use of sandbags increases erosional effects on adjacent (usually to the south) properties. Thus, Bob and I agree on the need to remove these structure once they have reached an obvious point of "no return".
Apparently, Pearl agrees with us also. But her tone and approach is different. In her quote above, I have highlighted in bold two specific comments I find disturbing and all-to-common in the soft underbelly of local residents. The first is the pejorative use of the term "out of towners", as if they are some breed of uncaring, useless people who don't "belong" in our community. The second is Pearl's use of the term "greed".
The former phrase depicts our community as a hostile place. These homes supply a significant portion of our tax base, including not only property taxes but occupancy taxes. The guests housed there generate revenues for local businesses and more sales, entertainment and other taxes to local coffers. As Pearl points out, no one lives in these houses most of the year. Pearl thinks this is mostly a bad thing, I suspect. In fact, its a good thing. All those taxes paid support our local government services, including schools. Yet none of these owners impact those services; their kids aren't in our schools and the owners never utilize our social services.Yet they pay for all the above and do so without the right to vote on the taxes they pay.
As to the latter comment, "greed" is highly overused, even by talking heads on cable news with M.A. and Ph.D behind their names. "Pearl" has no idea how much, if any, money these people have made from these "investments". Pearl doesn't know whether they have a sentimental attachment to these houses. Many are filled with personal items, paintings, even personal choices of furniture. Many of them have housed generations of the same family ownership who come here in the off-season to enjoy our area in the fall, celebrate Thanksgiving and Christmas, and revisit our community in the spring.
Sadly, I hear the same comments all to often about our seasonal visitors, a/k/a "the tourists".
And, while there were many comments similar to Pearl's supporting Bob's overall post, it seems no coincidence that my curmudgeonly friend Ray chose Pearl's gem to feature in his blog. Ray--too much Grinch at this time of year is bad for the soul :)......
Bah humbug Ray, and can we please put another coal on the fire??? It's cold. But no more gas on the fire....
12 comments:
I am always reminded of an old comedy routine by Sam Kinison who said something about "people who build their houses on the side of a volcano, then complain when there's lava in the living room."
test
Oh, I see, Russ...your comments section was buried down beneath the "Acumen Fund" ad. Why not move it to the top, next to the date. It's easier to see up there..JMO
Ray
There's no need in beating a dead horse here, Russ. Pearl's comments were spot on perfect, whether you like the way she phrased it or not.
It's a "no-brainer" that we all benefit from "healthy" cottages along our oceanfront, so why argue that? And, to say they don't come without a cost to local residents is faulty. Prosperity doesn't come free...more cottages, means more visitors, which means more need for services, which means more needs for schools, etc..Why argue all that?
Point is a lot of these buildings were little more than shantys even before they ended up in the surf zone (same holds true for Kitty Beach). Shanties that had been milked to the fullest extent possible (with little visual upkeep) to gain dollars for the investor's pocketbooks. And, who would put valuable family momentos in something about to be washed into the sea? You talking to an ex-taxman, Russ...don't make me weep with stories about all the income tax dollars these people have paid from owning these properties. I know better. Again, they WERE TAX COLLECTORS, not TAXPAYERS. Trust me on that one... Humbug !!!!
Ray
Ray, I agree with the gist of her post. The main point of my blog was the undertone about out of towners, and that isn't "spot on". I've seen the tax returns of a significant number of these property owners, and most pay huge tax bills. Many times the income tax bill exceeded my annual salary. More visitors=more schools if, and only if, their presence increases the local population due to healthy jobs. Tell me which way school enrollment is heading these days with construction jobs leaving town?
I was in a sandbagged house last summer. I never said they kept heirlooms there, I said the personalized the stuff. But this house was chock full of pictures, locally purchased furniture, and art.
I've seen the tax returns of 100's, it might be fair to say 1,000's and I know what I'm talking about....HUMBUG !!!!! :)
I spent a good deal of time this spring doing insurance quotes for several of these SNH homes. The goal for the prospective purchaser was to buy more and more of them and then get healthy payouts on flood and wind insurance when they finally blew or washed out. From a realtor and P&C agent perspective, the only reason they weren't gone already is that the insurance industry wants nature to take its course rather than government to decide. There is some greed involved in these interactions, for sure.
Miles
How would that work Miles? The insurance company shouldn't be insuring the home for more than its worth, which would be its appraised value. You can't insure the lot, and the value of a dwelling in danger of falling into the ocean should be severely discounted. How can one obtain a "big" payout? Are you saying insurers are routinely issuing policies for more than the sale price/appraised value of the dwelling AND also issuing NEW policies for homes this close to falling in? If so, sounds less like greed on the buyers part than stupidity on the insurers part. If that's the case, sign me up. I'll buy a dozen. Who needs a 401K??
Russ, you are misconstruing what Miles said. He didn't say what they paid for the homes or how much insurance was carried. I don't guess you considered rental income, afterwards, following by healthy tax write-offs and even tax losses (paper losses), etc. It's done everyday, Russ. As a banker, you should know that. There are people (we won't name any) making good money off those beach cottages today, while they are waiting for them to fall into the ocean..as to those sitting in the surf zone...they are, as the doctor would say, terminally ill..
Ray
Ray:
I guess we could discuss this forever. I know you were a taxman, but I have looked at 100's of these over the years, including most recent years. I know about the write offs, how some items are expensed rather than amortized, write offs on trips down here, etc.
Be that as it may, most homes lose 15-20% of gross rents right off the top to the management companies. And while they depreciate the asset, maintenance expenses are high, especially close to the OF. I could easily say with close to 90% of the home loans I reviewed in the last five years, cash flow, including tax breaks was negative and the borrowers had to qualify by adding in non-rental income.
Also, as you know, land is uninsured and makes up 30-65% of the value of many properties here in Dare. Thus, all you can insure is the replacement value of the dwelling, which if in SNH and in danger, is usually showing a decline in value. Miles used the term "big payout". If you borrowed $300K for an endangered SNH house, and $50K was attributed to lot value, a total loss would be $250K, and the owner would still owe the bank for the lot balance. If wind and hail replaces the roof, you break even.
NO insurance company should insure a house for more than its appraised replacement cost value, and its ability to be rebuilt if destroyed is another factor. On old homes, the insurers are stuck with them. On new purchases, they now factor in erosion rates (as does the appraiser), ability to rebuild, etc. And, flood and wind/hail expenses are increasing dramatically on OF and between the highways.
Even with rents, I don't see any "big" payout, or scam one could run where insurance plus rents would come close to making a "big payout" on new purchases. Miles clients may have been thinking that, but I bet none of them were able to make it work.
Short answer on the big payouts:
Cash purchase at distressed value, then a favorable appraisal by trusted appraiser (or use recent appraisal from before purchase--even better) then refi at replacement cost (significantly higher than actual sale price) with accompanying high insurance value based on the refi price...then minor claims, claims, claims for years in lieu of high rents (or high rents too if sand comes back late spring and you have an occasional unofficial "dune" push. Use the refi cash to buy yet another...along with maintenance. Keep the ball rolling...then when the ocean claims it, you get the insurance value of the refi for structure only which was likely more than purchase price anyway.
I know of a couple of investors/realtors who specialize in this in the areas of concern.
Call it unethical but it is being done.
Cheers!
Miles:
Oh yeah, that's unethical as hell and any appraiser involved should be turned into the state licensing board. Further, it would seem by now that insurance companies would not insure any dwelling in SNH that is east of the point where the property has a predictable life of 10 yrs or less.
Jeez--I hate hearing crap like that. Thanks for the inside info...
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