By Dave Bonta, a co-founder of Rah Rah Village
October 28, 2024
To be honest, I did not come up with this idea. I borrowed it from the Frank Capra classic, It's a Wonderful life. Something about that model of The Bailey Bros. Building and Loan business appealed to me. Especially when George Bailey's Dad tells him about how helping folks to have a decent home and a bath is a "fundamental urge". I also liked what George Bailey said later as the members of his Building and Loan come in a panicked "run on the bank" and demand their money back immediately. "That's not how this place works," George explains. "We don't have your money here [...] Your money is in Tom's house, and his money is in your house and you pay it back as best you can, and if something happens we don't kick you out" (I paraphrase-but that was the gist of it) I like that idea, especially when we are looking for a way to provide for some temporary housing for would-be-Rahmutarians.
There is a real housing crisis in this state, indeed in the whole country. The average price of a home is now upwards of $400,000.00-Thats way out of the reach of most people. The reasons for all of this are complex and varied, but in one way it comes down to one problem - greed. Now most of us don't think of ourselves as greedy, but many of us do play the game of "I want a deal!" That is, we like to "Buy low and sell high". I guess we all have done it: buy a car for as low as we can get it, and then selling one for as much as we can. The same thing goes with houses. Many folks bought houses years ago, for a fraction of what they go for now, and are all too happy to sell now for "what the market will bear". The only problem is, everyone else is doing that too, and so to buy another place means paying more as well. Real estate has become such a hot investment that "institutional investors" are buying up huge portions of the available housing stock and making them out of reach for the average purchaser.
It has indeed become a major problem, spiraling out of control and creating all sorts of nasty side effects in its wake. Anyhow, we all know there is a problem, and so we look for some kind of a solution. How about a Bailey Bros, Building and Loan? I don't think putting their dough in it was a highly successful financial investment, but it sure served the community of Bedford Falls! So, we are trying it here.
Quite simply we, ourselves, invested in Rah Rah Prom notes that pay simple interest of 5%. That is, like a Bank CD, that pays 5% annually, we pay a dividend at 1 years maturity, 5% of the prom notes amount. 5% is pretty good, seems fair and is more than a lot of other CD's pay, especially since the Fed lowered its benchmark interest rates recently. It is simple interest, not compounded, but the "feel good" makes up for that shortfall. A lot of baby boomers like ourselves had advantages that the younger gens coming after us don't have. We were beneficiaries of "The oil boom" that fueled "The good life" for most of our lives; Decent paying jobs, vacations, health care at the job, some kind of "nest egg" savings and other bennies. If we are being honest, we have to ask ourselves "How do we give back?" Rather than investing in some high-dividend investment, where we don't even know how it's being used, wouldn't it be better to put our dough directly where our values are? Well, we are trying it, and maybe it's a bit risky, and may not make the kind of return that an institutional investment corp would offer, buying up scores of properties and forcing the kind of high rents they want on folks, but maybe it's worth trying.
We have been building 3 tiny houses on our property here at Rah Rah village. We are using the funds from the Bank of Rah Rah. The rents will be quite low, compared to market rates, and frankly, I am working for free to help put my effort into where my values are. Kind of like "Habitat for Reality" (inspired by Jimmy Carter!). Those that live here may save enough dough over time to help out with the fund, and so create a self-perpetuating situation that can grow to....who knows? Buy whole properties and create other Rah Rah Communities? Maybe, like George Bailey, we will build "Bailey Parks" and beat the "Banksters" at their own game!
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