Could I get a grant to renovate a rental property?

Discussion in 'After Hours Lounge (Off Topic)' started by Adam Bluhm, Sep 5, 2005.

  1. Adam Bluhm

    Adam Bluhm Supporting Actor

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    I'm not really having much luck researching this myself online, so I came to here for a little insite.

    I'll keep it short and to the point. I'm 23. There is a house for sale locally. I can afford it and see it as a good investment opportunity for a rental. After purchase I'm guessing it would need (not require, but really should have some work done) a new roof, exterior paint and I was told the inside is fine. I'm having a look tomorrow.

    My question is might I qualify for a government grant to help pay for renovation to this small house regardless of the renter? I don't plan on having HUD pay for the rent and have it considered a low income housing (though I won't rule out that just yet). In talking to my mother, she told me that a few locals have had grants to pay for all renovation to buildings just to rent them out.

    Internet searching has not turned up a lot of information. It, for the most part, seems sketchy and shady. Does anyone have any good references? I know the local bank branch manager here in town. Would he have good information for me?

    Thanks for any help. I'm fairly new at this but am more than willing to learn.
     
  2. Micah Cohen

    Micah Cohen Screenwriter

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    Is it "historic"? An old house? You could possibly qualify for a grant to renovate an historic old house. Check with the local housing authority, local community associations or community civic groups. Is there a local historical society? Ask them.

    Ask the bank manager, but he may want to sell you a loan. (Then again, with good rates, that loan may be the way to go.) Ask the bank manager who to speak with about grants; he may be connected to local government types who would help direct you.

    Good luck. Either way, it's a good investment is the price is right.

    MC
     
  3. Adam Bluhm

    Adam Bluhm Supporting Actor

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    Thanks.

    I wouldn't consider it an 'old' house by most comparison. It might be 50 years old. It's certainly not historic.

    Asking price is just over $26k. They've had no takers and I'm considering making a bit at about $20k. My father and I 'kinda-sorta' know the realitor. Hopefully she'll help us out a little.
     
  4. Micah Cohen

    Micah Cohen Screenwriter

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    If the numbers work -- cost, rehab, rent income -- real estate is the way to go. (Especially when you're 23. When do you want to retire?)

    Then, when you have it rented and you have some cash flow, take it to the bank, get an equity line on it, and buy another one.

    Yeh, real estate! [​IMG]

    MC
     
  5. Adam Bluhm

    Adam Bluhm Supporting Actor

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    Retire? No idea! [​IMG]

    I just get a big warm fuzzy when I spend my money on something that'll give me money in return rather than something that depreciates (car, computer, etc). While I love electronics and whatnot, I can't bring myself to buy expensive toys when I should be saving my pennies.

    Anyway, I figure when I want to build a house for myself and some lucky future Mrs. Bluhm comes along, a rental property or two, if taken care of, would be an excellent way to pay a mortgage.

    I'm calling the real estate agent today and hopefully will get to talk to the local bank manager this week. We'll see how it goes.
     
  6. Micah Cohen

    Micah Cohen Screenwriter

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    Real estate is the key to retirement.

    Buy smart now (make the numbers work for you), and the future Mrs Bluhm will certainly feel lucky.

    And then you'll get divorced and she'll take half of everything, so maybe you should just leave her out of it for now. Actually, rental properties are great places to hide bodies if she gives you a hard time... Not that I know anything about that aspect of real estate investing. Honestly. Officer, seriously. [​IMG]

    MC
     
  7. Mort Corey

    Mort Corey Supporting Actor

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    I don't get it. Why would the government (fed/state/local) give you money to fix up your property?

    Mort
     
  8. Adam Bluhm

    Adam Bluhm Supporting Actor

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    No idea, Mort. I've just heard of other local people (which are ironically well off) that have done this. I'll find out if it's possible soon enough.

    Micah, nice thoughts. [​IMG] [​IMG] Way to think outside the box! I see I have a lot of outs with a rental property.. more than even I thought of!
     
  9. Micah Cohen

    Micah Cohen Screenwriter

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    Mort - You'd be surprised at what government money can (and, obviously at this moment, can't) do. Many places want to help investors renovate unused properties for people to live in, and so they set up grant programs that make that easier to accomplish. You have to hunt around, but sometimes you can find grant programs for renovating property. I personally have found nothing like that here in Baltimore, even tho I hear whispers about programs around the town, but I am sure that there are programs out there.

    And sometimes, as Adam notes, you unfortunately have to be someone who doesn't need them in order to qualify. That's usually a truism about this economy, no?

    Anyway, worth hunting down, free money, anyday.

    MC
     
  10. Mort Corey

    Mort Corey Supporting Actor

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    Sheeze....my house is going to need paint in the not too distant future. I wonder if I take the wheels off my car and park it on the front lawn I can qualify for some kind of aid to fight blight. [​IMG]

    I guess I shouldn't be surprised.....and probably not really surprised anyway. I'm sure there are a lot bigger abuses around.

    Mort
     
  11. Jim Sentry

    Jim Sentry Stunt Coordinator

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    There was gov't program called the 203K whiich was used for rehab. Call FHA directly and ask them for participating lenders.
     
  12. Adam Bluhm

    Adam Bluhm Supporting Actor

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    Eh. My landlord venture will have to wait. I took a look at the house today. It'll need a roof. It'll need a coat of exterior paint. A couple interior walls need to be redone. It needs a bathroom sink. One end of the house seems like it's not supported and it's falling in some.

    Oh yeah, did I mention it was built in 1880 and is in a flood plane? Probably not a wise decision for a first purchase for me. I'll keep my eye out, though! I shall no get discouraged.
     
  13. Micah Cohen

    Micah Cohen Screenwriter

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    New Roof = $4000 (assuming shingles, small house?)
    Paint = $800
    Inside work, drywall, etc = $2000 at most, coupla walls
    Bathroom Sink @ Home Depot = $40

    $7000... (I dunno anything about foundation work, I'd have to see it. Let's just assume...)

    Selling price is, what, $26K? Offer em $23K, spend $30K by the time you're done, get a loan for $30K, payment might be $300/m at the most, charge $600 rent, and...

    No?

    MC
     
  14. Adam Bluhm

    Adam Bluhm Supporting Actor

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    I was initially turned off, but was throwing around numbers like that. I'm not a handyman and would probably have to pay someone to do most of the work (I can paint, anyway [​IMG] ).

    One thing I forgot to mention is a terrible musty smell from previous floods. I'm not sure if there is a mold problem. Nothing is visible, but I wonder if it's a situation where the carpeting needs to be pulled and everything washed down.

    I'm going to think about it for the next couple days.
     
  15. Micah Cohen

    Micah Cohen Screenwriter

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    Where is a "flood plain" in Pennsylvania? Is this house next to a creek (uh, I mean "crick") that overflows? Is there water in the basement? These are important issues, water and that musty smell could spoil this deal. (You can recarpet a small house for under $1500. But getting rid of the water in the basement is a hassle involving sump pumps and concrete and big jack hammers.)

    Maybe, you don't have to buy THIS ONE. But, from your little experience here maybe you can see that if you find something like this, something close, maybe something that needs a little less structure (foundation, water, etc) and more simple TLC (carpet, paint), you will be more sure of yourself and be able to make the jump.

    You are young. You will see lots of property if you start looking now. You will become a better judge of your ability and of the numbers.

    Befriend the Realtor who showed you this property. Describe what you want (same thing, same price, less work), and hang on for the ride.

    You will surprise yourself with what you find.

    MC
     
  16. Adam Bluhm

    Adam Bluhm Supporting Actor

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    Heh. You nailed it. When I say flood plain I mean there's a creek on the other side of the road. [​IMG] We don't usually see heavy rain around here, but ironically enough we've had moderate flooding last fall and this past spring. Both times, as far as I know, the basement of this house was totally flooded.

    I'm thinking of giving a bid of $18k and giving myself a ceiling of $30k, leaving up to $12k for repair/upgrade. Like I said, other than a sink and maybe adding a washer/dryer, most repairs are cosmetic, but that is important to me. I have higher standards and I'd feel bad renting it out in it's existing state.

    Regarding the mold/musty problem, I'm thinking keeping the basement door closed, ripping out the old carpeting, washing down the walls and floors and adding a coat of paint will get rid of most of this problem. I was talking to the contracter that looked at this house with me and he thought up to $10k in improvements would really make the house a decent place. The roof should go another 2-3 years, and he estimated ~$7k to re-roof it.

    Regarding sewer and water, that is all okay. No problems there. We'll see where the $18k bid gets me. I can really see investing up to $30k and making it work out for me in the long run.
     
  17. Micah Cohen

    Micah Cohen Screenwriter

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    You don't need a washer and dryer, you only need the hookups, with shut-offs. Any plumber can sweat those pipes. Let the tenants buy their own W&D. (Most important to keep in mind: YOU ARE NOT LIVING HERE. Inexpensive new carpet and a new coat of paint make any place liveable.)

    As for mold and must, tear everything out of the basement, let it dry out for a day or so, wash it down with bleach solution so it smells fresh, and then repaint with Semi-Gloss paint (white).

    If it fills with water when it rains, this might be the time (before painting) to splurge and get a sump pump installed, with a "french drain" around at least two walls to drain into it. That ends basement water problems.

    Bid low, and get it. Keep your contractor friend close by, and see what happens. It starts slow and low just like this. But once you have tenants paying you rent, the loan gets paid off and you have a ton of equity with which to buy another one!

    My friends call me Donald Chump! [​IMG]

    Email me direct if you have deeper questions, or if you need forms and stuff, leases and whatnot. All that comes later.

    MC
     
  18. Adam Bluhm

    Adam Bluhm Supporting Actor

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    Thanks for your input and interest, Micah. My father has rental places so he's been around the block before, but I really do appreciate your input. I'll certainly be in touch if you're willing to give me your opinion on certain matters.

    Regarding W/D hookups, my father told me to forget that. He said that the sewage tank isn't large on this particular property and would likely have to be pumped at least once a year. He felt a washer would severely increase the amount of pumps.
     
  19. Mort Corey

    Mort Corey Supporting Actor

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    You might want to look into insurability BEFORE you make an offer as well. Something built in 1880 may be difficult to insure. If the property is really in a flood plain, a mortgagee may require flood insurance as well as fire insurance....and flood insurance ain't cheap.

    Here in the PRK, mold is a major benefactor to the legal industry. I guess, in some cases, people can get pretty sick living in a house with mold....and it's tough to eliminate. I don't know the legal climate in your area, but here, a tenant that became ill in a house with mold has just won a legal lottery ticket.

    Just a couple of cheery things to consider before your venture into becoming a land baron [​IMG]

    Mort
     

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