During my daily property hunts, I have run across a few big apartment complexes that are abandoned. Maybe 50-100 units. Now I dont have anywhere near the type of money to take on a project of that size. I was wondering if I could get the city to help fund the downpayment, rehab costs, etc to provide some low-income housing?
One development I went through was actually a city owned/run complex that was abandoned. All the units were concrete like prison cells. It was kind of weird. But there was a sign and it said the city of XXXXX housing authority or something to indicate it was city owned.
Nobody has enough money to take on projects like these, but they get taken on all the time. You need to get the project financed. That is what makes real estate so wonderful. You can do projects much larger than your personal finances will allow using other people’s money. That is leverage.
The bank will look to see if the project has enough income in it to pay to have it fixed up run and profit. The deal qualified the deal not the investor. The investor can disqualify the deal, but generally if you pay your bills on time then you probably won’t disqualify the deal.
I tried that once and got notta for money. I did get a tax break for rehab in a bad area but not enough to make me do it again. That was 15 years ago here in Oregon and things change
Most cities have programs to finance or grant the funds to redevelop low income housing. They like to see some experience from the redevelopers for the scope of project so that you don’t add to the problem. To supplement your personal experience, put together a group of highly qualified people, commited to helping you.
If there isn’t a program for the project you want to undertake, set up a meeting with the housing authority commissioner or the mayor or whoever with a well prepared plan of attack. Also you can set up a meeting with the president of a local bank to get them in on the action and good publicity. If your going to redevelop an abandoned complex, everyone will want a piece of the glory if you show them light at the end of the tunnel. This is not something I would go about in the traditional loan application way.
For abandoned, city owned buildings you may be able to work out something where they pay you a project management fee during rehab and property management fee after completion. That way you never take the title or have to qualify for any financing and always use the cities money.
Low income housing benefits everyone involved, use that to your advantage and be creative. Get highly qualified people on your side which will get the cities decision makers on your side. Go in with a solid plan or you’ll be laughed at.