Posted by Jim IL. on December 16, 1998 at 11:15:14:
That would depend entirely on the “requirements” for recieving these funds. Some are grants and some are loans. Obviously “grants” are basically Free money that you don’t have to pay back. Loans of course must be payed back.
Look into each program offered and see,
1.) do you qualify?
2.) does it have to be paid back, and if so, how soon and at what rate.
3.) are there other ways to fund rehab that have better rates etc.
4.) do you have to use the funds for “onwner occupied” or can you simply use the funds regardless of use.
You need to find out specifics of the funding available before you buy the rehab. Then make your decision based on all factors.
I hope this helps.
I know in my area, both types of programs were offered. One area city offered funds for rehabbing in our “historic district” via grants from the city. But in accepting these grants, we were to be severely limited in our use of the property. I had an old victorian home in this area that I wanted to aquire and rehab. My origianl intention was to make this home into professional offices, for lawyers, and doctors. It was perfect, but the city grant required me to commit to residential zoning. Therefore we took a pass on this property.
The next guy came in and bought this home, took the grant, and now cannot sell the home. The area is still in need of many more rehabs, so no decent buyers are looking here. I may look back to this area in the future when more homes are done, but for now, there jusy isn’t enough money potential to make it worth it. Frankly, if I’m gonna pour a few months and 20k of my money into a project, than I expect to make at least $10k to make it worth the effort. Otherwise, I’ll pass and let the next guy take his chances. There are too many deals out there with better numbers to waste time on this tyoe for me. But, this is also a business where you decide what works for you. So, make your own decisions, and make your own money.
Just remember to factor in every aspect, because the un-expected things always come into play. That can be the “deal killer”.
then again, it can also make you more money too. weigh your risks first, then take them according to what you see.
hope this helps.