Why walk before you run? Jump off a cliff and FLY!

[ThreeRiversREI]

Okay, I could have put this in Buying Your Next Property Right (http://www.magicbullets.com/forum/forumdisplay.php?f=7), Rehab & Renovation Q & A (http://www.magicbullets.com/forum/forumdisplay.php?f=99), or in Our attorneys, accountants and lenders council (http://www.magicbullets.com/forum/forumdisplay.php?f=11) as easily as here, but I had to pick one forum and this seemed the most on topic.

The subject is a play on the oft quoted truism of "You have to walk before you can run." But tempered by the equally quoted "If you owe a bank $5,000 you have a problem. If you owe a bank $5,000,000 THEY have a problem."

My partner wants to focus on SFH in need of minor repairs to buy cheap, rehab ourselves, and sell not quite as cheap for a quick buck. This works, but I have a couple of problems with restricting our business model to these situations exclusively.
Limited number of such deals compared to ALL good deals
Limit on the amount of work we can do (only 2 people, both with physical disabilities) limiting the number of deals we can do
Tax consequences of the quick buck vs long-term capital gains, etc.

So, what does a reasonable business partner do? Why, go out and find 2 city blocks of abandoned row houses (over 60 homes) being sold as a single lot and get blinded by the potential dollar signs.

Asking price is $750,000 which is about $12,000 per unit. And given the condition of the property and the time it's been on the market with no buyer, I suspect that can be negotiated down, possibly significantly. (Current owner's cost is roughly half that amount.)

Especially in that volume, average rehab costs should no more than $10,000 per unit.

Cost per finished unit would thus be about $22k. These are 3-bedroom row houses which rent for about $500/month, or a bit over $375,000 gross annual rent. Neighborhood comps indicate a resale value of around $40k each, or just shy of $2,500,000

City of Pittsburgh offers Act 42 property tax subsidies eliminating all the increase in property taxes due to substantial remodeling. So the property taxes (for me) will stay based on purchase price and not improved value.

The area has also been targeted for stepped up police enforcement in an effort to reduce the crime attracted by all the abandoned properties. This, combined with rehabilitating the properties & getting them occupied should drive down crime significantly & values (rent & resale) up.

The area is targeted for redevelopment by the Urban Redevelopment Authority of Pittsburgh (URA) due to it's blighted nature. (Multiple blocks of homes with zero occupancy tends to do that.) This will make special loan programs available. (10% grant, 60%@5% for 20 years, and 30%@3% for 20 years. Gotta love it when the government will finance EVERYTHING!) There is even a grant program that will pay for up to $5,000 per unit worth of accessibility upgrades. So they'd probably all have grab bars in the shower, level handles for door knobs, etc. throughout. P&I with those programs works out to be $8,500 vs Gross Rents of $31,500 per month.

Now, to qualify for those programs, a percentage of the units need to be set aside for low income families. Half the units would need to be sold or rented to low income families. Given that the neighborhood is recovering from blight & crime, that's whose probably going to be interested anyway.

Units would be offered for rent (including accepting Section 8 Housing Choice vouchers) or purchase. I'll want to find a mortgage broker that can work with low-income buyers and offer a full suite of mortgage products for A-D credit, First Time Homebuyers, etc. PITI on $40k will likely be very close to the $500 rent.


:SM128:


Okay, reality check.

This will involve dealing with a lot of government agencies/programs we've never dealt with before, likely a steep learning curve on a MAJOR product.

This will also involve dealing with at LEAST subcontractors, if not a large general contractor, relationships my partner has avoided forming.

This project will also require a property management company (possibly one that is also a Broker to be able to handle sales as well as rentals?) as some of the units will be kept for an extended period.

This project, even with all the government programs, may have cash requirements in the early stages (before rents start coming in) we can't cover, so an equity partner may be necessary.

This project is orders of magnitude than anything we've ever done, so a mentor would certainly help. (Possibly the same person as the equity partner?)

All 60+ units are currently on the tax rolls as 2 large buildings so it will probably be necessary to have them individually split off to allow for the sales.

Since the redevelopment loans will be secured by the entire project, a clause to allow the individual units to be sold off in exchange for paying off their portion of the outstanding balances (or possibly even some multiple to increase the LTV on the remaining units) would have to be negotiated.

And I'm sure there's more that I haven't thought of, including due diligence steps before embarking I'm not thinking of as well. (See above need for a mentor to help make this happen.)


:SM128:


But the payoff! *swoons* High end acquisition & rehab estimate vs conservative individual market value is 40% equity position ($1 million profit.)

If nothing sells, acquisition & rehab represents a 25% capitalization over gross rents at Section 8 levels.

Cash flow? $31,500 gross monthly rent. Allow 20% for vacancies & maintenance (vs the 10% I see quoted everywhere) and 45% for expenses (vs 40% quoted elsewhere) leaves $11,025 net rents. And a 1.25:1 ratio still handily covers the mortgage payments estimated above. If units are kept rented to good tenants and expenses are kept in check, cash flow jumps to about $7k/month after paying the mortgage!


:SM128:


Okay, this is where those family members who have done deals like this before step up and help me figure out if this baby can fly, or if I'm going to end up a bloody wreck at the base of the cliff.

[Dan Auito]

Yikes! That is a mouthful and the ramifications and unknowns are running rampant, but as you say, the potential payoff could be absolutely huge!

So as they say, you get paid for solving problems, well you'll be getting paid a long time because this deal indeed entails a multitude of existing, potential and future problems that will indeed need solving. I personally would start networking hard with local investors, contractors, city officials, lenders, Appraisers and so forth to start nailing down real partners that will be necessary to effectively begin to tackle the multitude of issues that this substantial deal entails.
Never say never!
This is how the legendary Jay DeCima aka: fixer Jay got started, you might want to engage him or read his book called 'Investing in Fixer-Uppers, it's a good read and has many insights on what you are currently contemplating doing! www.fixerjay.com (http://www.fixerjay.com)

[ZNICK]

I'd talk him down to half, get the deal funded, then wholesale them individually to rehabbers.

You pay $6k each as a package, sell them each for $15k with absolutely no work done on your part. You make around $550k-$600k and don't touch a hammer or talk to a contractor.

Certainly you'd have to do your due diligence to make sure this is feasible.

Z

[Debbie]

I'm more inclined to side with ZNick....

In no way am I discouraging you but you should be aware of the potential consequences.....

One of our acquaintaces (landlord) did very similiar to what you're contemplating.

Rather than go into details that I don't have access to, I will say this: He lost quite a bit of money! The government for Section 8 had promised $575/mo per unit after rehabbed. It took our acqaintance almost a year of completing the rehabs. We were impressed with the workmanship. Well within the budget.

After it was all said and done, the goverment was a major disappointment. They only provided the vouchers for $395/mo per unit.

And no, there was no justifiable reason for the government to shortchange him.

Let's just say that the chances hubby and I would be willing to participate is nil.

[ThreeRiversREI]

One of our acquaintaces (landlord) did very similiar to what you're contemplating.

Rather than go into details that I don't have access to, I will say this: He lost quite a bit of money! The government for Section 8 had promised $575/mo per unit after rehabbed. It took our acqaintance almost a year of completing the rehabs. We were impressed with the workmanship. Well within the budget.

After it was all said and done, the goverment was a major disappointment. They only provided the vouchers for $395/mo per unit.

WOW! I'd love to hear more. Any chance your can get your acquaintance to join this thread and/or e-mail me directly? I have to admit, that's one possible problem I never would have considered!

[ThreeRiversREI]

I'd talk him down to half, get the deal funded, then wholesale them individually to rehabbers.

Current owner bought them for about $350k, so I'm not sure I could get them for $375k (half) but I certainly have no intention of paying him $750k. My hope is to strike a deal in the $500k range, but I'm certainly not above making an offer to get him out at his original cost and working from there! I also expect that rehab for most of the units would be more in the $5,000-7,500 range.

At $500k acquisition & $7,500 per unit for rehab, the deal just gets sweeter. Cost per becomes just under $16k, FMV of $40k, wholesale them off at $32k is still 100% profit.

Biggest problem with wholesaling them as-is is that would kill the URA financing & city grants as those are all based on converting the blighted property into predominately low-income housing.

But it IS worth considering and I thank you for the suggestion!

[TommyOH]

Not to confuse you even more, but Dan's suggestion of networking is key.

Especially at the city level, and here's why. In these economic re-development zones, if you know who to talk to, the city or county usually has grants available for things like weatherization, energy efficiency, and even windows and siding grants.

Alot of the "rehab" work you would need to do could be done without cost thanks to the city or county. Just some food for thought, and sorry for the extra homework, but it could be worth tons of money if you do this.

[ThreeRiversREI]

Not to confuse you even more, but Dan's suggestion of networking is key.

Especially at the city level, and here's why. In these economic re-development zones, if you know who to talk to, the city or county usually has grants available for things like weatherization, energy efficiency, and even windows and siding grants.

Alot of the "rehab" work you would need to do could be done without cost thanks to the city or county. Just some food for thought, and sorry for the extra homework, but it could be worth tons of money if you do this.

No confusion at all. :praise: I thought the $5,000 per unit for accessability upgrades was pretty sweet all on it's own. That one will have me investigating EXACTLY what can be covered and specifying as much as possible to be included. Just as one example I'm sure is on the list, level handles instead of round door knobs for those with limited manual dexterity/strength. That means all door knobs get specified as such and (assuming here) the full cost is billed to a grant instead of the rehab loans.

I'm sure further grant programs exist for windows, weatherization, energy efficiency, etc. I'm in the early stages of putting this together. I'll have a LOT of homework to do to pull this one off, but the more I think of it, the more I think I can probably get the non-grant funded rehab expenses down to about $5k per unit. :SM110:

Almost makes me want to keep the WORST units (so I can get the most grant money) and wholesale the best units per Znick's suggestion. *giggles*

Ah, well. I'm attending a 3-day seminar locally with my partner, but come Monday I foresee spending all day on the phone!:SM056:

I'll keep everyone posted.

Question to Dan, et al, as a lot of the details on the URA grants, etc. will likely be specific to the Pittsburgh, PA, area, but other details of FannieMae guidelines, HUD programs, etc. will be more widely applicable, should I post details here, in the PA forum, spilt them, or just hoard the information until the project is underway and then write an article and donate it to MB?

Dan Here: Just keep posting to this thread so we can follow the saga from start to finish in one place. Sort of like tuning in daily to the days of your life. A real estate soap opera, you just gotta love these learning exercises!

[Debbie]

WOW! I'd love to hear more. Any chance your can get your acquaintance to join this thread and/or e-mail me directly? I have to admit, that's one possible problem I never would have considered!


This happened approximately 20 months ago when he learned that the vouchers were much less than promised.

Apparently, this isn't new that the government can rescind what they promised---it's been done nationally rather than locally.

As far as David providing additional information, I imagine he would.....Remember when I made this statement "Rather than go into details that I don't have access to..."? What I didn't say was that David didn't survive the auto accident four months ago. (Note: please refrain from offering sympathy---we were just acquaintaces--we just shared landlord shop talks.)
Therefore, I apologize that it's out of my reach to give you additional government/grant/voucher information.

The best you can do is do your due diligence AND have your attorney check all documents, whether you deal with government or private.

[ThreeRiversREI]

This happened approximately 20 months ago when he learned that the vouchers were much less than promised.

Apparently, this isn't new that the government can rescind what they promised---it's been done nationally rather than locally.

Huh. The only thing I can think of that makes sense there is if there was a misunderstanding between FMR under Section 8 and how that FMR would be split between tenant and local housing authority, or with how utility credits would be factored in.

For example, for the deal I'm talking about in this thread the local housing authority has quoted maximum FMR on a 2 bedroom row house as $755/$517(238)/$464(291). The simple answer to what the maximum rent on a 2 br is the first number, $755. However, that assumes that all utilities are included in the rent. The second set of numbers, $517(238), is the rent(utility allowance) if the tenant is responsible for paying electric light and gas heat, cooking & hot water. The last set of number is if the tenant is also responsible for paying water & sewage.

The number can vary further if there is heat, cooking, and/or hot water is electric. Also, apartments have smaller utility allowances than townhouse/rowhouses and detached single family homes have higher utility allowance.

Since the water & sewer authority can place a lien on the property for unpaid bills regardless of who is responsible to pay, I and all the landlords I've talked to choose to keep that in their name. Rather than rebill tenants for water & sewer, and not wanting to be on the hook for someone keeping the place at 70 in the winer and/or running window AC all summer, I chose the middle numbers -- $517 for rent. (I'll probably quote rent as $525 + gas/electric and in the case of a Section 8 tenant, discount the rent to the $517 ceiling.)

Now, off that $517, the tenant is responsible for paying 30% of their gross income with the housing authority paying the balance. A single parent working full-time at a minimum wage job makes about $900/month and would be responsible for 30% of that, or $270, and the housing authority would pay the balance, or $247.

The difference for David between the quoted $575 and the $395 actual voucher may have represented a utility allowance ($180 is about what the allowance is in Pittsburgh for 1 br apartment if tenant pays gas & electric). Or it may have represented the tenant's contribution ($180 would be 30% of $600 per month which could be a part-time job, welfare & AFDC benefits, or similar scenarios that would result in someone applying for Section 8 assistance).

Without him here to explain further, it's hard to understand what happened. But I'm going to start a new thread on Section 8 over in the landlord forum (http://www.magicbullets.com/forum/showthread.php?p=31437#post31437) and maybe we can get some firsthand experience.

As far as David providing additional information, I imagine he would.....Remember when I made this statement "Rather than go into details that I don't have access to..."? What I didn't say was that David didn't survive the auto accident four months ago. (Note: please refrain from offering sympathy---we were just acquaintaces--we just shared landlord shop talks.)
Therefore, I apologize that it's out of my reach to give you additional government/grant/voucher information.

Well, if I don't have to offer sympathy, would I be too cold hearted to ask if his passing has resulted in any bargains becoming available?

[Burke]

I am surprised Aldo hasn't chimed in on this yet but be sure you understand all of the "strings" attached to those grants.

[ZNICK]

I would go into the deal ignoring the grants, and making sure that it's a worthwhile project to get into without them. In other words, assume you won't get them, and if you can still make it work, then consider it. If the grants happen to work out it's extra $... but don't put yourself into a situation where you're screwed if they don't materialize.

Z

[ThreeRiversREI]

I would go into the deal ignoring the grants, and making sure that it's a worthwhile project to get into without them. In other words, assume you won't get them, and if you can still make it work, then consider it. If the grants happen to work out it's extra $... but don't put yourself into a situation where you're screwed if they don't materialize.

The only grant I'd be counting on, is the 10% one which is part of the 100% financing package.

Beyond that, the $5k/unit for accessibility upgrades just determines how much of those get done. Other grants for energy efficiency, etc. will certainly be applied for, but I'd be requesting sufficient rehab fund to make them not necessary.

Lots of research. Lots of paperwork. But for a great payoff!

[Debbie]

[QUOTE=ThreeRiversREI;31431 Well, if I don't have to offer sympathy, would I be too cold hearted to ask if his passing has resulted in any bargains becoming available?[/QUOTE]

No, not coldhearted. You're asking for education purposes is a smart one.

His survivors were children (40's years of age) and grandchildren (teens). They had no interest at all therefore sold some of the properties. Some are still up for sale that has price reduction several times.

Bargains? Again, I do not know but I seriously doubt it considering that at least a few has already been destroyed (vandalisms). Not in great neighborhoods.

I probably shouldn't have brought it up since I don't have direct informations. But I didn't want to see you as a potential "victim" without you being aware of potential consequence(s).

BTW---I do know there wasn't a misunderstanding between him and the government (I won't go into why/how I know). Plus, it was expected that tenants were responsible for own utilities.

[ThreeRiversREI]

Question to Dan, et al, as a lot of the details on the URA grants, etc. will likely be specific to the Pittsburgh, PA, area, but other details of FannieMae guidelines, HUD programs, etc. will be more widely applicable, should I post details here, in the PA forum, spilt them, or just hoard the information until the project is underway and then write an article and donate it to MB?

Dan Here: Just keep posting to this thread so we can follow the saga from start to finish in one place. Sort of like tuning in daily to the days of your life. A real estate soap opera, you just gotta love these learning exercises!

You got it, Dan!

First off, a quicky while I wait for my partner to arrive so we can go to day 2 of a Foreclosure training being held here locally.

City Act 42 New Construction or Home Improvements (http://www.county.allegheny.pa.us/opa/act42city.asp)

If you purchase or build a new home in the City of Pittsburgh you can be abated up to the maximum amount of $86,750 assessed dollars off of the building (house) assessment. This abatement is in effect for three (3) years as of the first year the purchase is tax assessed.
OR
If you do home improvements to your existing home in the City of Pittsburgh and the improvements are applicable, you can be abated up to the maximum amount of $36,009 assessed dollars from the increase of your assessment. This abatement is in effect for three (3) years as of the first year the improvement is tax assessed.

In short, as currently assessed, most of the value is the land. With Act 42, for 3 years after the rehab is done, the taxable assessment will remain the same.

[ThreeRiversREI]

These programs are, for the most part, specific to the Pittsburgh, Allegheny County, PA, region. However, similar programs are likely available through your local Urban Redevelopment Agency and are certainly worth looking into.

In addition to the property tax benefits provided by Act 42 that any project in the region can take advantage of, the Urban Redevelopment Authority of Pittsburgh also offers or administers several additional programs that offer tax benefits.

Local Economic Revitalization Tax Abatement (LERTA)

This is a tax credit on improvements to existing buildings and new construction that is available in selected areas of the City. In these select areas within the City of Pittsburgh an accelerated tax credit is available for the conversion of commercial buildings and land to residential use and hotels. See LERTA documents for further details.


ACT 42 (This is the one I talked about in my previous post.)

Allows a 100% abatement of City, County and School taxes on new construction housing and substantial rehabilitation housing. The enitre city of Pittsurgh is eligible for Act 42 tax abatement. For more information, see Allegheny County's web page: City ACT 42 New Construction/Improvements.


Keystone Opportunity Zones (KOZ/KOEZ/KOEZ Enhancement Sites)

This tax abatement program is available for specific parcels in several economically distressed neighborhoods throughout the City. This program abates virtually all state and local taxes for property owners, residents, and business tenants until 2010. The majority of the designated properties are either publicly owned, or are in severely deteriorated condition.


Tax Increment Financing (TIF)

When large-scale projects are proposed which are anticipated to generate significant new tax revenue on properties that are currently generating little or no tax revenue, Tax Increment Financing is a possible option to fill funding gaps. Tax Increment Financing requires the approval of all three local taxing bodies to agree to pledge a portion of the anticipated NEW revenues towards project costs.

The Urban Redevelopment Authority was the first entity in Pennsylvania to utilize Tax Increment Financing with the Pittsburgh Technology Center Project in 1993. The projected tax revenues were much higher than initially projected and allowed the TIF bonds to be retired a full twelve years earlier than scheduled.

TIFs are complicated deals to structure. Development projects utilizing TIFs must demonstrate a significant benefit to the City of Pittsburgh and to the community in which it is built to gain the necessary support.

See TIF FAQs for more information on what TIFs are and how TIFs work.


Federal Historic and Renovation Tax Credits

Federal historic and renovation tax credits are available when renovating historic or other older buildings and can generate equity in the amount of up to 20% of eligible development costs. For more information please visit the National Park Service's Federal Historic Tax Incentive's website: www2.cr.nps.gov/tps/tax/brochure1.htm


Pennsylvania Historic Renovation Tax Credits NOT YET PASSED BY LEGISLATURE

Twenty-one states have enacted state historic tax credits to complement the Federal Credit and capitalize on the economic benefits of historic renovation. Legislation has been introduced in both houses of the the Pennsylvania Legislature (Senate Bill 820 and House Bills 951 and 952). The House Bills passed unanimously in October 2003 and are currently in the Senate Appropriations Committee.

Please visit: www.pataxcredit.com if you would like to find out more information or join the URA in advocating for the passage of these bills.

See the recently issued draft document Preserving Pittsburgh, a joint effort by Pittsburgh History and Landmarks Foundation (www.phlf.org) and the URA. This publication details exactly how to use every tax incentive available to preserve and rehabilitate historic buildings in Pittsburgh.


My project is just outside 2 different KOEZ zones which were drawn specifically to focus on properties owned by the City of Pittsburgh and by the URA. If my project goes forward, I will certainly speak to the URA about the possability of getting the area in between the 2 existing KOEZ zones designated as well. Would provide some additional benefits, but not something that will be factored into my cash flow calculations at all.

For what it's worth, I got a tip on an 8-story office building connected to a 4-story office building downtown being sold in a LERTA zone for condo conversion. My partner already thinks I'm nuts for wanting to do a 60+ SFH deal so I didn't really get involved in the Due Diligence for that one, but I was highly amused when one of the lead news stories Friday night was that a different developer had signed a contract on the properties. That tells me I probably wouldn't have had time to make the deal happen anyway, but did give me room to gibe my partner about needing to think bigger....

Up next, URA loans & grants specifically to generate low income housing through multi-family projects. These are the core of my tentative proposal to move forward on my project.

[ThreeRiversREI]

The URA of Pittsburgh offers 3 categories of funding for development projects in ADDITION to the funding options for your BUYER that using the URA Development funds opens up. Again, these programs are specific to Pittsburgh, Allegheny County, PA, but similar programs are probably available through the local Redevelopment Authority where YOUR rehab/land development project is located.


Residential developer financing is offered by the URA's Housing Department. Through the issuance of Mortgage Revenue Bonds we are able to provide below-market interest rate mortgage financing to promote home improvement and home ownership in the City of Pittsburgh.

We offer a number of construction loan and grant "gap" financing programs that vary in features and eligibility requirements. Financing is available for small and large-scale new construction or the rehabilitation of rental housing.

We also provide equity financing to assist community-based organizations in participating in real estate development projects that provide housing or job creation opportunities


Single Family Residential


Pittsburgh Housing Construction Fund (PHCF)

Construction loan and grant "gap" financing for new construction and/or rehabilitation of for-sale housing.

Up to $25k grant per unit.
12 month loans of 80% @ 4% (for-profit) or 100% @ 0% (non-profit).
Completed units must be sold to low/moderate income households, or the development must be located in a Certified Redevelopment Area or eliminate slum and blight


Pittsburgh Housing Construction Fund (PHCF)

Construction loan and grant "gap" financing for new construction and/or rehabilitation of for-sale housing.

Deferred 2nd mortgage, 3% down (subject to requirements of 1st mortgage), 0% interest, due on sale/refinance.


Neighborhood Housing Program (NHP)

Commitments made to developers to provide deferred mortgages to income eligible purchasers of URA-financed new construction for-sale housing units. NHP loans are designed to cover appraisal gaps and/or to make units more affordable to qualified borrowers.

Deferred 2nd mortgage, 3% down (subject to requirements of 1st mortgage, up to $1k grant available for down payment/closing cost assistance)


Multi-Family Residential


Multi-Family Revenue Bond Program (MFRBD)

First mortgage construction/permanent financing for large scale new construction and/or rehabilitation rental developments. MFRBP projects typically have a first mortgage of at least $500,000.

10% equity requirement, 40 year loan term, loan amount determined by financial analysis of project, interest rate determined when bonds are sold.


Tax Exempt Bonds: 20% of units rented to households at 50% of area median income, or 40% of units rented to households at 60% of area median income (Issuance of Tax Exempt debt by the URA requires allocation of Volume Cap by the Pennsylvania Housing Finance Agency)
Taxable Bonds: 20% of units rented to households at 80% of area median income



Rental Housing Development & Improvement Program (RHDIP)

Flexible source of construction/permanent "gap" loan financing for the new construction and/or rehabilitation of rental housing.

Loan amount: Lesser of 60% of total development cost or $40,000 per unit
Loan Term: Longer of 20 years or remaining term of first mortgage
Interest rate: 0% - 5% (or more) depending on number of affordable housing units provided
Equity requirement: 10% of total development cost
Accessibility grants: Up to $5,000 per unit

Units must be rented to low income households or the development must eliminate slum and blight



Single and Multi-Family Residential


Pittsburgh Development Fund (PDF)

Flexible source of construction/permanent "gap" loan financing for the new construction and/or rehabilitation of rental and for-sale housing.

Eligible projects: City of Pittsburgh properties with total development cost of at least $1.5 million
Maximum loan amount: Lesser of 30% of total development cost or $5.0 million
Minimum loan amount: $450,000
Maximum loan term:

Rental Developments: Longer of 20 years or the term of first mortgage
For Sale Developments: Shorter of three years or the term of the first mortgage

Interest rate: 3% to 75 percent of prime rate
Equity requirement: 10% of total development cost


Community Development Investment Fund (CDIF)

Source of equity financing to assist community-based organizations in participating in real estate development projects that provide housing and/or job creation opportunities.

Eligible recipients: City of Pittsburgh non profit community-based organizations meeting specific criteria. The CDIF recipient can act as developer or co-developer, or can lend the CDIF funds to a developer.
Eligible projects: Commercial, industrial, and residential real estate developments
Maximum grant amount: $150,000 per project; $200,000 per year per organization
Leveraging:

Residential projects: 1:1 (other public and private investment to CDIF funds invested)
Industrial/commercial projects: 2:1 (other public and private investment to CDIF funds invested)

Project benefit:

Residential projects: 51% of units must be sold or rented to low income households, or development must be located in a Certified Redevelopment Area and/or eliminate slum and blight
Industrial/commercial projects: 51% of new jobs created must be made available to low income households or the development must eliminate slum and blight




Home Ownership
Pittsburgh Home Ownership Program (PHOP)

Provides below market rate first mortgage financing for the purchase of new or existing homes in move-in condition located in the City of Pittsburgh. Down payment/closing cost assistance grant funds are available for all borrowers.

Loan Term: 30 year
Interest Rate: 5.25% fixed
Down payment/closing cost assistance grants are available in the amount of up to $3,000 for all buyers.
Down: 3%, but financing up to 100% ltv?
Size: 1-4 residential units, Owner must live on-site
Income Limits apply except in Target Areas
First Time Home Buyers (not owned a home for at least 3 years)
Buyer must credit qualify.
Origination fee: 1.5% of first mortgage loan amount. Seller must pay at least 1/2 of the fee.

Housing Recovery Program (HRP)

Provides mortgage financing to purchase and rehabilitate, or to refinance and renovate older properties in the City of Pittsburgh. Interest free deferred, second mortgage money is available for qualified borrowers. Down payment/closing cost assistance grant funds are also available with this program.

Loan terms:

30 year fixed @ 6%
Interest free, deferred second mortgage funds available for up to 20% or 40% of total project cost. Available for qualified borrowers with properties located in Target Areas.
Grant funds for down payment and closing cost assistance for low income borrowers
Grant funds for the elimination of lead hazards within the home
Can be used for properties with as many as 4 residential units
Low down payment requirements--as low as 3%
Borrowers in Target Areas may exceed income limits.



Second Mortgage Financing

Interest free, deferred second mortgage financing to help purchase a newly constructed or rehabilitated single family home. Financing is only available towards the purchase of a URA-financed single family home.


0% interest, deferred second mortgage loans for the purchase of URA-supported single family homes for sale.
Loan is repaid only upon sale or transfer of the property or 99 years, whichever occurs first.
Loan can be used in conjunction with a URA PHOP first mortgage.
Property must be a URA-supported single family home, not available with any other properties
Borrower must be credit worthy
Income limits apply and depend on whether the home is newly constructed or newly rehabilitated
Borrower may not have received a second mortgage loan from the URA within the last five years



Properties receiving URA loans/grants qualify for URA loans when sold, definitely a win-win!

For my proposed 60+ unit (row houses) project, I am hoping to combine:

CDIF -- Work with one of the churches in the area trying to encourage redevelopment, possible equity share (150k = 10% equity for $1.5 million project)
PHCF Grants, 1st mortgage & PDF 2nd mortgage to acquire & rehab units to be sold.
PHOP, URA 2nd mortgage & Neighborhood Gold grant (if necessary) to assist sale to low income buyers.
MFRB 1st mortgage & PDF 2nd mortgage for rental units.


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[ZNICK]

This is the total opposite of K.I.S.S. I couldn't even read it all, lol. :SM050:

Z

[Dan Auito]

It's the Gov't Nick, what would you expect!

[ThreeRiversREI]

This is the total opposite of K.I.S.S. I couldn't even read it all, lol.

Yeah, I know. I'm must be crazy as I eat this stuff up like meat & potatoes! And just think, while I did a lot of cutting & pasting, I -also- did a lot of work to simplify it as much as possible while still getting the pertinent facts out. :eek:

And while I'll probably eventually put a cheat sheet together and post it to the PA group, so much of this is going to be specific to the Pittsburgh market that it'll be of limited value even there as the other PA investors seem to be on the other end of the state.

Now, a lot of the various loan programs I'm identifying for my eventual buyers are FHA, FannieMae, FreddieMac, etc. so that information WILL be applicable to all the family that wants to sell a property. And I'll work EXTRA hard to make that cheat sheet as simple & easy to understand as possible. :stupid::kidding:

And hopefully a Mortgage Broker or seven in the family will step up and say they work with most/all of those programs and will work with buyers anywhere in the country. :SM122: