In this economy we are eagerly trying to find ways to find funding sources, and I, as a practitioner and developer, share the pain. We have developed this website to coincide with the Government Deal Funding Home Study course to help you think about new ways to creatively finance, acquire, and rehabilitate deals all over the United States. I hope you find the information useful and welcome your feedback.
Are you finding deals are getting tougher to close with the new restrictions banks are pushing on applicants? Is it taking longer to get a deal done? Have you stopped looking for new projects to acquire?
The last few years have been a very difficult period in real estate history. Some markets have declined upwards of 50% in value with no light at the end of the tunnel. Not very good news if you started your “buy and hold” in 2007, but will certainly work better for you now as you pick properties up for a fraction of their price of years ago. Now as cap rates are heading into the two digits in some larger metropolitan areas, while dipping to 5% in others, this could be a market they have never experienced.
So what can we do to get some of these declining assets? The banks that were lending up to 125% a few years back have either left the market or cap an acquisition at 70% loan to value. The remaining 30% is up to the investor. But raising the 30% slows down transactions and your friends in Congress have attempted to help.
In July 2008, the President signed the Housing & Economic Recovery Act (HERA), which among other things, provided $4.5B to all 50 states, some territories like Puerto Rico and the Virgin Islands, and the District of Columbia, to combat neighborhood declination by foreclosure. These funds, known as the Neighborhood Stabilization program, were supposed to help investors, both for and non-profits, buy and rehabilitate foreclosed buildings in order to prevent the stable households from losing too much value. In February 2009, Congress added an additional $4.5B to the program, now known as NSP II, to further carry out the NSP mission.
This is nothing new. The federal government has been investing in real estate for years, at least since HUD was conceived during the Johnson administration in 1965 as part of the Great Society initiative. HUD allocates through the individual States and territories upwards of $20B per year to facilitate economic development and housing activities. Additionally, many states have programs of their own that can match federal funds in addition to over $5B in tax credit programs available to stimulate acquisition, rehabilitation and new construction of real estate projects.
In addition to our live seminars with networking and “in the classroom” learning, you now have a great way to learn about Government Deal Funding for Real Estate Investors and Developers from home.
Both the live events and your PRO System below include a free month’s membership to the Members Only section on the site where can you stay up to date on the latest changes in the industry.