Get this! I attended a meeting today in Brevard County Florida. The County Government set forth their program to distribute the Federal Stimulus Money. The mandate from HUD is that the money must be spent in designated areas where there are a lot of Foreclosures. The County intends to buy 61 REOs. Here's the kicker. The County isn't buying them for themselves, they are buying them for investors.
Here's how it works. The Investors/Contractors submit an application. If they are approved and meet the criteria they will have a chance to bid on properties identified by the County. There are some HUD guidelines but nothing too stringent. The County will then provide all of the money to the Investor at closing to purchase the property AND will also reimburse the investor for all repairs Plus a 15% developers fee. The 15% Developer's fee is based on the total acquisition cost plus repairs. So if the house cost $70,000 and the repairs cost $30,000, the Investor can collect a $15,000 fee.
That's right, the investor gets ownership of the house, gets the repairs paid for and can charge a 15% fee for doing this. The only catch is that the investor has to rent the home to low income tenants for a designated period of time. If the rehab project costs less than $25,000.00 the period of time is 10 years. If the rehab costs between $25,000 - $35,000 the period of time is 20 years and if the cost of rehab is over $35,000.00 the period of time is 30 years. In the meantime he gets to collect and keep the rent on a free and clear house and also has all of the tax breaks for owning the home as well. After the expiration of that time, the investor is free to do what he wants with his free and clear property the government bought him.
Isn't America Grand!!!!
Chris McClatchey
THM Investments, LLC
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