With the popularity of shows such as “Property Ladder” and “Flip This House” people have begun flipping houses for fun and for profit. Unfortunately, even in real estate the old adage holds true. You still have to spend money to make money. However, no one said the money you spend has to be yours. There are plenty of programs out there designed to kick start the housing market and in turn the economy, that pose very little risk to you as an investor. The key is learning where to find them.
NSP
The NSP stands for Neighborhood Stabilization Program; its purpose is to stabilize the housing market in communities that have many foreclosed or abandoned properties. This is a part of the CDBG or Community Development Block Grant. The grant allows for the purchase and redevelopment of these homes, the demolishing of blighted structures and the redevelopment of the demolished areas. The NSP is nationally available; however, each state and city could have different participation requirements. Before you attempt to enter into this potentially profitably business, check with your local county government for opportunities with the Community Block Grant.
CDBG
The Community Development Block Grants, funded by the Department of Housing and Urban Development, offer grants to provide a wide range of revitalization opportunities. These include Construction Rehabilitation grants and Land Acquisition grants. The purpose of the grant is to provide decent housing for low to moderate income families and provide the community with improved facilities and services.
Minority and Women Owned Businesses
The government also offers grants to provide assistance to women and minority owned businesses over a period of five years. These grants offer assistance in financial, management, marketing and startup to businesses with fewer than 500 employees and owned or controlled by these individuals. The list of eligible applicants for this type of grant range from small business to private institutions and even include specialized groups such as students and veterans. These grants are usually awarded to those who intend on selling to first-time home buyers or low income families.
Another way to invest in real estate without putting out too much money up front is to purchase tax liens. When people don’t pay property taxes to the county, the county puts a lien against the property. These liens start at as low as six dollars. You are essentially paying the persons taxes for them. They will then have a specific amount of time to pay the taxes back with interest and a late fee. The county will then turn around and pay you the amount you paid originally plus interest. If the owner never pays the back taxes there is a chance that the lien will then turnover to you. People have bought properties for as little as 1,000 dollars. With the increase in foreclosed properties the banks are letting these liens go and not fighting for first place lien-holder. If you are in a state with a good interest rate on these tax liens you will at least make more money than a savings account, at best you could end up with a property that you paid next to nothing for.