Monday, May 15, 2006
Creating Home Buyers
There are lots of renters in every market who would love to buy a home if they could just save enough money for the down payment. If they're paying rent, they could probably make a house payment... and have a home with a yard for the kids to play in!
I have an idea that will literally generate the downpayment money for these families, and have a positive economic impact on the community.
My plan is to purchase an apartment building and fill it up with people who want to buy a home. These tenants will pay rent, but when they're ready to buy a home I will rebate back their rent and they can use it for a downpayment on a home.
We won't be able to rebate all their rent money, of course, because we will have expenses of running the complex... taxes, insurance, maintenance, etc. But, hopefully, we could give them about a 50% rent credit to build toward their downpayment.
For example, if they are paying $600 per month for rent, a 50% rent credit would add up to the tune of $3,600 per year. At the end of two years they would have $7200. This is a forced savings for them. This could possibly be enough to buy a home, if we structure the purchase for the seller of the property they are buying to pay some (or all) of their closing costs.
Unfortunately, I am not independently wealthy and cannot finance this project myself. However, if I had some like minded people who would like to "partner" with me it could work. We wouldn't really be looking to make a return on our investment per month because we'll be giving the tenants as much credit as possible. But, we will maintain ownership of the building which will increase in value. If I had a lot of people willing to invest just a little we could make this work.
This is the seed of my idea. I'll tell you more about it in subsequent posts. In the meantime, let me know if you have input for this project.
Posted by Carol at 2:29 PM