Developing Small Rental Properties

Property Identification Should I buy this property?--how to evaluate properties for purchase and use as rental property? The market for housing right now means that we have to be able to make decisions quickly in order to compete for the purchase of property. What are ways to decide if the property you are purchasing is right for your organization? What should you do to prepare for property selection? Location analysis—do you want to concentrate on one neighborhood or community? Property condition analysis:--How much rehab will be needed?

PROPERTY IDENTIFICATION (con’t) Neighborhood/Community selection—is there need? how many units? Should we be developing housing in “high opportunity” areas? Are there tenants in place? Financial projections

Financing a project Federal funds can rarely be used alone to purchase rental property—there is not enough. What other sources are available to leverage federal funds? Do you really want to use federal funds because they put restrictions on rent amounts, relocation, tenant selection and have requirements regarding the rehab that must be done? Some financing examples What are lending options? Local banks CDFI’s WHEDA

10 Unit Supportive Housing project

10 Unit rental project Source Amount Owner Equity $192,000 HOME/CHDO Funds $700,000 Loan Funds** $675,500 Total Project $1,567,500 ** rents must cover the mortgage payment

Rehab What rehab should be done When should rehab be done Requirement of funding sources Rehab of occupied units?

Property Management Self Manage? Management Company? Other alternatives?