If you watch the news or read the paper, you may be thinking that real estate lending has completely dried up. You’re guessing you can skip over everything I’ve ever written or recorded about finding creative ways to finance investment properties, fund renovations, and get free downpayment money, because all those opportunities must be gone.
But you’d be wrong. Sure, things are tighter than they used to be. But there are still programs out there that can help you. You may be surprised to hear that some of the best ones going are funded by the government. And, in fact, it might be easier to get that money today than ever before: fewer people are going after them now, because they’re all listening to the news, too, and taking it at face value.
There’s a pile of government money available to investors – if you know where to look. We reveal all our secrets so you can get your hands on those funds at the Russ Whitney Millionaire Mastery Training Program.
The reality is that even in the boom-boom days, few people knew about all the government grant programs available to help with real estate. Banks and other lenders aren’t going to point you toward them – they make no money off these programs, so what’s their incentive? Most Realtors don’t know they exist. But I’m here to tell you, these programs can be a huge boost to your real estate investment business – if you’re willing to do a little detective work to dig them out.
The first thing to investigate is something called the Community Reinvestment Act or CRA. This is a federal law that requires banks to lend money for projects throughout the community – including in the low to moderate income neighborhoods. Any bank that is FDIC-insured must comply with the CRA – and that means they have to have a written CRA plan.
That means you should call each of the banks in your area and ask who administers their CRA program. Contact that person, and ask for a copy of their CRA plan – they’re required by law to share it with anyone who asks.
Depending on your income, there’s two different ways this information can help you. First, if you’re within the income limits set by the government, you may be able to get CRA funds to buy investment properties. If your income is above the limit, you can use the opportunity for CRA financing to entice buyers or lease/option tenants. The income limits vary depending on where you live, so be sure to check out the most recent numbers on the HUD Web site.
Once you’ve looked over the plan and figured out where you stand, make an appointment with the bank CRA administrators and start asking questions. If they’re smart, they won’t see this as a hassle – they’ll see that you can help them meet their CRA quota for the year. Each bank is required to lend a certain amount in low to moderate income neighborhoods, and they don’t spend their marketing budgets pushing that. So they need all the help they can get – and you can serve it up for them on a silver platter.
Community development block grants (CDBGs) are another good opportunity. These federal grants provide money to state and local governments for economic development projects. Each local entity gets to decide how to administer the money, but they’re required to devote a certain percentage toward projects that redevelop low to moderate income areas. Again, no one is out shouting this stuff from the rooftops, so you’ve got to do some digging to find out what CDBG funds are available in your area. The best place to start is your local department of economic development. Each place calls it something a little different – other possibilities are the departments of community development or housing. Don’t get hung up on the name, it’s the concept you’re after.
Ask what government grants are available for housing in low to moderate income areas. Some are very specific – funds for single moms, certain minority groups, people with disabilities, whatever. Some will give you a lump sum if you commit to using the money to provide safe, affordable rental housing in that area. Some you may not even have to pay back.
Now, as with any government program, these things change all the time. I can’t give you ever last detail on how it works because each program is different and they’re in constant flux. One program is cut, another one starts up, acronyms are flying all over the place. It takes some patience and some persistence to find what you’re looking for. But trust me, this money is still out there for the taking. You just have to know where to start, and know enough to ask smart questions. So ignore all those negative messages you’re hearing about real estate lending from everyone around you. Don’t argue – just let them keep listening to the talking heads on TV and the doomsday predictions in the newspaper. Let them go right on thinking there’s no more money out there – it just reduces your competition.