Act, Congress proclaimed that every American family should have a safe, sanitary and decent home in a suitable environment. At the same time, lawmakers realized that many families simply can't afford decent housing and, established the Other Homesteading Program.
This little known program makes it possible for people of low income or very low income to purchase homes in specified areas for a payment of $1, provided the applicant qualifies for a loan in the amount of from $25,000 to $30,000 (the amount needed to make homes livable). Home titles are awarded to families or individuals who live in the homes for three consecutive years.
For more information:
Contact the local Housing and Urban Development office nearest you. For telephone numbers, call the Federal information Center in your area.
Uncle Sam is more helpful than most folks realize when it comes to providing free or nearly free money to be used to purchase, rent or fix up property. To be sure, most of these government programs worth looking into if you're looking for a place to live and have limited funds.
The Farmers Home Administration makes housing loans to low-income and very low income rural families to assist in obtaining decent, safe and sanitary dwelling. Applicants must be without adequate resources to provide housing on their own account, must be unable to secure credit from other sources and must be citizens or permanent residents of the United States. Contact: Administrator, Farmers Home Administration, Washington, D.C. 20250.
The FHA also helps qualified low income families, handicapped individuals and senior citizens who are unable to meet the rental payments established for FHA qualified rental units, provided adjusted income does not exceed established limits. In fiscal year 1988, for example, the FHA made almost 25,000 such loans totaling a whopping $275 million.
Housing for the elderly or handicapped. Rental assistance is available for individuals 62 years old or older, the physically handicapped, the developmentally disabled, or the chronically mentally ill. Contact: Assisted Elderly and Handicapped Housing Division, department of Housing and Urban Development, Wash., D.C. 20410
PHA/IHA low income housing. Low income families with the potential for home ownership can qualify to receive benefits from the Public Housing Agency or, if qualified, from the Indian Housing Agency. These agencies provide low income families with the opportunity to purchase their own homes by assisting a family with its payment until such time as the family's income and equity accounts increase to the point where the family can obtain permanent financing. At that time, home ownership passes from the agency to the family.
If you are relatively wealthy and thinking about purchasing a luxury home but are waiting for a bargain, (DON'T! WAIT) you might be better served to hurry your purchase, this is a buyer's market unlike before. Tax breaks are available
Using property you own to raise cash
If you're in need of some ready cash, consider a sale lease back of business property you own. Such a deal would put 100 percent of the current value of the property in your pocket while allowing you to write off your rent payments as business expenses. You would, of course, be able to continue using the property as before, for the life of the lease, which could include renewal options.
The buyer (lessor), on the other hand, would receive taxable rental income; would be able to take depreciation deductions and applicable deductions for expenses of maintaining the property; and would have the ability to sell the property to the lessee or other party, at fair market value, when the lease runs out. (Typically, the seller, or lessee, would have first option to buy.)
Note that the IRS will look very carefully at such a deal and that, in order to avoid having the deal "red-flagged," any repurchase agreement must be structured so that the change of ownership is real. In other words, do not include provision for repurchase for less than fair market value.
When looking at a used home, you need to check, carefully, to make sure you're not buying a lot full of problems. According to experts, the following are easy, quick "tests" you can perform to check the structural soundness of a dwelling.
Check for settling due to an uneven foundation. This is a fairly common problem. Evidence may indicate eave line (the horizontal line that defines the bottom or leading edge of the roof) distortion, a sagging roof ridge (the highest point of a pointed roof), cracks in plaster ceilings, loose fitting or binding windows for example.
Check for distorted horizontal members, as evidenced by uneven floors, cracked wall plaster, and poorly fitting doors.
Check for rot and decay. Check all wooden members for signs of decay at points of contact with concrete (floor joints supported on concrete walls, framing supported in a pocket in a concrete wall, and wooden posts supported on a concrete floor).
Check other likely problem areas. Check the roof carefully for ridge sags, rafters that sag or have pulled away from the ceiling joist, and gaps in any turns in the roof or around chimneys.
While such horrors as radon and toxic waste poisoning get a lot of headline space, there are other - more common - health hazards that can afflict homes and which, obviously, can turn the purchase of even a bargain home into a nightmare.
Here's our list of the top most common 10
Inadequate ventilation. Install an exhaust fan in an attic or basement with venting to damp areas, such as bathrooms, laundry rooms and the kitchen. If it's too pricey to install a central exhaust system in an existing house, install separate fans in each bathroom, and the laundry room and a range hood and exhaust fan in the kitchen.
Excess dampness. Damp causes rot in walls, rafters and roof sheathing and can cause (in some individuals) health problems.
Combustible gases. If a home has (as almost three fourths of American homes have) wood, gas or oil burning appliances, be sure that byproducts are vented outside. You may also install air intake valves on furnaces and wood stoves to make sure back drafts do not cause seepage of dangerous gases into the home.
Unhealthy water. Th home's water supply should be tested for radon, lead, microorganisms, pesticides, arsenic, etc. If unhealthy substances are found, have an expert tell you what kind of filtration system is needed.
Formaldehyde. This toxic chemical is released by particleboard subflooring and by urea - formaldehyde insulation. Pull up the carpet or floorboard in a closed area to check for particleboard; check behind electric cover plates for a light - brown foamy mass or powder. Particleboard can be sealed with two coats of sealant (check with a hardware store for the best products). but urea - formaldehyde insulation should be avoided unless it was installed at least four years earlier.
Lead paint. this is such a health hazard that many state and local health agencies will check homes free. If lead paint (used in about two-thirds of the homes built before 1940, about one third from 1940-1960, and even a few built after 1960) turn up, it will cost anywhere from $5,000 to $15,000 or more for complete removal. To determine who is qualified to lead-free a home, contact an expert recommended by a local or state health department.
Asbestos. Used to insulate pipes and hot water heaters and in some textured ceilings. If you spot what you think is asbestos, contact the local office of the Environmental Protection Agency for advice and the names of professionals who can either remove or seal the substance.
Pesticides. Before making an offer to buy any home built before 1988, get a history of pesticide treatments. To determine the risk of any substance, contact the EPA pesticide hotline at 1.800.858.PEST. If you determine that the house has been treated within the last decade with chlordane or any other banned substance, you probably should just pass on the deal.
Radon. This natural gas, produced by the breakdown of radium in soil, is believed to be found at cancer causing levels in about 10 percent of U.S. homes. Contact your local EPA office to learn how to have your home checked; if radon is found, have the EPA give you names of specialists in radon reduction.
Toxic waste. Every buyer should be concerned about this prevalent problem. Determine if the home you like is situated within one mile of a dump or sits on land that was used for landfill purposes by contacting your local health agency. For soil testing, contact the agriculture department of a nearby university or hire an environmemtal engineer. For advice on how to eliminate toxic waste, contact the EPA at 1.800.424.9346.
Smart condo buying requires expertise not required in the buying of a single family home, largely because you - as a condo owner - must share certain responsibilities with other unit owners and, at the same time, must give up some "rights" you would have as the owner of a detached, single family home.
Tips to help your condo buying end happily
Make sure you have your lawyer (or an expert in condominium law) look carefully at the convenant of condominium - also called the master deed or declaration of condominium - so that you know exactly where you stand as an owner.
Remember that clauses in the covenant or deed are non- negotiable. Period.
Whatever you do, don't buy on impulse. A beautiful unit with a charming view can become a prison under the wrong circumstances.
Watch out for:
Resale restrictions. Your condominium association may have right of first refusal that could make FHA, Va and other government insured mortgages unavailble and that could, in fact, significantly impair your ability to sell your unit.
Use restrictions. You may not, for example, be able to rent your unit more than once, for one year, in the life of ownership .. this can be a real drawback if you decide to move but want to hold the unit in a soft market. Other restrictions can include rules against pets, cookouts on balconies, and even hanging a wet bathing suit on a balcony railing.
So-called "sweetheart deals." These are costly deals that can significantly boost maintenance fees. The most typical one occurs when the condo builder-developer owns so called "common" areas (swimming pools, for example) and leases those areas back to the condo association.
Subsidized fees in newer buildings. In some cases, a developer will manage common areas for a fee until all units are sold and then turn those areas over to the condominium association. As units are sold, these developers often charge very low management fees -- fees that soar once the association assumes responsibility.
Construction problems. Check carefully for these. Have an engineer inspect the building. If repairs are needed, including roof repairs, painting, etc., you'll have to pay your fair share through an assessment procedure.
The best time to buy is during the pre construction sale of new units
Be sure, however, to buy at pre-construction prices only in a locale where demand for similar units is high. You don't want to end up the only owner in a 200-unit building.
Condo investing tips:
While the condo market is extremely soft in some parts of the country, many investors are once again looking for profits in condominium investments, hoping to find plums at rock bottom prices and, at that same time, planning to benefit from mistakes made in the past.
Here are some tips:
IT's best to buy a condo that's selling for about 25 percent less than single-family homes in the area right around the condominium building.
It's best to buy an apartment in a building surrounded by single-family homes. Avoid, if possible, units in outlying areas.
It is better to buy a condo in a well populated area close to your home than a unit in a resort area far from where you live. While you might get higher rents for a resort condo, you're in big trouble if it sits empty for any length of time. At the same time, a unit far from home requires much more time for inspection and maintenance.
Time sharing (the purchase of rights to use a vacation condominium for a special time each year) has a bad reputation. Sadly, that reputation is, at least to some degree, deserved. You must be wary if entering into such an agreement.
Consult an attorney before signing anything. Read and study all documents carefully. Call the Better Business Bureau, the Chamber of commerce, and the local Department of Consumer Affairs office to check the project's management and developer.
Inspect the resort but be ready to resist lots of sales pressure.
Make sure you love - really love - the area in which the resort is located. You're going to have to live with your decision.
Do not pay a total that's more than 10 times the going rate for comparable time in a rental unit in the same area - even if the life of the time-sharing agreement is 20 years. You'll be putting a lot of money into the unit, paying interest, and earning nothing.
Buy only from an experienced builder-developer, one who has a track record to protect.
Buy a one or two bedroom unit in an area that's easy to reach. You'll have a better chance of selling or trading your time.
Buy time only in an area where natural geography or zoning laws will prevent overbuilding.
Real estate tax-shelter questions:
Given changes in the tax law, the only real estate tax shelter that make sense are those that have some economic substance. It's no longer sufficient for a shelter to generate write-offs of 2-to-1 or 3-to-1.
Here are steps needed to to make sure you're not going to be running for cover after you buy into a tax shelter:
Make sure that the economic assumptions presented make sense. If, for example, promoters are basing apartment house cash-flow projections on 100 percent occupancy rates, you have to question their wisdom and/or their honesty. Make sure, at the same time, that rental rates used to figure cash flow are realistic.
Check fees charged by management. Continuing management fees should be no more than about 5 percent of gross. Are fees paid to management for selling the project to the investor group or selling the project at the end of the partnership (and this is a judgment call) "fair" - or do they seem to be exorbitant? You can also check with your accountant to see how similar deals are structured.
Check to see whether most management fees are paid up front. It's better if managers take their lumps (and make their profits) along with partners. They then have a vested interest in performing well!
