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Non-Profit Housing Orgs – The New Market in Real Estate Education. Robert C. Kutschbach hondros college & Carleton Realty . History of Non-Profit Housing Organizations. 1900’s Church Sponsored Organizations. Homes for the Aged Homes for W ayward Children Homes for Orphans. - PowerPoint PPT Presentation
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ROBERT C. KUTSCHBACH
HONDROS COLLEGE&
CARLETON REALTY
Non-Profit Housing Orgs – The New Market
in Real Estate Education
History of Non-Profit Housing Organizations
1900’s Church Sponsored Organizations
Homes for the Aged
Homes for Wayward Children
Homes for Orphans
1970’s & 1980’s Fair Housing Period
Community Monitoring & Enforcement
Housing for Disabled
Low Income Housing
Consumer Credit Counseling
1990’s Home Ownership & Education Promotional Period
Private Charitable (Nehemiah, AmeriDream®)
Government Sponsored (OHFA)
Community Based (Homes on the Hill, Gladden Community House, Columbus Neighborhood Housing Service)
Environmental Education Lead Paint Radon Mold
2000’s Current Era
Loan Restructuring
Short Sale Advisory
Foreclosure Counseling
Credit Repair
Energy Efficiency Initiatives Green Construction Solar & Wind Energy Star
Advantages of Being a “Not-For-Profit”
Organization
Advantages of Being a “Not-For-Profit” Organization
Tax-free income allows more capital to be retained
Ability to raise capital in more ways – Loans only available to non-profits
Many preferences are given to non-profits HUD – first chance at bidding and reduced prices (10%-
30%) for repossessed properties & rental GFE’s – first chance at bidding & reduced prices on
repossessed homes. Tax Credit Financing – Over 90% of tax credits for
financing are awarded to non-profits
Advantages of Being a “Not-For-Profit” Organization
(Continued)
Can raise money through tax exempt donations
Non-profit offer competitive salaries & wages to attract and retain qualified staff
Limits personal liability
Eliminates property taxes
Allows eligibility for public & private grants
Provides for support from political advocacy groups
Target Markets &
Educational Subjects in Demand
Target Markets
Retirement Housing Providers Independent Living Assisted Living Skilled Nursing
Housing Providers Low Income Persons with Disabilities Homeless Housing Providers
Target Markets (continued)
Fair Housing Agencies
Homebuyer Assistance Agencies
Credit, Delinquency & Foreclosure Counseling Services
Types of Educational Subjects in Demand
Financing Programs
Credit Reporting
Property Management
Construction Management
Fair Housing
Types of Educational Subjects in Demand (continued)
Consumer Rights
Environmental Issues & Regulations
Home Buyer Budgeting
Energy Saving Techniques
HUD Approved Housing Counseling Courses
Financial Management / Budget Counseling
Mortgage Delinquency & Default Resolution
Non-Delinquency Post Purchase Workshop
Pre-Purchase Counseling
Pre-Purchase Home Buyer Education
Fair Housing Pre-Purchase Education
HUD Approved Housing Counseling Courses (continued)
Predatory Lending Education
Rental Housing Counseling
Home Improvement & Rehabilitation
Financial Budgeting & Credit Repair
Courses are offered in English, Spanish, Arabic, Cambodian & Portuguese
HUD’s annual budget for homeowner education & counseling is $88 Million
Financing Programs of Special Interest
Financing Programs of Special Interest
Section 202 - Supportive Housing for the Elderly Special program for low income senior housing
communities HUD determines “certificate of need” within various
communities All residents must meet low income guideline Federal Government pays for all allowable expenses
including reserve for replacements for amounts exceeding tenants rental contribution
The advance is interest free and is not repaid if the housing is available to low-income persons for not less than 40 years
Financing Programs of Special Interest
Section 202 - Supportive Housing for the Elderly (continued) Owner gets a “management fee” but no other profit Requires a guarantee from sponsor No down payment required. Capital advances are
made to eligible non-profit sponsors 40 year amortization (property is free & clear
thereafter)
Financing Programs of Special Interest
Section 203(k) - Rehabilitation Loan Allows for the acquisition & rehab of residential
houses (1-4 family) Rehab costs are financed into the loan Buyer may add-on appliances to the loan Buyer may add-on energy efficiency improvements to
the loan
Financing Programs of Special Interest
Section 203(k) - Rehabilitation Loan (continued) Processing time is longer Minimum $5,000 rehab required 3.5% of the total cost required as down payment Fees & interest rates are higher than normal FHA
loans & interest rates
Financing Programs of Special Interest
Section 221(d)(3) & (4) - Multifamily Rental Housing for Moderate-Income Families Program designed for the construction or major rehab
of large multifamily complexes (Over 20% of loan must go to rehab)
Reserve for replacement required 90% LTV financing (however general contracting
services may be used in lieu of down payment) 40 year amortization Non-recourse loan which is assumable
Financing Programs of Special Interest
Section 207 & 223(f) - Existing Multifamily Rental Housing Program designed for rehabilitation of large
multifamily complexes Loan covers acquisition & rehab costs Reserve for replacement required 85% LTV 35 year amortization Non-recourse loan which is assumable
Financing Programs of Special Interest
Section 232 - New Construction or Substantial Rehab of Nursing Homes, Intermediate Care Facilities, Board & Care Homes, & Assisted Living Facilities Must accommodate 20 or more patients requiring skilled
nursing care by licensed & trained professionals Major equipment needed to operate facility may be
included in mortgage Facilities for day care may be included Reserve for replacement required 40 year amortization Non-recourse loan which is assumable
Financing Programs of Special Interest
Section 811 - Supportive Housing for Persons with Disabilities Project rental assistance covers the difference between
HUD approved operating costs and the tenants contribution toward rent
The advance is interest free and is not repaid if the housing is available to low-income disabled persons for not less than 40 years
Capital advantages are made to eligible non-profit sponsors Requires a guarantee from sponsor Low down payment required. (½% of loan amount not to
exceed $10,000) 40 year amortization
Financing Programs of Special Interest
USDA 515 - Rural Rental Housing Loans Program designed for construction of multifamily
complexes in rural locations for non-profit entities Cooperative Housing Downtown Renewal Areas (Rural) Group Homes / Disabilities Rural Housing for Seniors
Financing Programs of Special Interest
USDA 515 - Rural Rental Housing Loans (continued) USDA issues (NOFA) Notice of Funding Availability for
Targeted Communities Competitive applications are submitted State directors approve loans to $1,500,000 to selected
projects Loans are written at a current rate, but can be reduced to an
effective rate of 1% based on income of tenants Requires a guarantee from sponsor No down payment Loans are for up to 30 years, but amortized over 50 years Owners may obtain guaranteed equity loans after 20 years as a
incentive for participation.
Tax Credit Financing
Federal tax credits are allocated to state agencies to assist with financing of targeted needs in the community
The state agency chooses which projects are most deserving
These tax credits are used by the project to raise money from investors
The interest paid to investors is federal tax-free
Not only is it easier to raise capital, but also, at a lower rate.
Recent Laws & Regulations
2009 American Recovery & Reinvestment Act
250 Million designated to “green” retrofit low income multi-family housing complexes
13.61 Billion was allocated to other programs administered by HUD (75% was to be administered by state and local agencies)
2010 EPA Regulations
In April 2010, EPA Regulations require contractors that remodel homes built prior to 1978 obtain certification as a “lead renovator”.
Today, this certification is being provided only by a few national paint companies.
2011 Government Regulations
Recent Government Regulations require special disclosures if companies are offering “pre-foreclosure or short sale” services or counseling
Summary
Real estate education goes far beyond pre-licensing, post-licensing, & continuing education for licensees. The needs in our society for real estate education are great. Non-profit organizations are just one example of this need. Real estate education providers should be exploring these other opportunities.