There are several ways to get renovation loans for rehabbing land bank homes in Kansas City. This post will talk about loans for individuals, and loans that can be used by investors (including nonprofit investors).
These loans are designed so that the buyer has funds available to renovate the house included with the mortgage. City and business leaders are supporting these efforts, and trying to work together with residents to improve the quality of life in their neighborhoods. However, many community leaders don’t have enough information to successfully acquire and renovate the homes. There are two often-mentioned loans that are helping to finance the home renovations; the FHA 203k loan, and the Fannie Mae Homepath.
For individuals who are interested in rehabbing land bank homes in Kansas City, I recommend attending a homebuyer’s education class offered through the Neighborhood Housing Services of Kansas City, Missouri. They are an accredited housing counselor under the Neighborworks America Network of Affordable Housing Providers. As always, be on the lookout for scams from people who claim to be selling land bank homes. You can qualify for these loans with some moderate credit strength, and the loans can provide up to 97.7% of the total costs of the after-renovation value of the home. (HUD has recently changed some of the value limits for eligible KC Dream or HUD Home funds).
For neighborhood groups and nonprofits who are interested in rehabbing land bank homes in Kansas City, you have many good resources available. You will want to first check if there is a more established nonprofit that you may work with. It is a lot of work to manage the financing and project management, especially when FHA or other HUD financing is involved. You may want to decide if this is a long term goal for your organization.
If the answer is yes, there are ways for Community Development Corporations to help allocate the funds available for home renovations. A strong organization is a must. Neighborhood associations will not usually be strong enough to handle the complex financial and organizational tasks that are necessary to manage the properties. Get some training at this year’s Neighborworks Training Institute. The institute is online all year long, but will be making a special one time appearance in Kansas City this December. Make sure you have strong agreement among members regarding incorporation and role definition, and then register as a 501c3. Find a strong board. Make sure you have some financial strength, and then start buying homes. You will have many great resources available. These include the Missouri Housing Development Commission, the land bank, and Neighborworks America.
Nonprofit developers will be able to acquire and rehab these homes using the Fannie Mae loan, but not the FHA 203k loan. Each of these loans ask for an estimate from a licensed and accredited contractor to provide the value of the estimated renovation. There is a lot fine fine print, too much to go into here. I hope this helps. You can sign up for updates by signing up for our newsletter.