COMMENT OF THE DAY: IMAGINING A HOUSTON TEARDOWN FINANCING FUND “Cool place. And could be bought with payments less than rent in the area. I wish lending were easier. I think this place would have a better chance of being saved. This will likely have to be bought unfinanced due to its condition, which means wrecking ball. I’d love if there was a fund of sorts, funded by people that want these places saved. Then home buyers could borrow from this fund when bank financing was otherwise not available. That would give the people that want to save these places a way to put their money where their mouth was while not having to directly buy and rehab themselves. A bonus would be an actual return on their cash vs the .1% they get in a bank. Dreaming, I know . . .” [cody, commenting on Peeling Away a Richmond Place Spanish Colonial Bungalow]
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I love this idea. But there’s no reason the City shouldn’t play a role in setting up a historic preservation fund. They already spend money on sticks to try to force people to preserve historic buildings – with the delayed permitting and historic districts. This would be a good carrot to encourage historic preservation.
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One could envision the City putting a small amount of resources towards helping set this up. They could team up with local credit unions, real estate investors, and other interested parties to set up the fund.
There’s a fundamental flaw in that plan… People who want to buy and restore a house like that are subset of a subset of a very small subset of customers. A lender has to consider a sale value of a home in case of default and with such a small customer base a value is hard to pin down therefore making the risk too high.
Commonsense: The subset is bigger than one might presume. How can you explain the popularity of groups like Houston Mod? I’s always going to be a niche market. but as long as the loans are available for a wide enough sort of renovation (I.e. good for mid-century mods, 1920s bungalows, Victorians, or anything else old and worthwhile) I think the market could be wide enough.
Fannie Mae has a specific lending program they call a Home Style Renovation Mortgage. You can fund repairs and improvements up to 50% of the as-completed value of the property. That’s a LOT of money for repairs, at rock bottom rates.
https://www.fanniemae.com/content/fact_sheet/homestyle-renovation-factsheet.pdf
Seems to me that if you’d like to see a fund like this started, you should start it. I can’t imagine there’s a law that would stop you. These things are easy to talk about but much harder to actually achieve.
Anse: I’ve tried. To be honest I haven’t had time to properly pitch or market it. But thus far no takers. The properties we upgrade are normally known to the neighbors and subdivisions and I’ve never seen an offer to help get things done faster or better. But again, I’m not too active in trying to solicit help.
Yesterday we bought a junker near UofH that needs love. I don’t mind taking it on myself but at the same time I hope to not hear complaints that its taking to long to improve.