“Lack of money is the root of all evil.” – George Bernard Shaw
Politicians know that the best way to keep their jobs is by funneling government money into the communities they represent. That is how the government ends up with hundreds of different programs to distribute billions of dollars to us in the form of grants, low-interest loans, and subsidies. And that’s where you can step up and reclaim some of your hard-earned tax dollars.
The government only gives that money to the people who know how to get it. You have to learn how to ask for it. But if you can follow instructions on an application form, chances are pretty good that you can get a grant for something – especially real estate.
Free Money for Almost Anything
Do you have an idea for a business? Want to invent something? Need help with living expenses? Want to change your career? Want to buy or fix up some real estate?
There is likely government, corporate, or foundation grant money that can help you.
If you’re a beginning real estate investor, Uncle Sam can guarantee you’ll get a decent loan to buy your first house or apartment building. If you’re having trouble coming up with enough money for a down payment, there are programs that will allow you to buy with a three percent down payment (from the Federal Housing Administration) or a zero percent down payment (from the Department of Veterans Affairs).
And because you now own property, you get tax breaks.
You can even help people who have trouble paying their rent by renting to them under the Section 8 Subsidy Program. The government can also help you rehab a property to get it rent-ready in the first place.
Grant Money for Rehabbing
Several years ago, I purchased a four-unit building that had my friends wondering if I had lost my mind. Each unit had one bedroom and one bathroom, and was inhabited by an elderly lady who had been living there for more than 20 years. The problem was that their rents had never been raised. The total income from that building was around $460 per month.
No, I wasn’t crazy. I bought this property because I had done my homework and found a government program called the Rental Rehab Loan Program. The program required me to borrow at least $5,000 to be used for upgrades in the building. The benefits were that I received the money at a very low interest rate and (much more important) that my tenants would qualify for the Section 8 Subsidy Program.
All four of my elderly tenants were existing on meager Social Security income. They lived in the fear that whoever bought the building would raise their rents. They knew comparable apartments were renting for around $625 per month, and they could not afford it. They all thought they’d end up homeless on the streets.
But, thanks to this particular government program, I was able to rehab the property with a low-interest loan. And when the rehabbing was done, I increased the income from the building from $460 per month to around $2,600 per month.
The elderly ladies now had a nicer place to live and, because of the Section 8 subsidy, they actually ended up paying less than they had been paying for rent.
You Don’t Need Good Credit to Qualify
Don’t worry if you have less-than-perfect credit. That doesn’t necessarily mean you won’t qualify for a grant. Grants can be based on many different criteria. It depends on the program you’re applying for.
Some programs are project-based. If your project fits a certain category, the project itself can qualify for the money. It could be the property, the area, or the tenants that qualify, not you personally.
If it’s a program that requires you to personally qualify, then your credit can become a factor. But understand this…
There are programs that are designed for people with bad credit. There are even programs that require you to be turned down by a bank before you can qualify for the money!
Navigating the Process
You must be organized and you must follow up. It may take a lot of phone calls and paperwork to apply for a grant, but the rewards can be substantial.
You may find that a particular program you uncover no longer exists. Don’t despair. Two or three other programs, under different names, have probably replaced it. There are so many grants that if you can’t qualify for one, there could be five, 10, or 50 other programs that you can qualify for.
The first thing to do is go to your local library and ask the librarian to help you locate government, corporate, and foundation grant sources. Once you’ve made your initial contact with a potential funding source, ask them to send you all the information they have on their program, including applications and guidelines.
To apply for most grants, you’ll need to provide two documents: a Grant Proposal and a Letter of Appeal (a summary of the Grant Proposal). If you’re requesting a grant of $2,500 or less, you can usually accomplish that by using the Letter of Appeal only.
Submit proposals to as many funding sources as you can find. There are not many restrictions on the number of grants you can receive… so why not get five grants instead of one? Why not 10 grants instead of five?[Ed. Note: Reggie Brooks is a national lecturer on creative real estate investing who specializes in abandoned properties and using grant money to acquire and rehab real estate. He has been an active real estate investor for the last 22 years – and even his two grown children have used their father’s techniques to become millionaires. To learn more about Reggie’s creative real-estate investment techniques, click here.]