Yes, there are two types of incentives. One is the federal government's rehabilitation tax credit. It offers credits that reduce taxes, dollar-for-dollar, for expenses associated with the renovation, rehabilitation, or reconstruction of certain buildings. The credit is 10% of the expenses for buildings placed in service before 1936, and 20% for certified historic structures. In other words, if you spend US Dollars 30,000 for rehab expenses, you can reduce that year's income taxes by 10% of the US Dollars 30,000, or US Dollars 3,000.
Normally, such old structures would not be suitable for a beginning investor. If, on the other hand, you have experience in construction or renovation, this could be a good opportunity. In addition, you can sometimes find such older properties that had a complete plumbing, mechanical, and electrical update within the last ten years, but now need other, more easily estimated, repairs. State and local governments often provide grants, low-interest loans, and/or discounted purchase prices for investors willing to rehabilitate properties in certain areas.
In addition, the U.S. Department of Housing and Urban Development (HUD) offers substantial incentives for investors willing to rehabilitate affordable housing. For more information, download the HUD publication entitled Best Practices for Effecting the Rehabilitation of Affordable Housing (September 2006), available here.
HUD homes are not always fixer-uppers. HUD has many, many homes for sale that are in excellent condition. Those normally sell rather quickly to consumers who want a home of their own, or to investors who desire immediately available rental properties. The dregs, the ones in need of repairs, sometimes offer the best opportunities for investors. Individuals can buy single-family homes directly from HUD, often at substantial discounts. If you are a real estate broker or licensee registered with HUD, you can also earn a 5% commission if you make that a part of your offer. First priority is given to people buying their own residence.
If the property remains unsold for some period of time, it will be made available to investors as well. The HUD asking price will always be the appraised value of the property. During what is called the offer period, all potential purchasers make sealed offers. At the end, the one that provides the most net money to HUD is accepted. You do not have to offer the appraised value.
If there are no offers, then the property goes into what is called the extended period. Extended period properties have the highest percentage of fixer-uppers. Offers will be accepted on any business day. If one is accepted, the broker will be advised within forty-eight hours.
Our website is not responsible for the information contained by this article. Webworldarticles.com is a free articles resource thus practically any visitor can submit an article. However if you notice any copyrighted material, please contact us and we will remove the article(s) in discussion right away.
This article was sent to us by:
Thomas C. Surry at
06282010
1. Real estate Investments
All articles in this directory are property of their respective authors. Additionally, read our Privacy Policy
© 2010 WebWorldarticles.com - All Rights Reserved.