For many Americans, the dream of homeownership seems to be out of reach due to financial difficulties ranging from being unable to save for a down payment to poor credit scores to other expenses that eat away at home-focused savings.
And while there are loan programs from government agencies and private lenders designed to help those in need of existence assistance, not everyone is able to qualify for such aid.
Photo by Jeff Turner / Creative Commons
However, there might be yet another route to homeownership for the disenfranchised. Equity & Help Inc., a Clearwater, Florida-based real estate investment company, has launched a program called PhilanthroInvesting that has a goal of helping 10,000 households that were previously unable to buy a residential property achieve their dream of homeownership by 2025. The program also provides investors with a passive-income vehicle with a strong social responsibility factor.
“We took the word ”˜philanthro”™ from philanthropy, because of the families that we help through this program,” explained Siloh Moses, who holds the title of PhilanthroInvestor Ambassador with the company. “So, the investor who would be a perfect fit for this program is someone who believes in philanthropy and believes in building communities and giving families a hand up.”
Under the PhilanthroInvesting program, Equity & Help will acquire foreclosed properties and make them available to investors at below-market rates. Investors buy a minimum of three of these properties for 45% below after repair value. The investors pay Equity & Help to manage the properties at $15 per unit.
Equity & Help puts the homes on the market and qualifies eligible buyers from the investors on owner financing, paying more than what the investors paid. The new households are responsible for improving the home and paying taxes on the property. Equity & Help manages the relationship with the new households on behalf of the investors for $45 per month
“They”™re the kind of families that if they went to a bank for a loan on a new home, they”™d be rejected,” said Moses about the households in the program. “But they”™re hard-working, blue-collar families ”” maybe single dads or single moms working two jobs with three kids in the household and doing everything they can and renting right now. But they have the dream of one day owning a home, so we give them a hand up to become a homeowner with a very low down payment for the home.”
Moses cited an example of a PhilanthroInvesting homeowner who is a single father of three children and has an annual salary of $35,000. Under this program, Moses explained, “He”™s now a homeowner paying $700 a month for a place that he actually owns versus $1,200 to $1,300 in rent for a place he would never own.”
The new household pays the investor a down payment of between $1,000 and $2,000, and investors finance them the balance with a 12% interest for an average of 20 years. Moses said that investors gain an average of 12% return on their investments.
According to Moses, the program”™s investors are seeking out “a passive kind of gross when it comes to their investing. They”™re not the kind of investors that love speculation ”” they might dabble in stocks and bonds and maybe Forex and Bitcoin, but it”™s not their main driver. These are people who are generally in their 40s, upwards of 65, who are looking forward to a really conservative investment that is going to give them something every month that isn”™t speculatory and doesn”™t have a whole lot of high risk.”
PhilanthroInvesting is being offered on a nationwide level, and Moses said Equity & Help is considering expanding the program to other countries, noting that its goals can transcend borders.
“We”™re taking the best of two worlds, philanthropy and real estate investing, and bringing them together,” he said.
