How to Find Government Financing for Your Residential Build

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( — April 5, 2021) — If you’re looking for an attractive investment opportunity, look no further than residential real estate. A residential build in particular can garner a lot of success in today’s market.

Why? These investments include all dwellings, such as single-family homes, apartment blocks, condos, townhouses, and multi-family homes. They’re routinely considered one of the safest forms of investment and can increase in value over a relatively short period of time.

Why a Residential Build Is Cheaper Now than Ever

The current low interest rates mean that now could be the right time to invest your funds in a residential build. These low interest rates are also expected to stimulate the market, which will encourage a new wave of people to get on the property ladder—thus fixing the damage COVID did to the housing market last year.

Additionally, project financing from government programs, such as the federal HOME Investment Partnerships Program, could make it easier than ever to afford a residential build. 

There is an expected increase in demand for residential dwellings. This means that investing in building new residential real estate now could be a lucrative way to generate a high return.

How the Government Can Help Finance Your Residential Build

The U.S. has three main programs to assist families on low incomes. These are public housing, Section 8 tenant-based assistance, and Section 8 project-based assistance. All forms of housing can be open to some element of private-sector involvement. In general, however, the greatest need is for Section 8 housing.

The basics of Section 8 project-based assistance

In principle, Section 8 project-based assistance comes in two main forms. These are the project-based voucher (PBV) program and the project-based rental assistance (PBRA) program. In practice, the differences between these two programs are mainly administrative. They are overseen and funded by different HUD offices.

With both the PBV and the PBRA program, the property owner signs a contract with the local housing association. This allocates funding to the rental unit. The rental unit is then made available to qualifying families (subject to owner approval). Either option can be used with investment rentals.

The basics of Section 8 tenant-based assistance

Section 8 tenant-based assistance provides qualifying families with Housing Choice Vouchers (HCVs). The family then decides where they want to live. Assuming the landlord is happy to accept them, the housing association will undertake the necessary checks and approve (or disprove) the unit.

If all is well, the tenant will pay a portion of the rent. The local housing association will make up the difference between the tenant’s portion and the full rent. HCV assistance continues to apply for as long as the tenant qualifies.

Final Thoughts About Financing Your Residential Build

Nothing ever seems cheap in the real estate market, but new investments can actually be pretty affordable if you have the right tools. Look into government-based assistance programs, particularly Section 8, to see if your investments qualify.

Trying to cut even more costs? Partner with an affordable residential builder before moving forward. The builder will help predict the cost of your new residential build and help you find ways to build a cost-effective but high-quality home.