Urban Homesteading

Article Tools

Image Gallery

Print

E-mail

Comments

RSS

And what about "sweat equity", you may ask? Well, it's possible that doing it yourself can make ad if ference—especially with such jobs as interior painting—but the city requires that you know what you're doing and that you prove it before you attempt any major improvement. (All code work—including electricity, heating, and plumbing—must be done by licensed professionals.)

It's a rule of thumb that a gross income of about $25,000 is necessary to support a $40,000 city-owned homestead renovation . . . assuming that the family has no large outstanding debt. However, the federally owned houses cost less to homestead, since the FHA repossessions tend to have been private homes that need less work in order to be brought up to code. In Baltimore, the average rehabilitation cost for such homes is $21,000 ... while some dwellings have been successfully homesteaded for as little as $5,000!

"REAL" TO THE RESCUE

There are also aid programs that help make citysteading less of a financial burden. The federal government, for instance, offers the Section 312 Rehab Loans program ... under which homesteaders can borrow up to $27,000. Priority is given to low- and moderate-income applicants—there's a sliding interest rate, from well below market up to 9%—and the money is available only for buildings in designated areas.

In addition, the city of Baltimore has its Rehabilitation Environmental Assistance Loans program—REAL—which is supported by the sale of municipal bonds. Interest on such loans is pegged at a 1% premium above the rate the city pays for the money (currently the mortgages run at 9%), and the program's popularity is clearly shown by the voters' repeated approval of the bond issues that support it. With help from these two programs, it's actually possible to finance the entire expense of a rehabilitation!

AND BENEFITS FOR ALL!

Some critics claim that a renovation project costing between $20,000 and $45,000 hardly deserves the name "homestead". Well, perhaps that's true . .. but maybe—just maybe—such people aren't taking the whole story into account. Consider: The average house that's sold these days now goes for over $60,000 . . . the absolute minimum down payment on such a dwelling would be about $3,000 ... and mortgage payments—at double-digit interest rates—are typically sky high.

Now look at the urban homestead: The cost of custom-renovating a structure is almost never more than two-thirds that of building a new one (and can be much less) . . . it's possible to have the rehabilitation completely financed, with no down payment required . . . and the mortgage costs are characteristically close to—and in some cases even less than—the rent that the owner would otherwise be paying. Additional benefits for the urban homesteader include freedom from loan payments for the first six months, a property tax exemption during the required residence period, and an interest subsidy.

RSS | Comments | E-mail | Print