Hi All,
Does anyone out there have experience purchasing rental properties that have been in Rural Development programs and transitioning them into the mainstream marketplace?
I am interested in purchasing a building that's currently in the Rural Development 515 Program but am concerned about the possible pitfalls that may occur when it's removed from the program. Basically the 515 Program provides affordable housing for tenants in rural communities by subsidizing their rent and loaning the original landlord money at an extremely low interest rate with a long amortization period (= low monthly mortgage payments). When I buy the property the loan will be through a bank rather than Rural Development which automatically means the property will come out of the 515 Program.
The main concern I have is the possibility of high vacancy rates at the very beginning of ownership - assuming the subsidized tenants will no longer be able to afford the rent without the government's help. Does anyone know if Rural Development just cuts off the tenant subsidies when the building is removed from the 515 Program? What other challenges should someone expect when purchasing a property that has been in this government program?
Thanks,
knot22
Does anyone out there have experience purchasing rental properties that have been in Rural Development programs and transitioning them into the mainstream marketplace?
I am interested in purchasing a building that's currently in the Rural Development 515 Program but am concerned about the possible pitfalls that may occur when it's removed from the program. Basically the 515 Program provides affordable housing for tenants in rural communities by subsidizing their rent and loaning the original landlord money at an extremely low interest rate with a long amortization period (= low monthly mortgage payments). When I buy the property the loan will be through a bank rather than Rural Development which automatically means the property will come out of the 515 Program.
The main concern I have is the possibility of high vacancy rates at the very beginning of ownership - assuming the subsidized tenants will no longer be able to afford the rent without the government's help. Does anyone know if Rural Development just cuts off the tenant subsidies when the building is removed from the 515 Program? What other challenges should someone expect when purchasing a property that has been in this government program?
Thanks,
knot22
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