Mortgage close to payoff! Then what??

Question

Hello BP fam! I have a family member who is about $5k-7k from paying off their mortgage. Property worth $30K when it was purchased. They own the property with Habitat for Humanity. Once the remaining balance is paid off, they will own the property free and clear. All of the properties surrounding this house are being remodeled and empty lots are getting new, modernized homes built on them. The neighborhood stands to be in the range of $250k-$500k for most upgraded properties. I want to help them to

A. Payoff the remainer of the money owed (without coming out of my own pocket)

B. Help them to decide whether to knock property down and rebuild and hold OR just do some additions completely gut and remodel and sell.

This property is located in Charlotte, NC not far from the city's center.

Is there somewhere I can contact to assist with mortgage payoff since its such a small amount? Anyone know any grants that are given for a situation like this?

Any feedback would be greatly appreciated!!

Randy Janoe · Answer

Keep in mind that Habitat typically requires that if the owner intends on selling the home there is typically a duration period (10-20 years). They will typically buy back property at par of purchase plus a small inflation adjustment, from what I'm sold.

My concern is that if the home is sold, where can they live for the nominal mortgage payment a 30K house provides? I'm not sure of anywhere one can rent for a couple hundred dollars in Charlotte metro.

Mike Dymski · Answer

A - I recommend they work with Habitat's staff on whether or not (and how) to pay off the mortgage and/or sell the home.  Sounds like Habitat has done them right.

B - Ground up construction and additions are not for the inexperienced investor (especially in today's market where contractors are scarce).  Going from home purchase assistance to scrape and build is going from 0 to 200 MPH in a blink.