Insight into financing a purchase from city government

[Maria McGary]

I am seeking opinions/advice.

The city is selling a vacant property donated to them by a bank. It needs improvement - two big ticket items (roof repair and windows). The property costs less than $5k. I would like to have it and live in it. I can pay for the property, but would have to finance the improvements.

I am working on rehabbing/renovating a commercial property not far from the available vacant property. That building is owner financed with a balloon mortgage. My intention was/is to buy it - fix it - put a business or two in and make it a live-work property.

I also have a mortgage on my home. I intended to sell it in order to pay off the commercial property.

If, however, I can figure out how to finance the improvements required by the city  - I can become mortgage free faster. 

Unfortunately and embarrassingly, I only have average credit. My debt to income is great because I have been working on being debt free (except for properties). But, I lost my job a few years ago and then my husband lost his - so I have a lot of late payments. Everything is good now, but I'm still building my credit score.

I have to provide the city with a proposal and a budget and tell them how I would pay for the necessary improvements (which can be done in phases). I don't think I can get traditional financing. And, I don't know enough about other options. Does anyone have any advice or suggestions? I would think - to satisfy the city - i would need to show capacity of about $50k. Even though, I don't think I will actually use that much because I will pay cash for many things and have lots of materials already due to the renovation I'm doing on the commercial property (it came with lots of materials - lumber, plywood, etc.).

Any advice is greatly appreciated.