City Incentive Program to Flip Houses

[Ram Gonzales]

In my full-time job, I work in downtown redevelopment. Part of my job is to create and manage programs that encourage private investment and revitalization. I'd like some feedback on a program idea to stimulate the rehab of SFRs in and near our downtown neighborhoods.

Essentially the concept is for our department to serve as a hard money lender for flips in targeted areas. We would provide short-term no- or low-interest loans for the acquisition of SFRs, secured by the home. Funds would be available only for acquisition, not repairs, and could be disbursed in as little as two weeks. There would be no interest or fees for loans repaid in six months or less. Beyond that, a 3% fee would apply with the full loan payable in a year.

What do you think? Would this motivate you to target properties in the program area? What other considerations should be taken in putting together a program like this? How could we better mitigate risk?

Your feedback is appreciated. Thanks.