Government-sponsored house flipping seems to be a new business in the DC area, specifically Prince William County, VA. Recently, this county enacted laws where the police are required to verify citizenship of anyone stopped or otherwise detained. This resulted in a mass exodus of the huge illegal alien community living in this county. These people also represented a large number of the local construction force for new home construction. That business is all but dead.
This has resulted in a huge number of foreclosures on homes, far above the national average. These people pretty much abandoned their properties and headed into Marlyand where the immigration laws are less stringent. Prince William County has been left with an inordinate number of residential properties seized for unpaid taxes.
The county has developed a program for real estate developers or investors to work in a partnership with them to flip these homes while keeping the sales price reasonable so that county employees can afford to buy them. At present, civil servants (fire, police, EMS, teachers, etc.) cannot afford to live in the county.
Sorry for the long-winded lead in, but here is a very general rundown of how this partnership works:
The original mortgage company releases ownership of the property for little to nothing just to get it removed from their books. Taxes owed are paid by the investor and they enter into a joint venture with the county to refurbish the house. The investor bears the expense to make the house sellable. Once it has been accepted for market, the county markets the house, arranges low-interest financing for the purchaser, then splits the profit with the investor. The investor is also exempt from paying property taxes during this transition.
Say an investor picks up a townhouse worth $150K for $50K from the county. They spend another $10K in repairs/improvements out of their own pocket. After improvements, the county sells the house to a qualified buyer with a low interest rate negotiated for the mortgage. The investor splits the $90K profit with the county and walks away with their portion of the proceeds.
This version of house flipping is picking up in Prince William County, although not all of these projects are county-sponsored. Still, properties are available dirt cheap in a market that is very attractive due to the proximity to Washington, DC. I'd be willing to bet that similar programs exist all over the country.
Someone who can secure about $50-100K worth of financing can probably turn over several of these houses per year and make decent money. It might we worth looking into. I've only heard this second-hand from someone who is actually doing it, but it seems like an easy way to make some money until the economy improves. Just an idea.
