Real Estate Investor Grants
A Comprehensive Guide to Real Estate Investor Grants
If you don’t already have a source of funding like personal savings or bank loans, it won’t be easy to get into and succeed in real estate.
And if you get a bank loan, you still need to pay it back, but maybe that wouldn’t be a problem. One way, however, to fund your real estate project without relying heavily on loans or debts is through a real estate investment grant.
Real estate investor grants are an excellent way to fund your real estate investment ventures without taking on excessive debt. In this guide, we will explore everything you need to know about grants for real estate.
What is a Real Estate Investor Grant?
A real estate investor grant is one that your local, state, or federal government or a private nongovernmental organization provides to help you fund your next investment project. Getting a real estate investor grant gives you a headstart without being burdened by the weight of debt or loans. You can actually focus on what matters - a quality project that’ll provide more value for society and more profit for you!
It’s a less risky way to get into real estate as there is no repayment term for a real estate investment grant. Although, it’s important to note that real estate investor grants usually have eligibility requirements that you have to meet.
Types of Real Estate Grants?
There are several real estate grants you can apply for, provided that you meet the eligibility requirement. Let’s consider a few of them.
Government Real Estate Grants
Each year, the government provides real estate investment grants worth billions of dollars through several grant programs. Government grants for real estate investment help prospective, new, or seasoned real estate investors with funds to acquire the real estate property they’re interested in, known as investor grants. The government may also provide grants programs to restore real estate properties rather than purchase them.
Many government grants are typically awarded to institutions, agencies, and NGOs. For example, the RESTORE Act Direct Component - Construction and Real Property Activities are provided by the US Department of Treasury using Gulf coast restoration funds for property investment which promotes tourism, job creation, workforce development, and so on, in the Gulf Coast region. The award ceiling for this grant is $110,099,450, but the only eligible applicants are state and county governments.
So, to get a government grant, you may be required to prove that what you’re doing is beneficial to the community. To be eligible, you may be required to be part of a registered agency or organization.
The U.S. Department of Housing and Urban Development (HUD) also offers several grants, such as the HOME Investment Partnerships Program (HOME), which makes up about $ 2 billion annually and is targeted at local and state governments to provide low-income households with affordable housing.
However, as a real estate investor, the way to benefit from a HOME grant is to partner with a local or state government. This will make you eligible to apply for this grant if you use the funds for a project in which more than 50% of the tenants or residents earn below the Area Median income.
Another Grant to consider is the Good Neighbor Next Door Program from the HUD, which allows recipients to get up to 50% off the list prices in specific neighborhoods. The goal of this program is to encourage renewals in certain areas. Eligibility requirements differ by state, but you need to buy property in a place for revitalization. This grant is limited to certain professions, such as law enforcement, teachers, firefighters, and emergency medical technicals, and requires that you live on the property for a minimum of 3 years.
Other government funding for real estate investors to consider include the First time homebuyer grant, which may be income and location dependent and require some repayment. You can also consider the Emergency Capital Repair Grant from the HUD, which can give up to $50,000 to owners of families housing properties, allowing them to make emergency repairs such as to structural integrity and ensure tenant safety and health.
Government-sponsored Real estate investor grants are not the only ways to get grants in real estate. Some nongovernment organizations or private entities also sponsor some real estate grants. For example, a California nonprofit organization sponsors the Real Estate Apprentice Foundation, a biannual grant that gives up to $250,000 annually to real estate agents. Although they’ve paused the project, you can keep monitoring the page to know when next you can apply.
FedEx also offers small business grants which real estate entrepreneurs can access. The FedEx Small Business Grant Content applicants can get up to $30,000 in grant funds. You would have to open a Fedex account and pitch your idea.
There are also a few minority grants you can access as a real estate investor. For example, if you’re a Native American veteran living close to or on an Indian reservation, you can access the Tribal HUD-VA Supportive Housing grants for Indian tribes at risk of homelessness.
Applying for a Real Estate Investor Grant
There’s no dedicated way or steps to take when applying for a real estate investor grant. What’s important, however, is to do adequate research on the real estate investor grant you’d like to apply to. Here’s a government resource to begin your research.
Once you’ve found an available grant, check the eligibility requirement, the amount accessible, and the deadline. Finally, get started on your application, and godspeed!
Tips for Increasing your chances when applying for a grant
Before applying for a real estate investor grant, make sure you know all you need to know about being a real estate professional. You don’t need to have actual real-life experience. There are several ways to learn, with a mentor, a course, or finding information online.
When applying for the grant, don’t just check the requirement or eligibility page. Of course, this is enough just to prepare the application. However, many foundations have a goal for setting up and giving grants. Make sure your goals align with theirs. Read more about the grant and the department or organization to understand what they want.
Also, it’s never a bad idea to prepare your application well ahead of time and review it carefully before making the final submission. You can also get important real estate mentorship, so you know how to go about applying. BPM REIA can help with such mentorship to increase your chances.
Pros and Cons of Real Estate Investor Grants
As with many grants, you don’t need to worry about any repayment, and you can focus squarely on your project. The few grants that need repayment only require you to repay only part of the grant.
Grants give you flexibility. You don’t have a deadline to meet or money to be repaid. This allows you to consider and reconsider your direction and take the necessary steps to achieve your goals.
On the other hand, grants aren’t ubiquitous. You have to find one that you’re eligible for, which is already difficult. On top of that, it’s really competitive as there is a limited number of awardees or funding.
Also, they may have a difficult application process, and it can be difficult to meet all the eligibility requirements, especially if you’re an individual or have no prior experience. Individuals can often not access government grants unless they partner with local or state companies or other eligible bodies.
Real estate investor grants can provide significant financial assistance for your projects. Because the government often offers them, you’ll probably not have to worry about high-interest rates and repayment requirements.
However, while they can be attractive, it's important to carefully consider each grant’s pros and cons and seek professional advice to make informed decisions. Need some mentoring before starting your application process? We can help. Book a discovery call with us now.
Frequently Asked Questions
How much can I receive through a real estate investor grant?
This depends on the specific grant. While some are just in the tens of thousands, with some, you can get up to hundreds of thousands.
Can I use a real estate investor grant to purchase any property?
Not usually. The properties you can purchase are often limited to the grant’s intended purpose.
How long does receiving funding through a real estate investor grant take?
The time it takes to receive funding through a real estate investor grant will vary depending on the specific grant program you're applying to. It can, however, range from 6 months to a year.
Do I have to pay taxes on the grant money I receive?
Generally, the IRS considers real estate investor grants taxable income, so you may be required to pay taxes on the grant money you receive.