Since the Obama Administration launched its Neighborhood Stabilization Program to help neighborhoods severely affected by the growing number of cheap houses for sale, many nonprofit groups get into the task of buying, renovating and re-selling foreclosure properties.
But they are not the only groups that have developed an interest on foreclosure houses. Investors laden with cash also plunged into the foreclosure investing market. And it seems that they are getting ahead of the game as non-profits are finding it difficult to find cheap houses for sale because investors are always a step ahead of them.
The non-profit organization, Family Resources Inc. received around $400,000 from the U.S. Housing and Urban Development's (HUD) Neighborhood Stabilization Program (NSP). The agency plans to use the funds to purchase duplexes, fix and rent them out to young adults who are transitioning from foster care. But so far, the search for good deals is fruitless.
Industry experts said that despite the huge number of foreclosure houses on the market, many nonprofits are having difficulty finding the right homes to purchase, renovate and resell or rent to eligible low-income families.
Non-profit organizations said that most often than not, they are being outbid by cash-rich investors who grab foreclosure houses, particularly in the low-end market. Officials of non-profits said that there are a lot of good deals on the market but there are always multiple biddings and many of them are not immediate cash buyers.
According to industry, the influx of investors laden with cash on the foreclosure investing market has resulted to few good deals left for local nonprofit organizations that are constrained by tight spending deadlines, limited funding and spending restrictions.
Experts said that also joining the fray for good foreclosure deals are first-time homebuyers who are motivated to make purchases by the federal tax credit of $8,000. Many first-time homebuyers prefer choice houses which means that they have set their sights on properties at the second or third tier.
The current trend in foreclosure purchasing has resulted to limitations on the number of local homes that would eventually be purchased under the NSP. In Manatee County, Florida, the local government received about $5.28 million NSP grant which has been distributed to several nonprofit organizations.
The city of Bradenton has received $2.57 million for its program to buy cheap houses for sale, fix and resell them and to assist buyers on down payment.
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