Rentals
Low-Cost Housing?
By Gary Foreman
Apr 29, 2005, 13:55

Low-Cost Housing?

We have a big dilemma. We rent our house and our lease is up next month. We have to move. Renewing our lease is not an option due to the fact that our landlord has not fixed the house and it is falling down around us. We have been to court already and the mortgage holder is foreclosing on the property. Anyway, our problem is we had a baby seven months ago and since then have spent the small savings we had and have been living paycheck to paycheck! We absolutely have not been able to spare a dime to save and I am very thrifty.

How can we move if we have no money to pay first and last month's rent and a deposit? We do not qualify for welfare housing. Please help!
M.

These suggestions are probably obvious, but here goes:

• Is there a relative or friend you can arrange to stay with for a few weeks? You could trade household chores or babysitting in lieu of rent.
• Check with the Department of Housing and Urban Development (HUD) in your city. Also check with your city's social services department. They may be able to get you a voucher for Section 8 housing, a subsidy to pay a deposit or a low-interest loan. Be prepared to deal with lots of bureaucracy.
• Check with your bank to see if you could take out a loan for the amount of a deposit and first and last month's rent (using a car or some other valuable as collateral), or see if a relative or friend could lend you the money. No one likes debt, but in this dire circumstance, you may not have a choice.
• Look for an apartment rented by a small-time landlord, maybe someone who is just renting a single unit. Sometimes, they can be more sympathetic and flexible than a property management company or apartment complex. One of my friends was forced to look for emergency housing because her apartment complex burned down. Her deposit got tied up in a legal battle and she had no savings. She found a landlord who had seen the news story about the fire and let her move in with no deposit and only half of the first month's rent until she could build up enough money in an informal "escrow" to cover what she would have had to pay in the beginning.

There are a few suggestions for this struggling couple that may work:

Go to your church and ask for help! Many times another parishioner will have the answer. Perhaps, they have a house that they have to rent or one with a land contract with no money down. Or the church as a whole may rally together to help with the funds for that crucial down payment.

This would definitely be the time to move in on family members if you have any close. This could be a temporary situation that could give you the opportunity to save for the deposit on another house or apartment. Scout the ads! There may be apartments that are running "No Deposit" specials.
Barb

In our area (Virginia), we have a government subsidized housing program called Rural and Economic Development formerly called FMHA. Housing that meets their criteria will be considered. It's based on your income, with no money down at all. It is worth it. We built a very nice house. It's small, but it's just the three of us. The square footage allowed when building is based on how many people occupy the house. I built a 1008 square foot home with three bedrooms and two baths on an acre of land. When you sell the house and make a profit, the catch is the fact that you owe them a certain percentage of recapture. No big deal considering you walked into the home owing nothing and you may walk out later with a small profit. My house payment on that new house was $180 a month!

Also, I used to be in the secondary mortgage business. If you qualify (meaning you need to have really good credit in most cases), there are loans that you can get with no money down. You need to find a good and honest (and I stress honest) Loan Originator that will help you with this process. You can, in most cases, buy a home for what you would pay in rent.
Vickie

We were faced with a similar situation when my husband was transferred to a rural community. I was a full-time university student and his was our only income. Therefore, we had very little in savings. We were able to find a house by doing a few things:

• We were honest with the owner. We told him that we did not have the money to pay a deposit, as well as first and last month's rent, all at once, but could do so over time. We provided references, both residential and credit, so he could be sure we were trustworthy.
• We were willing to settle. We ended up in a house that needed a little work. But in exchange for the damage deposit, we have fixed and replaced a number of things in this home. The owner pays for materials and we do the labor for free. If you don’t give a damage deposit, take good notes and pictures of the home prior to moving in. Note all damage even seemingly inconsequential things to avoid being blamed for them when moving out.
• In the past, we have paid an extra $50 or so per month towards the damage deposit with our rent until the deposit was paid off. Please make sure you keep accurate receipts that note how much should be applied to rent and how much to the deposit so you are sure to get the complete amount back upon moving out.
• We were able to avoid paying the last month's rent by signing a lease and asking the owner to waive it in exchange for the lease.

I always recommend familiarizing yourself with your state's landlord/tenant act (that's what it's called in Alaska). I believe you can request a copy from your local state law enforcement agency, district attorney, or online.
Bridget

I live in Pennsylvania, and in my area there are two ways to get housing assistance. One is through the Housing Authority or HUD. Your situation would probably qualify for emergency housing and you would be top on the list for housing opportunity. Typically, rent is 1/3 of your income.

The other way is through the Commission on Economic Opportunity. They provide emergency housing assistance and can pay part or all of initial rent costs. They pay security or first month's rent or both depending on your situation. They also have emergency payment if you have a shut off notice for your electric or gas bills. You can't abuse this service, but it does help in true emergencies.
Kathie

If your husband is handy with his hands, you could find a landlord that would agree to let your husband fix up his property in exchange for a month or so of free rent. It may be a long shot since finding such a landlord may not be easy. But my husband and I did it. He is a painter and made arrangements with our landlord to paint the interior of the house in exchange for free rent.
Ashley

Check your local phone book for organizations, such as religious organizations, that can help you with moving costs. There are organizations out there that will pay for your first and last month's rent and deposit to help get you settled. Call the business office of the city that you live in and ask for a "where to turn" booklet of services in your county. They will mail it to you for free and it is full of agencies and resources for just about any situation. In Seattle, this booklet is published by the Crisis Clinic for the United Way.
SH

I'm a realtor and I would suggest that you check into first time homebuyers programs available in your area. There are bond programs that pay your down payment and closing. There are even programs that make it so you come out of closing with cash in your pocket. You usually (not always) need good credit, steady work, and good bill paying history (especially if you don't have credit). Check with realtors, banks, your city and your county to see what is out there.
Mary

Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website stretcher.com and ezines.