Page 2
S U P P L E M E N T
OF
STÍye
^ o rtía n h
(©baerüer
Editor in Chief,
Publisher
C h arles H . W ashington
Editor
L arry J . Ja c k so n , Sr.
BùJhkfLYrJliu.
or T he P ortland O bserver
A bout 15 years ago, inner N orth/
N ortheast Portland w as a hotbed o f
open-air drug superm arkets, gang
w arfare and prostitution. N eedless
to say, it w asn ’t an area o f dynam ic
urban grow th as it is today. W hat
h a s tr a n s p ir e d to c h a n g e a
com m unity once populated with
Copy Editor
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or T he P ortland O bserver
Joy Ramos
Business Manager
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P o rtlan d , O R 97211
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email:
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p u rch ased th e co m p o sitio n of
1999 The Portland Observer
^ o r t l a n b (© bseruer
boarded-up and condem ned houses
to b e c o m in g a M e cc a fo r th e
u p w a rd ly m o b ile an d u rb a n e ?
A nsw ers to a few but not all o f those
questions aw ait you in this special
edition o f The Portland O bserv er’s
housing edition.
J o h n P o w e ll, a p r o f e s s o r at
M ichigan State, has pointed out
quite eloquently that historically,
w h e n in n e r - c ity u rb a n a r e a s
experience an influx o f professional
and
o th e r
upper
c la s s e s ,
opportunities are created. However,
due to the inflation o f housing costs
associated w ith this process, m any
o f the traditional residents are forced
to m o v e ; a n d th e c o m m u n ity
becom es
fra g m e n te d .
C o n s e q u e n tly , m a n y h is to r ic
residents are not able to benefit
from these new ly created econom ic
opportunities.
T h is issu e attem p ts to p ro v id e
inform ation on how to attain and
p r e s e r v e w e a lth th r o u g h th e
ac q u isitio n o f pro p erty . It also
endeavors to present options to
those threatened by displacem ent
b y re c o g n iz in g v a rio u s ren ta l
alternatives that are affordable for
lo w
and
m o d e ra te - in c o m e
households.
A lso, w e w ish to bring to read er’s
attention the availability o f unique
lo a n a r r a n g e m e n t lo a n s fo r
hom eow ners w ho otherw ise may
be prohibited from m aking repairs
on th eir hom es.
A unique home savings program for low-income people
CONTRIBUTED STORY
th e ad.
------------------ ®
Fair Housing April is Fair Housing Month
Focus
A
Focus
April 5, 2000
Individual D evelopm ent A ccounts
( ID A s ) a re m a tc h e d s a v in g s
accounts that allow low -incom e
individuals and fam ilies to build
assets and m ove up and out o f
poverty. Participants save m oney
for a specific goal and their savings
are m atched at a rate that varies
from 1:1 to 2:1, depending on the
typed o f IDA. A dult participants
m ay save tow ards a dow n paym ent
on a h o m e , p e rm a n e n t re n ta l
housin g , ed u c atio n , or a sm all
business. Y outh participants m ay
save for educational, artistic, or
athletic goals. O nce the participant
has reached their savings goal and
has attended the required financial
education training, their savings is
matched by PR1DA (matching funds
n e v e r g o d ir e c tly in to th e
participant’s account, they are paid
directly to the vendor).
A ccounts O ffered
Individual D evelopm ent Account
Eligible Participants: H ouseholds
that m eet Earned Income Tax Credit
incom e guidelines.
S a v in g s
G o a ls ”
F ir s t- tim e
h o m e o w n ersh ip , ed u c atio n /sk ill
d e v e lo p m e n t, a n d b u s in e s s
developm ent.
M atch Rate: 1:1
M axim um Savings: U p to $750/
y ea r fo r th re e y ea rs = $ 4 ,5 0 0
(m atch+savings)
N ew S tart D evelopm ent A ccount
Eligible Participants: H ouseholds
that m eet Earned Incom e Tax Credit
incom e guidelines.
S a v in g s
G o a ls :
F ir s t- tim e
hom eyow nership/perm anent rental
h o u s in g ,
e d u c a tio n /s k ill
d e v e lo p m e n t,
b u s in e s s
developm ent.
M atch Rate: 2:1
M axim um Savings: U p to $500/
y e a r fo r tw o y e a r s =
(m atch+savings)
$ 3 ,0 0 0
Y outh IDA
E ligible Participants: Y outh (10-
18) in fam ilies earning less than
65% o f the are a’s m edian income.
Savings Goals: Educational, artistic,
and athletic achievem ents.
M atch Rate: 2:1
M axim um Savings: U p to $300/
y ea r fo r o n e y ea r= $900
(m atch+savings)
For m ore inform ation, please call
th e F am ily F in a n c ia l S erv ice s
D irector at H um an Solutions, 503/
248-5201.
Buying investment property — a win win situation
C hris G uinn III
for T he P ortland O bserver
by
T he term “first tim e hom e buyer”
has becom e extrem ely fam iliar as
o f late, m ainly from the prodding o f
re a lto rs an d b a n k e rs try in g to
e n c o u r a g e r e n te r s to b e c o m e
hom eowners.
I w ould agree that acquiring your
first hom e is an enorm ous and very
im p o r ta n t s te p to w a r d o n e ’s
financial stability. H ow ever, w hat
about the people w ho have ow ned a
hom e for 10, 5 o r even the last 3
y e a rs? T h ey m ay b e read y to
purchase a second hom e from m ore
room or com fort, as an investm ent
or even additional income. As a
realtor, I help people purchase and
sell property for various reasons.
For those interested, w e can focus
on buying investm ent property in
the N orth/N ortheast areas. I f you
a re n ’t quite sure how to go about it,
maybe you just need the steps simply
explained so you can go forward.
G etting A Loan
G e ttin g a lo an fo r in v e stm e n t
property is a little trickier than when
you bought y o u r first hom e. You
are attem pting to buy a “non ow ner
occupied” property. T o a banker,
this indicates m ore risk on their part
so they generally require a larger
dow n paym ent, som etim es as much
as 20% o f the purchase price and a
slightly higher interest rate. L et’s
say that you w ant to buy a duplex
for $200,000. T he purchaser w ould
need about $20,000 for a down
p aym ent. T h ere are b an k s th at
require as little as 10% to borrow ers
w ith A to A+ credit. T he issue o f
k e e p in g g o o d c r e d it is v e ry
im portant when buying investm ent
property. It m ay be the single m ost
im portant asset to have on your
side. The m ore credibility you have
in paying y o u r debts, the m ore
property you can leverage with less
m o n e y . T h e m o st s u c c e s s fu l
investors usually start out with more
credit than m oney and over tim e,
their incom e rises m aking the need
for credit less critical.
Leverage Y our Property The term
“ le v erag e” is o ften u sed w hen
buying investm ent property. This
sim ply m eans using the m oney or
equity in a property to purchase or
leverage another. Let ’ s say the hom e
you bought 7 years ago for$ 110,000
is now w orth $ 175,000. T his m eans
you have $65,000 equity in that
property. M any hom eow ners use
this equity for hom e im provem ent
or debt consolidation, but it can
also be used to leverage another
property. U sing property to buy
property is generally financially
w iser than ju st getting a loan on
y o u r eq u ity b ecau se you m ake
m oney on the investm ent property
as opposed to ju st paying interest.
So th a t $ 2 0 ,0 0 0 y o u n e e d to
purchase that duplex do esn ’t sound
like such a large n u m b er now,
especially w hen the positive cash
flow a m ulti-fam ily unit can produce
is considered. If a venture o f that
size seem s a little too m uch right
now , try som ething sm aller and less
expensive like a sm all hom e in
N orth/N ortheast Portland that needs
a little fixing up. T his is a w ay to
acquire “sw eat eq u ity ’.T h is sim ply
m eans buying a distressed property
fo r lit tle m o n e y an d m a k in g
im provem ents on your ow n o r as
inexpensively as possible to bring it
up to a level o f the hom es around it.
At this point, you m ay choose to
rent the property and m ake your
m oney back over tim e w ith your
tenant paying your m ortgage or you
m ay decide to sell and take your
m oney or “sw eat equity” on to the
next one. Y ou m ay also decrease
the risk and obligation by going in
on a jo in t venture with a partner.
T here are tax laws such as “capital
gains” w hich you need to know
about which you can leam by talking
w ith your tax person or CPA.
Invest in y o u r com m u n ity W h at
better place to invest than your own
com m unity. G ood investors who
invest in theircom m unity generally
im prove their com m unity. As we
can see, N orth/N ortheast Portland
n eig hborhoods are experiencing
s w e e p in g
changes
and
redevelopm ent in the last few years.
T ake the case o f Ben and Lisa May
o fN o rth east Portland. They started
investing a few years ago in the
com m unity and have been able to
(Please see ‘Property’ page 5)