Family Move In
We’re excited to announce that rehab is officially complete and our first family has moved in to the upstairs unit. It took several weeks to match a family once all work was complete, but we were finally able to match a lovely family of 3 from Afghanistan with a 1 year old through Bethany Christian Services.
The family is settling nicely and getting oriented to the area.
Below, you can find walkthroughs of both units of the duplex after rehab completion. We were fortunate to partner with a local church to fully furnish both units prior to move-in so the matched families can focus on the other aspects of their adjustment to Philadelphia.
The downstairs unit will have full and exclusive access to the first floor and basement where the bathroom and laundry are located. While the unit is not rented yet, we hope to have a family placed shortly.
The upstairs unit is now home to our family of 3 from Afghanistan, who have since rearranged the layout based on their own needs.
We expect to have the second unit rented to another refugee family in the next few weeks. We are especially excited at the prospect of multiple refugee families living as neighbors to help support each other through the challenging adjustment to a new culture.
Meanwhile, we are also working on one more important step! Remember back in the beginning when we mentioned that only 25% of the cash needed to purchase and rehab the property needs to be fundraised? Well that is because we use some special financing to get access to short term funds that allow us to purchase the property with cash. Now that the property is fully rehabbed and rented, we need to refinance the property by opening a mortgage.
Why get a mortgage now? If we had gotten a mortgage when we first purchased the property, then we would have been able to get a loan for 75-80% of the purchase price of the house. That means we would have had to put down 20-25% of the purchase price in cash as a down payment. Afterwards, however, we would have had to pay for all of the upgrades and repairs in cash.
The significant cost in repairs and upgrades, however, have now raised the value of the home by at least that amount. So when we refinance and open a mortgage on the property now, we will be able to get a loan for 75-80% of the new home value. This value is called the after repair value (or ARV) and is significantly higher than the initial purchase price of the property.
When we open the mortgage, the bank will give us cash for the value of the mortgage. And this cash will allow us to pay off the initial short term loan we opened to make a cash offer on the property.
Confused yet? If so, don’t worry about it. Just know that by waiting until now to get the mortgage, we will have saved about $30,000 for a fully refurbished house. And that savings gets us that much closer to the next impact home.