Non Profit tie in with real estate

8 Replies

Hello guys, so I am currently the director of a small non profit in the Houston Texas area. We focus on fundamental measures to combat homelessness as well as assisting underprivileged children. In the past year we have struggled to obtain funding and stay afloat but have done what we could from donations and assistance out of pocket by myself as well as others on our team. We currently possess a 5013c which makes all donations and grants tax deductible which has really helped. I would like to propose an idea and all of those knowledgeable in the area feel free to chime in because I am not sure if this is actually feasible. We had a meeting Thursday afternoon and the idea of purchasing a property (residential) on the behalf of the non profit came up. The foundation of this idea would be to use the property as a transitional space for those struggling to get back into the work force. I would like to know from you guys perspective, is this possible? Can a non profit organization even obtain a mortgage, loan, to buy a property? Donations are not consistent enough to pay monthly rent so how could we pay the mortgage and eventually purchase the property? Would an employee from the NPO have to live on site to manage? Any thoughts, pitfalls or ideas regarding how to do this correctly and what to expect on this path would be much appreciated! Thanks in advance

I see four questions and will answer some. Regarding "I would like to know from you guys perspective, is this possible?" Yes. Regarding "Can a non profit organization even obtain a mortgage, loan, to buy a property?" Yes. I know of a stellar Wake county NC non-profit, in existence since 1966, that borrowed almost $3M on 4/4/2011 from a commercial bank. The bank will set terms and conditions but how they will underwrite your non-profit is beyond my competence. 

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@Chris Martin I Greatly appreciate your insight you have helped me to move in the correct direction. I will do some deeper research and set up a meeting with chase this week to get a better understanding.

@Don Konipol Thank you very much, from my understanding you are saying once I obtain a grant large enough the bank reserves would serve as income verification to the bank. This would allow the bank to know that we would be able to make consistent payments on the property.