McGregor willing to donate lot for Lease Purchase Program
By Audrey Posten, North Iowa Times
The city of McGregor has agreed to donate a lot in its Ohmer Ridge Subdivision for use in the Northeast Iowa Community Action Corporation’s (NEICAC) Lease Purchase Program. Similar to a Habitat for Humanity project, the program would allow a selected individual or family to “rent to own” a new home.
“We do construction, then rent a unit out for a period of two to three years before they buy the home,” explained NEICAC Housing Director Jeremy Jostand, who spoke at McGregor’s Nov. 20 council meeting.
Homes are typically 1,400 square feet, with three bedrooms and one bathroom, as well as “some room to grow so they can put some equity in the house,” Jostand said. A two-car garage is also included.
Lot 12 in the Ohmer Ridge Subdivision would allow NEICAC to build one of two types of homes: one that’s long and narrow or another that is wider. A slab to grade home would alleviate any concerns over the rockiness of the property.
“It’s one of the flatter lots in the area and offers the most flexibility,” Jostand told the council. “It’s also closer to town and services” than some of the city’s other available lots.
Thirty-two homes within NEICAC’s coverage area have been completed through the Lease Purchase Program since 2007, with all but two being new construction. Over the past 10 years, the program has put nearly $1 million in assessed value into Clayton County alone, Jostand noted.
“We’ve had good success,” he said.
NEICAC has been interested in building a home in McGregor for several years, but the timing hasn’t worked until now. Once the council approves a resolution at its December meeting disposing of the property, Jostand said he can move forward with the process. The project would likely go out to bid next summer and, by this time next year, the home would be close to being completed.
Jostand said NEICAC seeks tenancy applications during the construction process, evaluating those who are interested based on factors like rental history, criminal background, job longevity and income.
“They have to be able to afford it,” he said.
There is no set sale price for the home; it’s based on what the tenant can afford, explained Jostand, so that’s different for each person. To date, a home has never sold for less than $60,000 or more than $75,000.
“Typically, we use local lenders to see how much they would qualify for on a loan and then we take the max they can afford and we reduce that by 10 percent. So if someone qualifies at $80,000, we don’t want to max them out and set them up for potential failure. We drop that to about $70,000/$72,000, so it gives them a little cushion,” he detailed. “A lot of times, these appraise about $135,000, so if we sell it at $75,000, there’s a $60,000 difference.”
Each year, the resident will gain $4,000 in equity just for living there.
Jostand said NEICAC tries to attract a local person to live in the home. The primary marketing area will be McGregor itself, then it will extend to Clayton County and, eventually, NEICAC’s seven-county region.
Once a tenant is selected, they will receive home buyer education and budget and financial counseling.
“We help prepare them to be home owners, including knowing what’s going on with the city, being a good neighbor, maintenance and things like that,” said Jostand.
The council is excited about moving forward with the program, as is mayor Lyle Troester.
“I think it’s a wonderful opportunity for us to get a house and help someone get started,” he said.
