To many experienced real estate investors, old properties are a diamond in the rough, especially those with fix-and-flip expertise. Restoring historic properties present challenges, such as higher costs and the obligation to meet more stringent regulations. However, one creative solution for overcoming these obstacles is utilizing Historic Rehab Grants. These grants can help minimize the downsides of restoration while allowing investors to preserve culturally significant structures.
Purpose and Eligibility
The primary goal of these grants is to preserve or restore historically significant buildings. Properties must qualify for grant funding by being listed on the National Register of Historic Places (NRHP) or being eligible for inclusion. To list a property on the NRHP, it must meet specific criteria related to historical significance, integrity, and age. Applicants must also demonstrate how they will use the grants and comply with specific preservation guidelines.
Historic Preservation Fund (HPF) Grants
The HPF makes preservation grants available to support historic preservation projects across the U.S. Though exact amounts can vary, these grants typically require a matching contribution of 50% of total projected costs.
Certified Local Government (CLG) Grants
These grants are awarded through the HPF but through partnerships with various State Historic Preservation Offices (SHPOs). Much like HPF grants, CLG Grants are awarded with the intent to sustain and promote local historical preservation initiatives.
Federal Historic Preservation Tax Incentives
The Federal Historic Preservation Tax Incentives offers a 20% income tax credit for rehabilitating historic buildings engaged in some income-producing activity, such as paid tours or workshops.
Save America’s Treasures Grants
This program, funded by the National Park Service, provides grants to preserve nationally significant historic properties. Unlike some other grants on this list, applicants can receive substantial funding for both construction and conservation activities.
Funding Uses
National historic rehab grants can be used for a variety of activities, including:
- Building Rehabilitation: The core focus here is to restore and repair the physical structure, ensuring it meets all mandated safety and access standards.
- Architectural and Engineering Services: A portion of the awarded grants are intended to fund expert consultation to create accurate and compliant architectural plans.
- Accessibility Upgrades: Though implementing some of these changes can sometimes be tricky, the primary goal of this type of work is to make historic buildings accessible to all by installing necessary upgrades such as elevators, ramps, or other modifications that comply with the Americans with Disabilities Act (ADA).
Benefits for Real Estate Investors
National historic rehab grants can present quite a few advantages for savvy real estate investors. The funds provided typically cover a significant portion of rehabilitation costs, reducing out-of-pocket expenses and limiting financial risk.
Tax incentive programs like those offered by the FHP offer significant tax relief and can provide opportunities for significant economic gain.
Application Process
Securing historic rehab grants involves a fair amount of due diligence and preparation. The most important element of the application process is a well-drafted and thorough proposal. Hiring an architect, engineer, or other professionals with expertise in historical preservation is highly recommended.
Conclusion
Historic rehab grants present real estate investors with unique opportunities. That is, if the investors do their homework. You must understand both the application process, and the requirements and restrictions these kinds of projects entail.
By exploring available grant opportunities, preparing comprehensive proposals, and consulting with preservation professionals, investors can do their part to preserve our nation’s history — and see some profit in the bargain.
