Need Loan For My House My Life program - Brazil
by Ademir Sousa
(Fortaleza, Ceará, Brazil)
MINHA CASA MINHA VIDA (MY HOUSE MY LIFE) My House My Life is part of the Brazilian Government's growth acceleration program (PAC) and is an investment opportunity like no other.
Growth Acceleration Program
What is PAC?
Brazil's program for the Acceleration of Growth (PAC) calls for a total of 504 billion real (235 billion U.S. dollars) through 2016 to be invested in building and repairing highways, airports and ports nationwide, boosting energy development in the north, and providing housing, water and sewage systems that will benefit poor Brazilians.
What is My House My Life (Minha Casa Minha Vida)?
This is one element of the PAC program. Launched in 2009, it committed to building 2.5 million homes for low-mid income families by 2016. Brazil is currently experiencing a huge housing deficit which is estimated to be between 7 million and 10 million. Caixa And Bank Brasil, the government owned federal bank is offering attractive interest rates for buyers and builders. The program is very well subscribed and the challenge is now to keep up the supply with the demand. As an example there are over 65,000 people on the waiting list in the city of Natal.
What is PAC 2?
PAC 2 is a continuation of PAC 1. Announced in March 2010 investment totaling US$526 billion for the period of 2011 - 2014 and another US$346 beyond the World Cup year. About US$205 will come from the state owned companies and the private sector, the rest will come from the government. PAC 2 includes an extension of the My House My Life program to build a further 2 million homes.
How will My House My Life work for you?
Minha Casa Minha Vida Investment Opportunity
Builders and construction companies are looking for private investors to finance the start up of these social housing projects. The investments available in the marketplace currently range from individual unit purchases/financing to joint venture development opportunities.
What are the restrictions?
Developers of qualifying products receive a government subsidy and tax incentives. In return they agree to offer homes for sale at a pre-agreed, competitive price. The Minha Casa Minha Vida program will finance properties valued up to R$130,000. The maximum price depends on where you live, in Rio and Sao Paulo it's R$130,000. In cities with more than 500,000 inhabitants e.g. Fortaleza the limit is R$100,000 reais. For smaller cities the cap is R$80,000. Qualification is means tested based on a family's total income to minimum wage ratio. Parts of the program also allow for discounted insurance, reduced notary registration fees and payment protection.
What is my exit strategy?
The Minha Casa Minha Vida program is heavily subscribed and there is a short supply of these approved new homes. The states and the municipalities cannot grant construction permits fast enough to keep up with demand. Each municipality is given an allocation for the pre-defined income brackets. A developer will sign up end users before construction and normally have full allocation within 3 months of building starting. They handle the full resale. Once the loan is funded, the property deeds are transferred the investor receives their original investment plus profit.
What returns can I expect?
This normally depends on the level of money invested and the deal structure. The final sales price is already determined based on the developer's agreement with the municipality and the price caps in place for it's population scale. The developer knows exactly how much profit they will make before they start construction and they trade this profit in exchange for the capital provided by the investor.
We are in need of investors, lenders, join venture, to finance our projects in the program my house my life. We have to build 120.000 units in the Brazilian Northeast.