Buying a house - dealing with banks.

[DeltAlum]

ZZ,

First, I applaud your willingness to work on this project. It sounds like you're looking at a good size in a reasonable price range.

Having a house is a great thing, but it can be a real bag of worms. I've been on the outside of this kind of thing, and it's pretty scary.

First, there's no way I would sign as a guarantor, unless you can personally afford to pay a large chunk if the chapter fails. I know that's a cold way to look at it, but I've seen even great chapters fall apart really quickly. It's particularly tough when the chapter is young enough that there are no "rich" alums to donate large portions of the cost or guarantee the loan. That was the situation at one House Corp. I was on.

One serious hazing violation or alcohol problem -- the chapter is suspended, and the House Corporation is left holding a fairly substantial bag.

Do you have any alumni in the Real Estate business who might help? How about a lawyer? You need some real expertise.

Unfortunately, the national organizations tend to distance themselves somewhat from these projects because of the above and, frankly, because fraternity houses tend to get trashed and lose their value instead of appreciating as much as other real estate.

The other thing that tends to get lost in the euphoria of building a house is making sure the chapter itself is financially sound enough to not only pay the mortgage, but also the costs -- like property taxes and other operational expenses (a few listed below) and standard maintenance that aren't considered when in the fund raising stage.

Another thing that chapters often overlook is that if the house is closed for the summer, the mortage, utilities, insurance and maintenance costs go on. So rent has to be enough to cover those vacant three months. Some chapters choose to rent out rooms to non-members during summer sessions. I've never been real keen on that idea, since you really don't know how the tenants will treat the property.

This kind of stuff is obviously NOT what you and a chapter wants to hear, but brotherhood can only go so far when House Corp. members are struggling with career, family ,etc.

I wish you the best of luck. The project I worked on has yet to work for many of the same reasons I've listed above -- and the ones you have already discovered in trying to find a lender. It's a really tough exercise -- but not impossible.