Oklahoma City -- Tired of the vacant and dilapidated houses in their neighborhood, the members of the Capitol View Neighborhood Association decided to take matters into their own hands.

Using donated buildings, volunteer labor and no-interest loans made by its members, the neighborhood association is fixing up its neighborhood one neglected house at a time.

While subsidy dollars are increasingly hard to find across the country, the neighborhood association has a model for rehabbing homes for moderate-income buyers that needs almost no subsidy.

Last October, the group finished its third project, a $65,200 rehabilitation of 844 Northeast 28th St., which fits two bedrooms and one bathroom into its 1,200 square feet. Workers carved out a new doorway to the backyard and opened up the house’s floor plan in addition to replacing a lot of water-damaged gypsum board. “It really hadn’t been cared for,” said Sam Moore, an architect who donated his time to the rehabilitation.

The neighborhood association did much more work at the house than was needed to make it habitable. For example, the nonprofit installed fancy new cabinets and stainless steel appliances and hired a professional landscaper to make over the lawn. “We try and sell the units with as much bells and whistles as possible,” said Lenardo Smith, association president. The nonprofit also spent $4,500 to hire a public relations company and create a Web site. This might seem like a lot of publicity for one unit of affordably priced housing. But the developer wanted to change the perception of the rundown old house – and the whole neighborhood.

The neighborhood association received the house from GMAC Mortgage Corp., which had serviced a foreclosed loan on the property. The neighborhood association paid for the work with a package of $40,000 in loans at 0% interest provided by the members of the association, including Smith, who made a $15,000, 0% loan to the property. The house also received a foundation grant for $5,000. The remaining $20,000 was financed by contractors who agreed to wait until after the house sold to be paid for their work.

Other contractors and vendors, including Raffine’ Interiors, Lowe’s Home Improvement Center and Comfort Guard, offered services and products for free or at discounts, not to mention the dozens of volunteers who sanded and scraped and hammered and nailed at the property.

After the workers finished, the house sold in just one week for $76,000. That would be a quick sale even in a hot real estate market, and the price is still very affordable compared to prices in the wider metro area.

The nonprofit made about $12,000 from the sale. A matching grant from the Oklahoma City Community Foundation has doubled that money, leaving the nonprofit with $24,000 in its bank account for its next project. The neighborhood association is negotiating with GMAC to take over four more foreclosed properties in the neighborhood.

Volunteer workers from the neighborhood association have also offered their services to homeowners with code violations by landscaping and repainting their houses for free. The builders have worked on seven homes so far.

When Smith is not running his nonprofit or running for the Oklahoma City Council, he manages his own portfolio of 20 properties in and around the Capitol View neighborhood. He hopes that the neighborhood association’s work will create a stronger community in his neighborhood by adding new homeowners (as opposed to renters) and increasing the value that residents – and investors – place on their properties.

“It’s about changing the whole neighborhood,” Smith said.