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A Non-Profit Developer’s Perspective

A Non-Profit Developer’s Perspective. Acquisition, Renovation and Resale in Baltimore City’s Middle Neighborhoods David Sann, St. Ambrose Housing Aid Center, Inc. 4/21/09. Comprehensive housing services in Baltimore since 1968

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A Non-Profit Developer’s Perspective

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  1. A Non-Profit Developer’s Perspective Acquisition, Renovation and Resale in Baltimore City’s Middle Neighborhoods David Sann, St. Ambrose Housing Aid Center, Inc. 4/21/09

  2. Comprehensive housing services in Baltimore since 1968 Mission to create and maintain housing opportunities for low & moderate income people and support strong neighborhoods Five silos of services Quality rental housing Home-sharing Pre-purchase counseling Foreclosure prevention counseling Housing Development St. Ambrose Housing AidCenter, Inc.

  3. Housing Development Program • Acquisition, rehab and resale of FHA & Conventional foreclosures in targeted Baltimore City neighborhoods • Scattered-site nature of program works well in relatively stable neighborhoods. Fully renovated house in Belair-Edison

  4. Community Revitalization Model • Ideal for “neighborhoods in the middle” • Stagnated housing values • Lack of investment by residents • Potential buyers with choices looking elsewhere • Existing / emerging foreclosure problem • Development objectives include • Improve the housing stock with targeted acquisitions • Jump start the real estate market • Reduce instability caused by foreclosures • Inspire current residents to invest in their homes • The community is the “client”

  5. HUD Asset Control Area (ACA) Program (2004 – Present) • Acquisition, rehab and resale of FHA foreclosures • Discounted purchase • Quality renovations • Market sales • High impact in neighborhoods with many FHA foreclosures

  6. ACA Program Success since October 2004 • Acquired, renovated and sold 150 houses to qualified moderate income buyers • Helped to jump start stagnated real estate markets in the communities we serve • Helped create significant equity for current homeowners • Have been able to expand the ACA program to new Baltimore neighborhoods

  7. Challenges in Current Market • Slow sales pace resulting in higher costs • Falling prices reducing margins • Apprehensive buyers • Lack of closing cost funds for buyers • Lack of market comps pushing prices down further • St. Ambrose’s market sales are cushioning the fall by maintaining market comps

  8. Lesson Learned # 1: It Doesn’t Work Everywhere • Scattered-site acquisition, rehab, resale typically does not work in highly distressed neighborhoods • Not enough scale to overcome community challenges • Scattered-site projects can work in relatively stable neighborhoods • Serviceable, functional housing stock • A functioning real estate market • Not too many vacant houses

  9. Lesson Learned # 2: Develop a Production Model Components of a production model include: • Research capacity for smart planning and development decisions • Financing in-place (speed & ease of use) • Construction management in-house • Quality general & sub-contractors lined-up • Marketing and sales expertise in-house

  10. Lesson Learned # 3: Choose Your Neighborhoods Carefully • Know your market niche and price points • A functioning real estate market is essential • Look for housing stock that can be affordably rehabbed: • Brick townhouse (3-bedroom preferable) • 1940’s & 1950’s construction has fewer structural issues • Modest, consistent, functional layouts • Contractor familiarity results in lower construction costs • Look for a community-based partner

  11. Lesson Learned # 4:Have a Marketing Plan In-Place • Develop to your market and price points • Work with realtors in the community • Include sales commissions in your budget • Provide pre-purchase counseling services • Include closing cost help in your budget • Partner with community groups & non-profits

  12. The NSP Program:Applying Lessons Learned • Neighborhoods that were chosen are the middle neighborhoods: • Higher foreclosure rates • Low vacant housing rates • Functional real estate markets • Moderate housing prices • Community based marketing and mortgage lending capacity in-place

  13. St. Ambrose and the NSP Program • St. Ambrose chosen to help implement the homeownership portion of the NSP Plan • St. Ambrose will be working in most of the neighborhoods designated by the City • Many of the neighborhoods overlap our existing program areas.

  14. The Development Model Applied to the NSP Plan • Research and acquisition expertise • Extensive lines of credit from local lenders • Experienced general contractors ready • Experienced construction management • Sales and marketing expertise • In-house real estate brokerage to list our houses • Network of realtors (100+) who know and appreciate St. Ambrose’s work

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