Interesting wrinkle on neighborhood revitalization: investor fixing nearby properties to raise own property values (part two)
There is an older blog post, "Does it matter who is buying foreclosed homes in Oakland?," by Callie Shanafelt of the California Health Report about the prevalence of investor acquisition of foreclosed properties in Oakland and "does it matter?" She writes:
A June Urban Strategies Council report shows an increasing trend of private investors buying properties in Oakland. Investors bought 42 percent of the 10,508 homes foreclosed on in the city from 2007 to October 2011.
The report raised the ire of some Oaklanders who worried that outside investors are buying up the city and preying on the problems of homeowners in distress. ... The report expresses concerns that outside investors may mismanage upkeep of properties and drain local wealth.
She links to some interesting reports about the phenomenon in Oakland and more generally. The PolicyLink report, When Investors Buy Up the Neighborhood: Preventing Investor Ownership from Causing Neighborhood Decline, makes the point that the closer the investor is to the property, the more likely they are going to be a "good" proprietor of the property, rather than to just let it languish.
This example of REO Homes LLC, as described in the previous entry, is quite interesting, almost unheard of, because they are actively working to improve the neighborhood in which they are heavily invested.
Sure they are self-interested, but they see the value in contributing beyond maintaining and investing in their own properties.
This is very rare. I can't think of similar examples.
What is key is the level of investment. The more they are invested in a particular area, the more it makes sense for them to spend money on other things.
Of course, the trick is to get them to do good quality improvements, rather than crap. (Crap is the problem we have in the undesignated DC neighborhoods, because 9 out of 10 times, value engineering and a lack of appreciation for potentially historic architecture and materials rules the day.)
I am tangentially involved in a project trying to get control of a historic theater building, and one of the problems is raising money to buy the building. There is a lot of development activity in the area, but the projects are comparatively "small," so it is less advantageous for the developers to drop a million dollars or more into this other project, which if re-opened, would make their residential units more attractive to potential renters and buyers, increase retention, etc. But on a unit basis, the investment doesn't make sense...