Friday, August 23, 2013

West Oakland-REO Company fixes up properties

Investment firms such as REO Homes LLC , an investment firm that owns homes in areas such as West Oakland, CA, spends times fixing up exteriors of homes they don't actually own.  They do such things as trim trees, pressure-wash  the wood siding, and even touch up paint jobs.  The actual owners and renters do not need to pay for this.  The investment firm works on helping homeowners upgrade their homes and even has planted hundreds of trees along city streets in some areas.

 The REO founder, Neill Sullivan recently said , "The neighborhood was badly in need of capital, to maintain, beautify, and restore it."  He said this as he drove his hybrid sedan through the streets of West Oakland.

This is not a nonprofit company, the motives are part of a broader strategy to upgrade the neighborhood, therefore attracting higher-income residents who will possibly boost property values.
These investors who actually put work and energy into a neighborhood after purchasing foreclosed homes and properties in neighborhoods are trying a different approach other than buying, then flipping them quickly.  These type of investors, instead, can spend billions of dollars to buy homes and then upgrade them as well as the neighborhood!

Mr. Sullivan remarked, "We're taking mostly vacant, abandoned and beat up housing stock, fixing it up, and putting livable, quality housing on the market."

Ingrid Gould Ellen, co-director of New York University's Furman Center for Real Estate and Urban Policy, explained this trend by saying,  "It can take generations for neighborhoods to change, but investors have the potential to accelerate the process, especially because they may have the cash on hand to purchase lots of homes at once even in tight credit markets."

Many see Oakland as a more affordable and family friendly option to San Francisco, though it is not many miles away, and is reachable through public transportation such as BART.

The Urban Strategies Council, an advocacy organization based in Oakland, found that between 2007 and 2011, 10, 508 homes in the city went through foreclosure, and 42% were acquired by investors.  One of the biggest investors to seize on the opportunity was Mr. Sullivan's REO homes.  Thomas Steyer, the founder of San Francisco based firm, Farallon Capital Management LLC, helped REO with an early investment.  Since REO was founded in 2008,  REO has acquired more than 200 homes in Oakland,  most in West Oakland.  Most of the homes cost around $200,000 and REO spends around $100,000 fixing them up.

Mr. Parmer,  who lives in the neighborhood, and is a homeowner who received free upgrades from the REO company, said, "This neighborhood has turned around 180 degrees."

The changes in the community of West Oakland worry some Oakland City Officials.  Some are working on initiatives to slow down investor purchases and give the owner-occupiers an opportunity to buy foreclosed properties before  investors see them as part of a program such as the "First Look" federally funded program.

Desley Brooks, the council member who has sponsored city legislation that requires investors to record their property holdings in a city registry to slow down purchases,  said, "I'm not interested in finding housing for San Franciscans who can no longer afford San Francisco.  I'm interested in helping people here in Oakland.  There are people here who have lived their whole lives who can no longer afford Oakland."

Ideas and quotes from article in Wall Street Journal, Wednesday, August 14, 2013- Vol. CCLXII, NO. 38, "The New Urban Pioneers- Companies Spruce Up Neighborhoods, Putting Gentrification in Overdrive."

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