Using an unusual real estate manual, a local company is looking to bring more than 100 luxury homes to the East End.
The investment arm of John B. Levy & Co. recently bought the 130-unit villas at Oakwood Apartments for $10.7 million and plans to convert those units into condos for sale for about $150,000 each.
The 56-year-old complex, located at 3526 E. Richmond Road, was originally built as apartments before it “went into disrepair” and was converted to condos around 2007, said Bram Levy of John B. Levy & Company.
In the year Before the real estate market crashed in 2008, about 30 units were sold as condos, while the rest were left as apartments due to the Great Recession.
Levy said he was inspired to take on the project after the company noticed that there were fewer than 10 homes for sale under $150,000 in the Richmond market on a given day.
“It’s funny how little there is for a family to buy a home at this price,” Levy added, adding that it’s an opportunity to provide homeownership opportunities in the mostly black Oakwood neighborhood east of Church Hill.
“There is a 25 percent racial gap in home ownership between white and black households. This is the highest it has been in 100 years and the location and current demographics of these apartments are communities of color,” Levy said. “We think it’s an opportunity for us to bring 130 home ownership opportunities to East Richmond.”
The apartments, which are currently 98 percent leased, rent for about $1,050 to $1,100 a month. If the apartments sell for the proposed price of $150,000, Levy said the total monthly payment for residents would be only about $100.
However, before starting the process of converting, renovating and registering the apartments as condominiums, the company stated that they must first find four more lenders to enter the project.
Andy Little, principal at John B. Levy & Co., said he wants lenders to treat the loans as “portfolio loans,” agreeing to book condominium buyers’ loans instead of buying and selling them. Insure them on the secondary market, such as Fannie Mae and Freddie Mac.
“It’s an opportunity for (lenders) to put some loans on their books and expose the risk in these communities,” Little said.
Levy added: “We had a few who stood up and said, ‘This is an opportunity to correct this historical mistake and give a home to a family.’ But we still need four more portfolio lenders. If we don’t, we can’t pull it off. That’s the missing link.”
Since the guidelines on condo projects have changed since the Great Recession, Levy said they want them to be portfolio loans.
So far, Virginia Homes and Virginia Credit Union has found two lenders that will commit to lending on 40 of the 130 units. Once they have a commitment to the remaining 90 units, they are ready to start selling the condos, Levy said. In the year The first 30 condominiums sold in 2007 will not be part of the project and will remain privately owned.
Current renters who qualify for the loans must not be willing to buy their first unit.
“We love to turn renters into homeowners. That would be the best outcome here,” Little said.
Little and Levy said the units will be heavily renovated when they arrive. Plans include replacing carpets with plank floors, remodeling bathrooms, repairing roofs and replacing appliances.
“When we’re done, they feel cleaner and more modern,” says Levy.
The firm, which typically serves as an investment bank that helps developers raise capital for their projects, is seeking advice from local housing nonprofits to help get the project off the ground, Levy said, adding that they hope they can create another location in the future.
“The affordable housing issue is often driven by the nonprofit world, and everyone is telling us, ‘We can’t do it alone, we need private capital.’ We were like, ‘Wait a minute, that’s what we do,'” Levy said.
Little added, “We see this as the first of many. If we can get this model right and…get these portfolio lenders on board, I think we can really move the needle on the[affordable housing]problem.