The non-profit organization wants to buy homes to give people a ‘real step towards home ownership’

For low- to moderate-income homebuyers, the prospect of going toe-to-toe with cash-strapped investors can be daunting — if not financially impossible.

But in Milwaukee, one nonprofit thinks it can level the playing field.

Earlier this month, Acts Housing launched a buyout fund that would typically attract out-of-state investors to buy single-family homes on the hunt for additional rental properties. Housing costs nationwide. Unlike low- to moderate-income buyers, investors can buy homes off-market with no strings attached.

With a $1 million operating grant from the local Zilber Family Foundation to get started, however, Acts Housing hopes to use those same tactics to stay competitive, while also offering sellers a bit of moral salvation: Work with us, and you’re on. Home ownership is possible for people who are locked out of the market from time to time.

“Without some market disruption, we’re going to see this continued flow of investor capital to lower- to middle-income families, particularly black and Hispanic families, who weren’t getting a fair shot at homeownership,” said Michael Gossman. President and CEO of Act Housing, which provides services to low- to moderate-income renter families looking to become homeowners.

Although the group buys from investors, it also acquires homes by marketing them directly to sellers who want the same full cash provided by investors, Gossman said.

Acts Housing is currently in the process of raising $10 million in grant money for a revolving fund that will allow it to purchase and renovate at least 100 properties starting in 2023, Gosman said.

‘When you own your home, you know what your payments are going to be for the next 30 years, and you can invest in your family, invest in your home, invest in your environment.’

– Teg Vallee-Smith, CEO of the Community Development Alliance

Dorothy York said the company bought the first houseof the group A real estate vice president described a three-bedroom, 1,000-square-foot home that previously cost $90,000 for $29,000. in Repairs. Act Housing is now looking for a family to live in the rehab house, she said.

That puts the property in the city’s sweet spot for affordability, York added. For families served by Act Housing, an affordable home would cost around $125,000 to $150,000. (Milwaukee homes sold for an average of $202,000 in July 2022, a 9.4% increase from last year, according to Redfin.)

However, such relatively inexpensive homes are equally attractive to investors looking to grow their rental portfolio. And Milwaukee isn’t the only city grappling with that reality: Investors have poured money into single-family rental properties across the country, according to testimony at a congressional hearing in June.

Targeted housing is often located in communities with above-middle-class populations of people of color, according to that hearing, raising concerns that the low rate of home ownership among black Americans will continue to be exacerbated by rising prices.

Teg Wiley-Smith, CEO of the Neighborhood Community Development Partnership, a Milwaukee stakeholder coalition focused on increasing racial equity in affordable housing by partnering on the acquisition fund, said the goal is to turn those single families around. Assets return to home ownership.

“The housing system has become unstable because people don’t own their homes,” Wally-Smith said. “When you own your home, you know what your payments are going to be for the next 30 years, and you can invest in your family, invest in your home, invest in your neighborhood.”

In Milwaukee, where nearly 39% of residents are black, single-family or duplex properties have quadrupled since 2005. Investors took 40% of the city’s properties priced at $125,000 or less, the release said.

Other cities are facing similar problems and are coming up with similar solutions – buying up properties before they are lost to investors looking to rent at exorbitant prices. A Cincinnati agency made headlines earlier this year when more than a dozen organizations bought nearly 200 local homes to keep them in affordable housing.

“If families who come in and do the right thing, we make this promise that we will qualify them for the best financial assistance and help them find a home that meets their needs,” Gossman said. he said. “Currently, our families are not finding those homes as consistently as we would like.”

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