Flipping less-than-desirable / foreclosed homes in the hopes of turning a profit is not a new concept. In fact, both Bravo and TLC networks have hosted one or more shows on the topics, spurring a mini-revolution of sorts in a period when there are more renters than homeowners and more properties than people able to fill them.
The flippers are usually upwardly mobile real estate developers or handymen who know the value of hard work and quality materials (of course, there exist those people who insulate your walls with bargain-brand batt, hoping the buyer will never realize…).
It’s difficult to find fault with an individual who scoops up a property on the cheap, pours a great deal of sweat equity in the place and then puts it on the market for personal gain; but when the flipper is your local government, when the seed money is federal dollars that could be put towards other programming, and the profit is less than half of the dollars poured into the rehab, big, bold, burning red question marks arise.
Such is the case in my idyllic community of Cleveland Heights, as reported by the Patch: “The City has rehabilitated 12 homes using money from a federal program created to help cities tackle the foreclosure crisis.”
“The city received about $2 million through the Neighborhood Stabilization Program, which grants money to local governments to buy abandoned, vacant and foreclosed homes, repair them and turn them around for sale. The dollars also can be used to demolish homes that can’t be saved.”
“The city has sold eight [of the twelve] homes so far. [It costs] on average, about $140,000 to repair each home. Once the homes are sold, the money goes back into the fund to continue to rebuild homes or demolish those that are dilapidated. The homes sell for about half of what it costs to renovate them, including Delmore [pictured above], which is listed at $76,000 [which is on the high end. Other properties unsold as of publishing are listed for $64,000 and include a vacant side lot].”
My very many questions:
Who determines which homes should be vetted for the $140,000 facelift and which homes are destined for the wrecking ball? What are the instruments in place to measure a structure’s value? Do residents truly have a say? Would the people authorizing the expenditure move into one of these homes after all is said and done? What do the neighbors think? Would they rather have a community garden on their street as a result of a demolished, under-performing structure or a refreshed (but still empty) home? (FYI: only certain people qualify to purchase these homes.) Should flipping be a hobby left to the “professionals”? Shouldn’t city government be more invested in what’s best for the whole, not taking on housing for 12 families? Shouldn’t these federal dollars be spent on demolishing the over-abundant vacant, unsafe housing stock and focused on urban, public interventions that the whole community can use as a resource?
This is a prime example of why transparency in government is so crucial.
What is Patch?
It’s a “new way to find out about, and participate in, what’s going on near you”. They’re “a community-specific news and information platform dedicated to providing comprehensive and trusted local coverage for individual towns and communities”. Find out more, here.