Can you redevelop north Baton Rouge one house at a time?
Armed with an ambitious business model, a little cash, a background in construction and a lot of heart, local real estate investor Tommy Campbell is trying.
Campbell’s plan involves buying blighted, abandoned houses cheap—like $10,000 cheap—then fixing them up and selling, not renting, them to first-time homebuyers.
While it might not be the best way to get rich quick, it just might be the best way to help stabilize neighborhoods and make opportunities available to a segment of the working poor population that doesn’t realize homeownership is within its grasp.
Campbell, 53, has worked in real estate for years and knows north Baton Rouge, where he already owns a 58-unit multifamily complex called the Fairwood Apartments.
After the 2016 flood, he became interested in a couple of single-family homes on Eton Street, around the corner from his complex. The small structures had been in bad shape before the flood. After taking on four feet of water each, they deteriorated into a blighted mess.
But they were solid houses with good bones that had been developed in the 1950s for working-class families whose fortunes were tied to the nearby chemical plants. Campbell realized he could do a quality, but relatively inexpensive job restoring the properties and turning what would typically be offered up as rental units into stable, owner-occupied homes.
Campbell paid just $8,500 for the first, 870-square-foot house, which has two bedrooms, one bath, a small back porch and spacious yard. He spent nearly $40,000 renovating it from top to bottom—installing new plumbing, wiring, sheet rock, flooring, plus cabinetry, countertops and brand-name appliances. He even threw in a portable, wireless burglar alarm.
His asking price: $65,000.
He bought the house next door for $10,000. At 970 square feet, it’s larger, with three bedrooms, one bath and a small garage. Campbell spent $50,000 fixing it up and is now listing it for $80,000.
About a mile away, in a stable neighborhood of slightly larger working-class homes, Campbell has acquired a third house for $35,000. His plan for that one is slightly different. It didn’t require a total renovation, just a little TLC and some minor repairs, so he spent about $10,000 fixing it up and is now listing it, also, for $80,000. Unlike the others, it’s a quicker fix and the margins are potentially higher. But his target market is the same.
So what now? Campbell is hoping to attract buyers from the low- and moderate-income segment of the population, the working poor. Technically, in federal HUD terms, that would be people who earn no more than 80% of the area’s average median income, or about $59,800. In a dual-income family, that would mean each wage earner would have to average about $15 an hour, or roughly double the current minimum wage.
Most people in this segment of the population rent because they cannot afford to own or, more importantly, do not think they can afford to own. Campbell is hoping to show them that they can.
He points to a neat brick house directly across from his two Eton Street properties. It’s about 1,000 square feet, roughly the same size as the larger of his two. It rents for $800 per month.
Campbell has done the math and says with virtually nothing down, a family in that $59,800 income range could own one of his homes for as little as $350 or $400 per month, thanks to various federally-subsidized loan programs.
The state also has several programs aimed at making home ownership more affordable—secondary mortgages, for instance, that are forgiven after five years if the primary home loan is consistently paid on a timely basis. These benefits can stack—they’re not mutually exclusive—and there are plenty of organizations willing to help potential buyers qualify.
But key to making it all happen is to help those in this target market get their credit score up to 640, which may seem out of reach for many, especially those who have not built up a good credit record and have no idea where to start. That’s where agencies like the Mid City Redevelopment Alliance come in. The organization is leading the way locally, helping people learn how to build a credit score by lowering their debt-to-income ratio.
The group offers HUD-approved counseling services and courses for a nominal fee. It also provides down payment assistance and even matching funds to help with closing costs.
Campbell has been meeting with the folks at MCRA, trying to bone up on the various programs available and create synergies where possible. He’s also trying to network and get the word out around town—both to potential homebuyers but also to investors and others who can help make his vision a reality.
Would it be easier to buy these homes and flip them as rentals? Sure. But Campbell knows the real key to revitalizing these neighborhoods and enhancing the value of the properties in them is to put as many of the properties as possible in the hands of residents who own them.
It won’t be easy and it won’t rehabilitate an entire underserved area overnight, but it’s a seed from which other positive change might flow.
People have told Campbell he’s making a mistake. It’s a gamble he’s willing to take. He believes people should be able to own a home. There are easier ways to make money, sure. But Campbell is hoping to make a real difference.