I recently attended a meeting in Lafayette on the subject of Buying, Building and Investing Downtown. I learned about the meeting through meetup.com, it was sponsored by a group called “Lafayette Speak Easy”.
Our mortgage business is on Main Street and we show local artists paintings in a our gallery area and I own some rental property in the area too, so I was interested to see what other business owners and investors had to say about the direction of the neighborhoods and what kinds of investments people were interested in.
My office had just completed a loan that involved Wabash Valley Trust and another that involved a Neighborhood Stabilization Program (NSP) grant the City of Lafayette used to buy and fix up select houses. I hoped there would be some talk about similar programs and maybe I could talk to someone about the lender side of these kinds of transactions and how we were able to help by funding mortgages for the home buyers when others could not.
I left this meeting thinking about how I have contributed in the past, if there was anything I was doing now, and how I might best contribute in the future in a way that addressed the issue of making downtown Lafayette a better place.
As a teacher of Fine Arts, History & Appreciation of Art and Architecture for several local institutions, I have had a chance to enlighten a few about the value of creativity and craftsmanship and how it adds to the vitality of cities. I am a supporter of Friends of Downtown and I pay attention to local politics. I just put in a proposal for a mural on Main Street through the Tippecanoe Arts Federation and my business is always hiring. So I feel like I am contributing as much as anyone; but somehow these things seemed temporal and limited in their reach. To facilitate real change the effort needed to be more focused and people really had to be inspired and empowered to go out and actually do something.
One thing I have been very proud of over the years is a House on Main Street that I was able to restore. People and businesses come and go but that house on the hill remains. I really think it is one of the most significant projects I have done and is a real world example of an individual making the downtown a better place. There is a permanence and public presence to the place. It welcomes visitors to down town at the five points Main Street split. I thought maybe by telling people about how I was able to do that work that it might inspire them to do something for themselves.
My wife and I, along with my brother, bought the duplex on Main Street about 12 years ago and it was a very different market back then. We pooled our student loan money and savings and purchased the 1901 Craftsman Style home in 2000. It was in serious need of repairs. A bathtub was leaking into the living room ceiling, it needed a roof, paint, furnace, windows and more. We paid $90,000 putting 10% down at 9% interest (adjustable rate). We were lucky to get a loan on very limited income and short job time but the rent we would collect from the other side of the duplex helped us qualify. I was able to see the potential this house had and it is a good example of the kind of thing that the meeting attendees cited as good objectives. It is now a single family home, owner occupied, restored wood exterior; it has a new roof and modern updates but we kept the historic charm.
I started thinking about the things we had to go through to accomplish our goals with the house and realized how much easier it would be today if someone only had the knowledge of the tools available. Everyone says things like: “If I only knew what I know now back then..” Well I know it now, and although I can not go back in time to help my former self or change that market, I can help my future clients and friends in this market and they do not have to have near the obstacles. The problem is finding people with the desire to go out and do it. Some think you have to wait on one of these non profits or government program houses to come along but you don’t. You just have to know about a few kinds of mortgages. You can pay for restoration and upgrades and likely pay less than you would pay in rent in today’s down market with such low interest rates and tax incentives.
Today a house in the same condition might cost much less. The mortgage rates and down payment requirements are less than half of what they were back then. Now you can borrow money to do the repairs when you purchase the home with a 30 year fixed FHA 203k loan. The industry has made it so easy to accomplish rebuilding neighborhoods compared to what it was like when I was buying and restoring my home. It is really fantastic but it requires individual action by a qualified buyer and a knowledgeable loan officer.
After thinking abut how much better it would have been to be able to use a 203k loan to do my repairs and all the headaches I would have eliminated, I was filled with a desire to go out and really start educating people about the program.
Planning meetings are great but, volunteerism and personal responsibility are really what I think should fuel community development and ultimately respect and pride of private ownership are the best inspirations for these aspirations. And then of course there is profit; which contrary to what many have been trained to believe, it is not a dirty word. It is a driving force, one measure of success and source for stability and economic sustainability. Investing in downtown can result in profit as well as community development and I can show people how.
I’ll be posting a few examples of current properties on the market and sales histories to try to shed some light on the numbers and available financing for these kind of investments. I hope this will help individuals assess the potential for profit, a good home, or see how they can make a positive impact on the community by maximizing the available programs that are designed to help make it simple.