Last updated on August 10th, 2022 at 01:28 pm
Milwaukee-based nonprofit Acts Housing is setting up a fund to help low-to-moderate income families buy lower priced homes that otherwise are often snapped up by out-of-state investors.
The new initiative is meant to offset the burden for families competing to buy lower-priced homes with absentee investors, who typically make off-market deals with no contingency cash offers, according to Acts Housing president and CEO Michael Gosman.
“Annually, there are hundreds of families with low-to-moderate incomes that have graduated from the Acts Housing’s homebuyer education program. They’re financially prepared and approved for homeownership, but they’re missing out on (being able to buy) the most affordable homes,” said Gosman. “That is because of predatory, out-of-state investors have purchased massive quantities of single-family homes to use as long-term and often poorly maintained rentals.”
According to a Marquette University Law School study, the number of single-family or duplex properties in Milwaukee owned by out-of-state landlords has quadrupled since 2005. The Community Development Alliance in Milwaukee says that outside investors have purchased 40% of Milwaukee’s available inventory of homes that cost $125,000 or less, resulting in many low-to-moderate income families burdened with affording rent.
Acts’ goal is to create an expanded inventory of homes in the $90,000-to-$140,000 range with monthly housing costs between $900 to $1,200 – meaning, families earning less than $25 an hour will be able to afford these homes and reduce their monthly expenses used for rent.
Acts’ vice president of real estate Dorothy York will spearhead a team of real estate and home rehab professionals to identify housing ownership opportunities; which, includes buying homes directly from sellers in off-market transactions, portfolios from investors and purchasing properties from municipalities.
“With the Acts Homeownership Acquisition Fund, we’ll be able to provide families with affordable housing opportunities that otherwise wouldn’t be available,” said York, noting her team wants to quickly begin buying homes with cash and no contingency offers.
Depending on demand, Acts will sell the homes in as-is condition to its homebuyer education program graduates or the agency will perform the necessary repairs in-house and sell move-in ready homes.
In collaboration with the CDA, Acts has set an $11 million philanthropic fundraising goal through public and private support. This includes $1 million for operating support needed for the enterprise to reach profitability and be self-sustaining, and $10 million for a revolving fund to purchase and renovate homes. Sales proceeds will replenish the fund, officials said.
To date, $3 million in capital has been committed to the program.
Acts expects to purchase at least 100 properties per year beginning in 2023.
Since its founding in 1995, Acts has helped more than 3,000 families purchase homes.