Building strong blocks

Socially responsible investors fund rent-to-own program

Michael Williams (inset) bought this stone duplex in Milwaukee’s Martin Drive neighborhood with the help of Strong Blocks.

Michael Williams has been a CNC machinist for several years, but it wasn’t until he started the CNC machining program at Milwaukee Area Technical College about two years ago that his salary increased significantly.

“I was doing machining before but the places, they really didn’t want to pay me the money I should get even though I knew what I was doing,” Williams said. “They were trying to pay me $9 and $10 an hour for my skills.”

Michael Williams (inset) bought this stone duplex in Milwaukee’s Martin Drive neighborhood with the help of Strong Blocks.

Halfway through the program, Williams was recruited by Snap-on Inc., and he’s now making about $24 per hour for the Kenosha-based toolmaker.

Because his pay increased, Williams, 33, was able to save up enough money to buy his first home in Milwaukee’s Martin Drive neighborhood. He received assistance in his homebuying journey from a company called Strong Blocks.

Quindel

Strong Blocks, started by former ACTS Housing executive director Carl Quindel in 2015, buys homes in disadvantaged neighborhoods, then rehabs them and recruits would-be homeowners for its 21-month rent-to-own program.

Some of the tenants’ monthly rent goes toward their down payment. Strong Blocks coaches the renters on how to improve their credit so they will be eligible for a mortgage, and introduces them to banks that can help them get a loan.

Williams entered the Strong Blocks program in May 2016 and was able to purchase his stone duplex in January—the first Strong Blocks participant to do so. He lives in the upper unit and rents out the bottom one, which pays his mortgage. Strong Blocks helped him get the right documentation in place to become a landlord. He saves the money he’s making at Snap-on, and has used some of it to make improvements to the home.

“The program is designed for the family to have a fixed rent and a fixed purchase price for 21 months. It can’t move on them,” Quindel said. “We stick with our families to make sure that they’re successful.”

Strong Blocks this month will close on its second equity fund, which is expected to total $1 million. It raises funds from local investors as socially responsible investing, which both provides a financial return and advances a social good.

Investors are repaid from the rental income, and when a home is sold, they receive additional returns.

“We typically work with accredited investors and they’re investing as a part-owner of the portfolio that ends up being developed,” Quindel said.

The investors can tour the properties and meet the residents, so it’s a more hands-on investment process, he said.

“The markets more and more feel like it’s further away from people’s day-to-day reality,” Quindel said. “This is something people can feel and touch.”

Stewart Wangard
Kaufmann

Local real estate developers Stu Wangard and Juli Kaufmann both have invested in Strong Blocks funds. Both like the mission of creating more locally-held wealth and strengthening neighborhoods that are disinvested.

Kaufmann invested $5,000 in Strong Blocks’ second fund.

“I wouldn’t invest in it if it wasn’t local,” she said. “Why would I want to invest in a national company that doesn’t align with my values, isn’t helping my community, is paying corporate salaries that are excessive?

“His returns are competitive. I would have taken a lower return, frankly, for the kind of impact this project has.”

“From a financial perspective, there’s other areas where I can get a higher return,” Wangard said. “From a positive impact on the community, this is one of the best places where I can put my money.

“You’re bringing a home back to a fair market value. You’re taking it from a blighted state…and eventually you’re going to see a home that has an assessment and is generating taxes. If you’ve got healthy neighborhoods, there’s less of a need for these community services.”

In March, Strong Blocks was selected for a City of Milwaukee RFP to buy and fix up houses in the Sherman Park neighborhood. It’s using the funds from the second equity fund to begin buying homes there, and the city will reimburse some of the renovation costs. Quindel buys many of Strong Blocks’ homes from the city.

“The hardest part is selection of the houses because (the city has) a lot of houses and even for $1, some of them are very difficult,” he said. “They’ve been abandoned for three or five years, electrical is ripped out, vandalism, squatters, animals, you name it.”

Strong Blocks spends an average of $60,000 rehabbing its homes. It owns 87 units, and there are 21 families in the Strong Blocks program. The first few participants will reach the 21-month mark in August.

Before he started Strong Blocks, Quindel spent nine years as executive director of ACTS Housing, a nonprofit that makes homeownership accessible for low-income families. With his for-profit social enterprise, Quindel plans to build up neighborhoods where it’s needed most—creating strong blocks.

“We saw just how many families were left out, but also had a pretty clear path and realistic path toward ownership,” he said.

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Molly Dill, former BizTimes Milwaukee managing editor.

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