Gorman selling dozens of single-family rental homes in Milwaukee to tenants
Working with Acts Housing, developer has plans to sell more than 70 homes to first-time homebuyers over the next two to three years, and more than 200 over the next dozen
Two homes constructed by Gorman & Company in the 2500 block of North 36th Street in Milwaukee's Metcalfe Park neighborhood 15 years ago as low-income rental housing have been sold to the tenants that live there. (Cara Spoto/BizTimes)
As the Community Development Alliance works to wrest thousands of homes from the hands of predatory investors in Milwaukee, one Wisconsin developer is taking steps to sell dozens of its single-family home rental properties to its tenants. While most people think of Gorman & Company for its headline-grabbing mixed-use apartment complexes, the Madison area-based developer
As the Community Development Alliance works to wrest thousands of homes from the hands of predatory investors in Milwaukee, one Wisconsin developer is taking steps to sell dozens of its single-family home rental properties to its tenants.
While most people think of Gorman & Company for its headline-grabbing mixed-use apartment complexes, the Madison area-based developer devoted a large chunk of the 2000s, and 2010s, working on Low-Income Housing Tax Credit (LIHTC) projects in several inner-city Milwaukee neighborhoods – projects that involved the construction and rehabilitation of 202 single-family homes as well as many duplexes.
By using LIHTC dollars to finance those developments, Gorman agreed – per the regulations surrounding such credits – to make the single-family homes available for purchase after 15 years.
Now, 15 years after its first LIHTC development was completed in Milwaukee's Metcalfe Park neighborhood, Gorman has been working with nonprofit Acts Housing to sell the 30 houses it built there between 2007 and 2008, to its tenants. Four of those homes will be sold by the end of the year, and Acts is working with eight other tenants to get them into a position where they can buy their homes. The two-story, three-bedroom houses are about 1,500 square feet each.
Over the course of the next 12 years, the developer will repeat that process another seven times, until all 202 single-family home rental properties are owned by qualified homebuyers. Another 14 homes in the city's Garden Homes district will become available for purchase in 2037, under a project not directly affiliated with Gorman.
While the requirement to sell the homes is spelled out by law, Deatra Kemp, vice president of programs for Acts Housing, which is working with Gorman to sell the properties to tenants, credits the developer for reaching out to Acts to make sure the homes actually end up where they should be at the end of 15 years – in the ownership of the low-income residents that live there.
“Gorman has more than 200 of these single-family homes that they built over the course of 15 years, primarily on the north side of Milwaukee – 98% of their tenants are African American. If I could get half of those people to convert (to homeowners) that will statistically change home ownership rates in Milwaukee,” Kemp said. “Because we both know Gorman's not the only developer that's getting tax credits like this. What's nice though about Gorman is that these projects are single-family homes.”
Real opportunity
Although most affordable housing developments financed with lease-purchase LIHTC dollars, require that the units be offered to the tenants for purchase after 15 years, that process isn’t always followed, Kemp said.
The real opportunity with the Gorman properties, which includes houses that Gorman constructed itself in neighborhoods like Metcalfe Park and the North Division area, and dozens more rehabs scattered across the north side, is that the lion's share of the properties are single-family homes. Gorman did construct duplexes as part of some of the projects, but those properties are not involved in its work with Acts Housing.
Although Gorman did attract attention for its agreements to rehab dozens of vacant homes in the city following the Great Recession, Ted Matkom, Wisconsin market president and general counsel for Gorman & Company, believes the reason more people aren’t talking about those homes soon becoming owner-occupied, is that it almost seems too good to be true.
[caption id="attachment_581513" align="alignright" width="300"] Deatra Kemp[/caption]
“To be honest with you, I don't think anybody really believes it. I don't think anybody really believes that a developer is actually going to give over the single-family homes to the renters,” said Matkom, who has been leading the effort at Gorman to develop a process to sell the homes. “Until Metcalfe Park came along, it was the first one that people were like, really? I can't believe this is actually happening.”
Outreach
To help stem that disbelief, and underlying mistrust in the lower-income neighborhoods where the Gorman homes exist, Matkom tapped Acts Housing to help it educate its tenants about the real opportunity they have to become homeowners. With the help of Kemp, the nonprofit has been working with tenants in the Metcalfe Park homes to prepare them financially to purchase the properties.
“I got Acts involved because I needed help. I had my own people try to get a meeting with the residents and try to get this thing moving and it went nowhere because of the trust factor,” he said. “The tenants don't trust the landlord, which is, you know what? I don't blame them.”
To alert the Metcalfe Park tenants about the opportunity they had, Acts Housing reached out to Safe and Sound, a community outreach nonprofit that has built trust in the neighborhood.
“They were kind of our boots on the ground, knocking on people's doors, telling them about the great opportunity to buy their home,” Kemp said. “They are literally talking to kids at Safe and Sound events saying, ‘talk to your mom, tell her she has a chance to buy that house and to talk to us.’”
Acts followed up with mailers and flyers and then coordinated a ‘lunch and learn’ event for all eligible tenants, giving them a chance to sign up for Acts Housing homebuyer coaching and assistance services right on the spot.
[caption id="attachment_581510" align="aligncenter" width="1080"] Dr. Eve Hall, president and chief executive officer with the Milwaukee Urban League poses for a photo with Melody Jones, a new Metcalfe Park homeowner at an event in September. The Milwaukee Urban League was involved in getting the Metcalfe Park homes project -- Gorman & Company's first LIHTC project involving single-family homes -- off the ground. (Photo by Pat A. Robinson Photo)[/caption]
Built-in Equity
Those services have been key to getting those tenants ready to buy their homes, Kemp and Matkom said. Because, although all are eligible to buy their homes and have access to a bevy of down payment assistance programs, most still have a lot of work to do to repair their credit and sock away funds for earnest money, home inspections and other related costs.
Luckily, Acts has programs, like Power Pack, that can help its clients fix their credit while also raising up to $3,200 over the course of 12 months.
What’s great about the Gorman homes, Kemp and Matkom noted, is that once a tenant has the financing and the cash needed to purchase, they get a house with built-in equity.
That’s because with the LIHTC homes, the rent that the current and previous tenants have paid to Gorman over the last 15 years is counted as equity. That means many of the tenants only need mortgages of around $50,000.
What’s more, even though the houses were valued at $100,000 when constructed by Gorman, they are now worth upwards of $130,000, Matkom said.
“I’m going to give you a perfect example. Shar, our first homeowner. She’s lived in her home for 12 plus years – raised her three sons there. So, she's been paying rent all this time, anywhere from $800 up to $1,100 at the end,” Kemp said. “She bought her house for like $45,000. So basically, she went from paying over $1,000 a month in rent to $750 a month for her mortgage, taxes, and insurance, and she has a 15-year mortgage. She is 40 years old. So, her house is going to be paid off by the time she's 55.”
That tenant ended up getting financing through a loan product Acts Housing developed. But another Metcalfe Park tenant that Acts helped with the homebuying process – who had built up about the same amount of equity – opted for a 30-year traditional mortgage through U.S. Bank. Her monthly payment, which includes principal interest, taxes, and insurance, is now just $468 a month.
“Her house was appraised at $135,000. So, once we added down payment assistance and all of that type of stuff, she basically paid market-rate for this house,” Kemp said. “I like to stress that, because people want to act like this is a giveaway or something. This woman paid $135,000 for her house if you add in all the rent that she paid for those years … Now she’s paying significantly less per month to own her house. You're talking about single moms here – women with kids who work two and three jobs just to take care of their families. This is life changing.”
[caption id="attachment_581515" align="alignleft" width="241"] Ted Matkom[/caption]
Growing interest
While it may take a year or more to get all the Metcalfe tenants into a good enough financial position where they can buy their homes, Acts Housing and Gorman are learning how to better streamline the process, both from the buyer's end and from the seller’s end.
“If it was up to me, I'd love to have these done in one day, 30 sold, done, but then when we look at the Northside Homeowners Initiative, which comes online in 2026, we are going to start this process a year before it comes due. So that Acts Housing can get all these people set and we can have 20 out of the 40 close in one day,” Matkom said.
That might seem optimistic, but Kemp said word of what’s happening in the Metcalfe Park neighborhood is already spreading to tenants living in other Gorman homes.
“I already have families whose house comes (up for sale) in three to five years calling me saying, ‘I want to buy my house,’” Kemp said, adding that Acts is already beginning to reach out to the tenants in the Northside Homeowners Initiative neighborhood near North Division High School.
“When that comes online on January 3, 2026, I can be closing five or 10 families because I spent the whole previous year getting them ready,” she said.
[caption id="attachment_581541" align="aligncenter" width="2031"] Xavier Shands, a new Metcalfe Park homeowner, is surrounded by the Acts Housing team that helped him purchase his home in the 2500 block of North 36th Street. His homebuyer coach, Anthony Bell stands to his left, and Jenean Shorter, his real estate agent, and Ben Sheehan, director of lending operations, are to his right. (Photo courtesy of Acts Housing)[/caption]
Addressing misconceptions
Kemp also hopes to spend that time clearing up misinformation, like the misconception that the tenant themself has to be in the house for 15 years before they can buy it. Any tenant paying rent to Gorman is eligible to purchase the property once the 15-year period is up, she said. The 15 years only applies to Gorman.
Other conversations will center on busting the myth that you need to have 20% down to buy a house.
“If you're living paycheck to paycheck and somebody tells you, you got to have 20% down to buy a $100,000 house – that's $20,000. You're gonna be like, forget it, and never think about it again,” Kemp said.
She’ll also be doing work to explain to tenants who might not be keen on buying a home in Metcalfe Park, that the decision, if nothing else, makes financial sense.
“Let’s be honest. Metcalfe Park is not one of the best neighborhoods in the city. But this deal is exclusive to those properties in that neighborhood. And this happens a lot when I'm out in the community where you have people who kind of frown on where they already live,” Kemp said. “But it's like you already live here. I'm telling you that you can live here for less. So, if you have the opportunity to purchase, well now you're putting yourself in a position where you're paying yourself instead of Gorman.”
For Kemp it is really working to help tenants – many of whom may not have a single person in their peer group who is a homeowner – see the importance of ownership, while also getting them to open their eyes and see the potential of their neighborhood.
“They're building $300,000 houses down the street. And just because somebody calls this the hood right now, I can guarantee you they'll be calling it ‘five minutes from downtown’ in the next couple of years. Real estate is all about location,” she said.
But Kemp is also keenly aware of the distrust in the African American community surrounding housing.
“It sounds too good to be true, and let's be honest, the Black community has experienced a lot of boondoggles where people tell you that you have this great opportunity, and then somehow during the process they pull the rug from up under you and it's not what you perceived it to be,” Kemp said. “So, I try to be very conscious of that in our work with the community.”
That’s why she believes the first few closings in the Metcalfe Park neighborhood were so important, so other tenants can see that the opportunity is a real way to build security for their families.
“This is not a scam. This is us truly trying to help one of the poorest zip codes in our city move up and put some of the poorest families in outstanding positions where they actually have the equity that they've earned for renting all these years,” she said.
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