Finding the Property

IT WAS A SEGMENT on CBS-TV-Chicago on Cory Armond that influenced Wayne Young’s decision to renovate his parent’s home on Gary’s wonderfully wooded west side and repurpose it into a short-term rental.

Part 9 of 10

One way to find property is to not lose what you have and to maintain it: this is a fictional, based on fact conversation between a Gary homeowner and a real estate investor trying to buy her house:

“Hi, my name is John, and I want to buy your house. If you are interested in selling it, I will give you a fair market price – cash.”

“Hi, John. My name is Eva Brock. No, I am not interested in selling my house, so you can price out the middle and poor classes. However, if you pay me $1,500,000.00, I might be persuaded to change my mind.”

“I would have to have an appraiser look at it first, ma’am.”

“An appraiser hired by you, right?”

“Yes ma’am!”

“Get the hell off my phone!” Brock, a paranormal saga author, is one of Port of Harlem magazine’s most popular contributors. She shared her experiences with real estate phone solicitations, which have finally become common in Gary. For about a decade now, I had become accustomed to getting such calls about my home in Washington, D.C., and dismayed by the lack of return calls I would get for my parent’s home on Gary’s wooded west side. Now, speculators have even found my number after scavenging through probate records, which are available online. “Gary is depreciated, but now, all of a sudden, people want these properties and that tells me they are worth something,” says Terrance Wilburn, who recently renovated his grandparent’s home in Gary. He predicts that, “In the long term, the property is going to be way more valuable if I hold it, than the money, if I took it and ran.” Wilburn grew up in Gary, but now lives is a town south of the city. It was he who suggested that we turn down the offer for our Gary home, which I discussed in the first article in this “Cast Down Your Bucket Where You Are” series. He advised—actually warned—me: “Wayne, $15,000 is too little; you might as well renovate it yourself.”

Cash, Conventional, and Investor Buyers Can Make It Tough

On the other end of the real estate “Buy for Cash” spectrum are homebuyers who pay thousands above the asking price. “Last year, cash offers were insane. About one in every four homes sold in the (Washington) D.C. metro area was a cash offer,” Justin Noble, Realtor with Sotheby’s International, told to WUSA-TV.

In some D.C. neighborhoods, all-cash offers made up 80% of the offers placed on homes. Washington is not alone in this trend. Data from the National Association of Realtors revealed that overall, in 2023, cash buyers represented between 15% to 25% of real estate sales citywide.

Such deals cut out many lower-income, first-time homebuyers from the market, who often depend upon FHA and VA loans. FHA and VA set loan limits that leave much room for a cash-only or conventional loan home buyer to outbid FHA and VA buyers. In addition, small investors may lack the capital or access to capital to effectively compete for housing. FHA and VA also require that the house it finances be in a specific condition. “The building has to be in good living condition; therefore, a house that needs painting would not qualify,” says Ivan Brown of Ivan Brown Realty in D.C. Conventional loans have less restrictions than FHA or VA loans, because conventional purchasers are required to make a larger down payment. “You also have to have a much better credit rating to qualify for a conventional loan than for a FHA or VA loan,” warned Brown, who specializes in working with first time homebuyers—many whom have been priced out of living in D.C. proper.

Institutional investors are also making it harder for first-time, economically-limited buyers. Institutional investor purchases are defined as residential property sales to non-lending entities that purchase at least 10 properties in a calendar year. ATTOM, a real estate data company, reported that institutional investors nationwide accounted for 6.7 percent, or one of every 15 single-family home purchases, made in the third quarter of 2022. With so many competitors buying up an already short supply of American housing, when a salesman says to you after a walkthrough of your property, that they will make you a cash offer, you won’t have to pay any closing costs, commissions, or repairs—is that a good deal?

“In some cases it is, but in most cases it is not,” says Brown. He clarifies that investors are motivated to buy as low as they can, fix a unit up just enough so they can sell or it rent it, and make a profit. On the other hand, a realtor is motivated to sell “as is” for as much as they can since their commission is based on the property’s purchase price. “The same investor who offered you cash, may still try to buy the property when it is offered competitively once you put it on the market, and will probably pay more than what they initially offered,” continued Brown. “The competition may also attract a less-experienced investor, who may pay you even more.”

Low Costs and the Potential Profit Make Gary an Opportunity

In D.C, the demand for housing in the once declared-murder capital of the nation, is much greater than that of the Steel City. However, what makes the Gary market unique, says John Allen, principal broker at Mallen Equities, is that “property taxes are lower and return on investment is higher” than in Illinois, which is less than 20 minutes from Gary’s western border. “If Gary ramps up tearing down vacant properties, it will help develop its housing market,” he adds. Allen explained that vacant properties affect housing values in many ways, including the decision of developers and renovators on whether to invest in the neighborhood or not, and that the rate of tax collection is higher on vacant land than distressed structures. Tax collection affects city revenue and the ability to deliver basic services. To find a house to repair, Allen often monitors the Lake County Treasurer’s Tax Sale offerings. However, renovating Gary’s housing stock, and recently, commercial properties has been the focus of renovator Cory Armand. After renovating several houses in Gary, the AIG Business Center has become his new crown jewel. The Center includes a small restaurant; shared common area, WIFI, and printer; a phonebooth for private conversations; and an expanding business postbox system for those needing a business address. It was a segment on CBS-TV-Chicago on Armond that also influenced our decision to renovate our parent’s Gary home.

Armond learned his carpentry skills while in high school at the Gary Area Career Center before studying business and construction management at Purdue University. He graduated with a business degree near the new AIG Business Center at Indiana University Northwest in Gary. After college, he worked for a general contractor and more fully realized that, “I like working with my hands,” he says. With a growing family, he maintained a day job and even a side hustle of repairing and selling cars, as he began renovating homes in the Steel City in 2007. However, the housing market crashed in 2007 and with the mortgage payments on the construction loan about to almost double, Armand said, “We pretty much had to pay somebody to buy the house.” With a focus on protecting his credit, the Gary native said going into foreclosure was off the table, so he sold his first property at a lost. Even with a loss in his memory, he clearly recalls taking pride in “taking something abandoned in my city, and going through the process of turning that completely around.” Between 2009 and 2014, he bought and renovated a home every year, sold cars he repaired, and worked in the steel mills. Life for him continued much the same, except that he learned that it was “easier to find a renter, then a buyer.” Soon he found himself buying about two houses a year. He learned from the Northwest Indiana Creative Investors Association, whose president we interviewed in the first article of this series, how to use the equity in his properties to buy other properties. “Once I learned about leveraging the equity in my real estate, I started increasing my inventory. In 2019, he bought his first multi-unit. Then, in 2020, COVID hit. “It took a toll on my mental and physical health and my family life,” he stated.

Like many other Americans, COVID made him slow down and reassess his life. Again, he learned from his hard knocks, quit his day job, and focused full-time on his business. Ultimately, he started eyeing buying his first commercial property. He found a diamond in the rough. “I loved the location. It is less than a mile from the (Indiana University-Northwest) university,” he says. He looked through the county records, such as the Lake County Treasure’s Tax Search and Payment link, found the names of several possible owners, and wrote to them. For about nine months, he heard nothing; then a response came from a lady who lived 30 miles away. “She was just sitting on the building,” he quips. He admits that many Garyites find it hard to see changes in the city built on sand, including the renovation of his commercial space. “That is a challenge for people who are here every day,” he quips. “All my investments are in Gary,” he adds, “I see nothing but opportunity.”

Next in the Series – Coming in January 2025 – Cast Down Your Bucket Where You Are: Renovating IN Gary, IN – One Year Later, Looking Back. Don’t Miss It – Get a FREE subscription now.

Gary native Wayne Young is the publisher of Port of Harlem magazine. Founded by Young in 1995, the magazine is inclusive, diverse, and Pan-African. He is also president of the Port of Harlem Gambian Education Partnership, which funds and manages small projects centering around culture, education, and community in the West African nation. He recently repurposed his parents’ home in Gary into a short-term rental.