On August 8, 2016, we closed on a HUD property located at 61 Fairgrove Street, Pontiac, Michigan 48342. More on this specific property a little later.
For those of you who may not be familiar, Oakland County, which includes the City of Pontiac, is one of the wealthiest among over 3,000 counties in the U.S.A. Those of us who live in this county, however, often consider Pontiac to be comparable to Detroit in Wayne County. In other words, it is an area whose rate of property-value declines has been equivalent to that in Detroit. With a possible threat of the blight spreading, what was happening in Pontiac has been of deep concern to many residents in surrounding areas.
I’ll be blunt and to the point. Whether a particular area prospers or deteriorates can almost always be traced back to those who hold leadership positions.
As an outsider observing what had happened to cities such as Detroit and Pontiac, I cannot help but notice that whenever we have a situation where those who rose to positions of power have the attitude of a victim mentality, the results have been devastating. Whether or not such sentiment is true makes no difference. Those who reach positions of power, who believe their own words, even when based on false premises, are capable of convincing not only themselves but unsuspecting citizens, who are grasping for answers to their predicament, that their plight is the fault of others in neighboring communities or of the other political party. How convenient it is to always have plenty of scapegoats while enriching their own pockets! They may have been intelligent enough to figure out how to get to positions of power but they are not true leaders. On the contrary, those who resort to such tactics – never hesitating to take bribes along the way – do tremendous disservice to their constituencies, states, and the country slowly but surely. They talk a good talk to unsuspecting citizens, making them believe that they’re on their side. Yeah, right. Wake up, people! Look no further than cities such as Detroit and Pontiac for proof of their dishonesty. By the time their deceit and corruption manifest themselves in blighted cities, they are long gone.
True leaders never place blame elsewhere. True leaders believe in the power of human ingenuity. True leaders bring out the best in others. True leaders inspire citizens of all backgrounds to figure out how to improve a community in which they live, together. True leaders show how to behave by being good examples to others. Most of all, true leaders care more about service to others than enrichment of their own pocketbooks.
In recent years, I began hearing some rumblings about major improvements being made in Pontiac, a city where many of us investors continue to avoid to this day for a very good reason. The shakeup which spelled the end of Pontiac Police Department with takeover by Oakland County Sheriff in 2010 may have been the beginning of what was to come for Pontiac. I believe it is a direct result of the actions taken by L. Brooks Patterson, Oakland County Executive, who has been in charge of the county since 1993.
As noted above, I had the privilege of helping to close a HUD property for the Grace Centers of Hope, led by Pastor Kent Clark. By the way, doesn’t his name remind you of someone you know? With what he is getting done, by inspiring so many others, he might as well be known as Superman. I especially like Pastor Clark’s philosophy of “You don’t work, you don’t eat.” Amen.
Pastor Clark’s right-hand man is Clif Seiber, a civil engineer and volunteer, who makes Pastor Clark’s vision of revitalized Pontiac a reality. Between the two of them and countless others who donate their time and money, the changes that are already happening in downtown Pontiac are simply awe-inspiring.
Sometime between late 2015 and early 2016, two events took place that connected the dots:
- Dan Cary, the leader of the Pontiac Landlord Group, had invited Clif to its monthly meeting to make a presentation about the Grace Centers of Hope, its vision, mission, and goals.
- Shortly after I became an independent real-estate broker as well as a registered HUD-bidder, I had a light-bulb moment: I should be working with Clif on HUD properties in Pontiac. As a result, I began making several attempts to contact Clif; but no return calls. Nothing ever fazes me, however, when I see a great fit. I knew he was an extremely busy person, doing great things for Pontiac. When all else failed, I knocked on the door to the office of the Grace Centers of Hope in Pontiac. Once again, Clif was not there but the lady – who listened to my case as to why I needed to have an appointment with him – agreed to make sure that Clif gives me a call back. And he did. Finally!
Here is a list of the rest of the chronological events at 61 Fairgrove Street:
- 1911: Originally built.
- It was explained to me that Fairgrove was once a beautiful street with homes for automotive executives. I can almost picture how beautiful Pontiac must have been.
- In fact, this must be why “Pontiac” used to be one of General Motor’s brand names.
- Now, let’s fast forward the time line.
- 08/05/2014: The deed was transferred from the owner back to Wells Fargo; in other words, it was foreclosed – like so many other properties in Pontiac.
- 02/10/2015: The deed was transferred from Wells Fargo to HUD; in other words, this was an FHA-insured mortgage loan.
- 04/06/2016: David and I went to take a look at this property. Upon arrival, we sat inside our car for a few minutes. While I could see that, once upon a time, this must have been a beautiful house, the front porch looked dangerously dilapidated. I almost did not want to go up the stairs to go inside. David, however, convinced me that we should take a look since we drove out here specifically to do so. And, goodness, was I glad he talked me into it. It had a beautiful shell, waiting to be rehabbed by someone who cares. So I placed a bid.
- 04/26/2016: My bid, as a HUD bidder and buyer, was accepted by HUD.
- Immediately after the bid acceptance, I notified several of our strong cash buyers, including Clif, to see if there was any interest in the property. And, if so, they needed to come and take a look at it at 1 p.m., the same day. Well, there was no taker.
- By the way, due to HUD requirements, I have only 24 hours to make or break a deal. This means, if I were to wholesale a HUD property, without having to hold inventory (thus minimizing risk), I must have an end buyer identified within a few hours after bid acceptance.
- 04/27/2016: In the morning, Dan, the leader of the Pontiac Landlord Group, came to take a look. His assessment was as follows:
- The property costs $20,000.
- The rehab would cost around $50,000; so the total cost is at least $70,000.
- Because of the current Pontiac market, especially where this particular property sits, the rehabbed property would not sell for more than $35,000, if that. In other words, this property would be a money loser for any investor.
- The bottom line: Dan made it clear that the only way this deal would make sense is if materials and labor were to be donated to a non-profit organization, such as the Grace Centers of Hope. I was in total agreement with Dan but Clif had not responded the day before.
- 04/27/2016: (Yes, the same day.) Due to lack of a willing end-wholesale buyer, I filed for cancellation with HUD.
- Then, early evening, several hours after my accepted bid was cancelled, I received a call from Clif. He wanted to buy it but, of course, it was too late.
- Shortly thereafter, this property went pending; in other words, someone else put it under contract.
- Based on what Dan had explained to me, however, I had a hunch that whoever put it under contract would quickly find out that it would be a money loser and that it would come right back on the market. So I kept a close eye on it.
- Sure enough, a few weeks later, it was open for bid once again.
- 05/19/2016: I received a bid acceptance, the second time.
- 05/27/2016: A notice of fully-executed contract from Sage Acquisitions – an asset-management company for HUD – was received via email.
- 08/08/2016: We finally closed on this property.
- We went through so many twists and turns, leading up to, and even on the day of, the actual closing at noon.
- When it was all said and done, I exhaled a big sigh of relief.
Despite all of the roadblocks that we had encountered along the way, I could not help but think how fortunate I was to have been able to do my small part in our leaders’ vision of a revitalized Pontiac. In downtown Pontiac, the results of Pastor Clark’s vision are already starting to show in significant ways.
In Oakland County, Michigan, we are blessed to have remarkable individuals, true leaders from both the government AND the private sector that truly care about the community. The future of Pontiac, therefore, is bright, in my humble opinion. It bodes well for the rest of Oakland County as well.
I cannot help but be reminded of a quote by Margaret Mead: “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”
I love Oakland County where I have lived since Chrysler brought me into town in 1984!
Lastly, a call to action:
If you are retired comfortably, know how to motivate volunteers and supervise rehab projects, and would like to volunteer your time for this worthy cause, please contact Grace Centers of Hope Volunteer Department.
