FORT WAYNE, Ind. (WANE) – Local developer John Nichols hasn’t completed renovations to Centlivre Apartments, restoring the complex to its once-chic address, but part of his day is spent fending off offers from outside developers.
“We get calls weekly, sometimes daily, about the property and other properties we may have. Emails, SMS, inquiries definitely. I would say the majority of them are from New York,” Nichols said.
Homebuilder before entering commercial development in 2008, the last two years have been remarkable.
“We’ve had inquiries from Indianapolis, Detroit, Columbus, Ohio, New York, Chicago, seeking to bring in private equity groups — REITs — to buy these properties,” Nichols said.
The most aggressive companies come from New York with “ties to Wall Street, some of these private equity groups,” Nichols said from his Westbrook Drive base where he and his partners are in the final stages of Centlivre’s turnaround. .
Local property investor Mike Anderson says the problem has become “obsessive” over the past year and a half. Three to four phone calls a day, five postcards and six or seven letters a week, e-mails, a few text messages a day.
“They call late at night. They will call 9-10 at night. They will call on the weekend. They will call Sunday morning. It never stops.
And every one of them is “hi Michael” instead of calling me Mike, so I always know it’s triggered. They looked at the property tax record sheet or they canceled this compiled list you can buy and they will still ask if they can have the property. They try to put you down as much as they humanly can and are usually about half the price of everything. It’s obsessive. It’s boring,” said Anderson, who owns about 200 properties, mostly in the West Central and Lakeside area, with a few “in the Fairfield corridor.”
Anderson said there were reasons outside investors were trying to grab all the real estate they could. Property values are skyrocketing and Fort Wayne is “an amazing place to invest.”
“People see an opportunity to make money. It is now impossible for them to steal property in New York. It is now impossible to steal goods in California or Florida. They come here and they are predatory. They take advantage of the locals to take the property,” Anderson said.
Investors don’t put the property in their name, Anderson said. “They just get a contract that says ‘you’re going to sell it to me or whoever I assign and they sell the paper. They don’t take it in their name. They never register with the county. They pay no tax. They just make money. They buy it on paper. They turn around and try to sell it for another $20,000 or $30,000 and they don’t put anything into it.
TRANSACTIONS ARE NOT TRANSPARENT
Allen County Assessor Stacey O’Day supported what Anderson had to say.
“We don’t always see the transaction,” she said. “They are not changing the name of the LLC.”
WANE 15 has obtained data from the Assessor’s Office which shows how outside ownership has developed in the county.
In 2015, 1,440 commercial properties were owned out of state; today, that number is 1,845, a jump from 14.8% to 18.6%.
Similarly, the number of out-of-state businesses with residential rental properties has grown from 10.4% in 2012 to 14.5% today. However, the number of apartments or complexes with more than 40 units has not changed much.
Other local real estate investors interviewed for this story include Steve Barkus with Bartkus Auctioneers who saw a diverse mix of people “play the investing game” and that “comparables don’t really matter,” and Bill Bean, a real estate investor with considerable holdings. , who said Fort Wayne hasn’t seen real estate appreciation in years.
“Now it’s over and things are definitely moving forward,” Bean said.
OUTSIDE INVESTORS MISMANAGE PROPERTIES
Rental home owner Jim Sack doesn’t truck with out-of-town investors and normally only sells to people who rent from him. In the last three years alone, he has received calls. At the peak, there were about 10 calls a day, he said.
Sack views Fort Wayne as a relatively cheap real estate market with a reputation for being a good landlord rental market – this means a low cost of entry, i.e. buying a home is quite cheap and high rents, so the margin is very good here.
“Here’s my problem with Fort Wayne investors,” Sack said. “They never come to Fort Wayne. They don’t see the property. They have a local manager and overall the managers do a second rate job of maintaining the property.
“They’ll buy in a low-income neighborhood and let them sow or do the minimum maintenance to avoid neighborhood code (with the city.) A landlord can block a repair for a year,” Sack. “It’s bad for Fort Wayne. You can drive to almost any neighborhood and find the rental properties.
WHO SELL? PEOPLE IN THE “DIRE STRAITS”
People in the area are selling these properties after finding themselves in a “desperate situation”. Leaking roofs, bursting pipes, so they sell to some like that – vultures,” Sack said.
Anderson says investors from outside the big cities take a different approach.
“They come with the mentality of where they come from,” Anderson said. “In New York, it’s all about the money. New York people sit and talk about money all day. We’re not just sitting around talking about dollars.
One out-of-town investor who caused a stir is Anthony Tumbiolo who expressed his disdain for Fort Wayne in a blog he posted in November 2019, after moving here from Miami with his girlfriend, a girl from his hometown .
“As I write this, I’m sitting in a Starbucks in Fort Wayne,” he wrote, as if the shock hadn’t worn off, he was in a place he hadn’t. “no desire” to visit. “Just the fact that she grew up there (Fort Wayne) wasn’t enough, especially not enough for me to spend time in the Midwest.”
Eventually, quite a few people here read Tumbiolo’s blog and were offended, calling him out on social media and the press. His goal of reaching “100,000 a year in investment income” came with remarks about the type of owner he was and it wasn’t flattering.
“If you had told me a year ago that I would be moving to Fort Wayne, I would have said you were absolutely nuts,” Tumbiolo announced in the same blog post where he noted that his money goes further here and that he achieves his goals.
THE BLACK HOUSE ON WEST JEFF? IT’S TRENDY ?
At least one real estate investor has anonymously remarked that Tumbiolo brought the fashionable coastal aesthetic even to historic homes in the midwest, namely the house in West Jefferson which he painted black as if he had carried a thousand cans of matte black on the outside and punctuated with large white address numerals, 1802.
Tumbiolo, at least, is candid about what he’s doing here and why and his Facebook page is full of admirers.
However, when asked if he wanted to defend himself in this article, he refused.
LOCAL INVESTORS HOLD ON
And local investors, regardless of the competition, are not going away.
“Over 70% of income residential properties have been locally owned for 10 years,” O’Day wrote in an email.