Investor Ownership with Responsible and Sustainable Growth

Top Quote Mich Alta understands that economic and community development is not a sprint. It's a marathon! By utilizing strategic partnerships with government bodies and community organizations that specialize in advancing affordable housing initiatives we want to work with any organization that wants to join the ranks of our mission to make a positive impact. End Quote
  • (1888PressRelease) September 29, 2010 - Focused on positive high impact investment strategies that create a conducive environment for non profit organizations with special and affordable housing needs for the communities in which they serve the public. With over 700 houses in Mich Alta's portfolio that covers most major metropolitan areas throughout the Midwest we are determined to help thousands families achieve home ownership through our strategic partnerships all over the United States. By working to address the affordability challenge, Mich Alta is committed to creating opportunities for prospective home owners that have completed the Michigan State Housing Development Authorities requirements for the Mortgage Credit Certificate and Home Buyer Counseling Program and others like it. This in conjunction with several other programs offered through all levels of government designed to help individuals achieve home ownership is how Mich Alta will drive tomorrows' real estate market to recovery.

    Long Term Initiatives:

    Responsible neighborhood stabilization can only be accomplished by giving neighborhood residents an opportunity to sit at the table while fabricating our investment strategy. We have already begun to do this through our community outreach initiatives through local churches and nonprofit organizations that specialize in Home Buyer Counseling. Our core long term initiatives are as follows:

    Do Better than Business as Usual; In order to stabilize the community we need the involvement of all key players that are willing to work with us on a massive scale to establish sustainable and responsible solutions that provide an opportunity for residents to have an active role in learning about home ownership and having a voice in how their new home and revitalized neighborhood will be improved upon.
    Create More Than a "One Size Fits All" Solution; In the real world many of the programs and public funding requirements are not practical and therefore we need the participation of law makers that are willing to make the tough decisions to get involved and fight for the people that need it most. Often times citizens are under represented at the table when these decisions were first passed into law.

    Put the PEOPLE FIRST; Our strategy is designed to minimize the negative impact of community redevelopment and maximize the opportunities created by our activity in the communities in which we do business. Education, is more than just handing a pamphlet to a potential home owner and telling them to read it. Seeing to it that they understand the importance and urgency of their involvement in the community is the only way to ensure that residents have a place at the table where decisions are made as to how their community will be redeveloped. Purchasing a home is much more than just making a monthly payment. To ensure sustainable growth and responsible homeownership we have to educate them on the importance of home maintenance, fiscal responsibility and all of the public resources that they may possible tap into to make it and keep it affordable. Low income families working with responsible community organizations are the building blocks to the foundation of sustainable growth. Learning the lessons of the foreclosure crisis and applying that knowledge is the key to tomorrows recovery one door, one family at a time.

    State of the Economy - Our Demographic

    The foreclosure crisis is a key equity issue of our time. While the housing and mortgage crisis is far reaching, low income and people of color who were disproportionately targeted for subprime mortgages have been stabbed and wounded deeply. A recent analysis by researchers at UCLA found that African Americans and Latinos lost an estimated $200 billion in assets due to foreclosures over the last three years - amounting to the greatest loss of wealth for people of color in modern history. In addition to the loss of personal wealth, foreclosures are concentrated in low income communities of color, including many neighborhoods that were just beginning to show new signs of revitalization.

    Without investment, foreclosed properties deteriorate and weaken the neighborhood housing market. Studies have shown that foreclosed properties decrease nearby home values by an average of $7,200, or 0.6 and 1.6 percent. 1 The Detroit real estate market often noted as the worse hit by this foreclosure crisis has seen values drop by more than 70 percent in some areas. The Center for Responsible Lending calculated that in 2009, foreclosures caused 70 million neighboring homes to lose $510 billion in value.

    Mich Alta has a genuine interest in any land bank reserves that may be for sale. Our commitment to driving out unscrupulous absentee investors from our community is a top priority. Would-be homebuyers are discouraged from purchasing in certain areas because of blight. Blight caused by investors that lack the knowledge and resources required to contribute to the efforts of community based organizations that are intensely focused on revitalizing the community one door at a time, one family at a time. The threat of predatory investor ownership is greatest in low income communities of color that have already suffered the most from the foreclosure crisis. This issue will be addressed in the section called, "Best Practices & Stable Growth".

    The Problem. Investor Ownership and Its Challenges:

    Investor ownership in of itself does not automatically mean that there will be a negative impact on the community. Many small investors such as the neighbor down the street who bought a foreclosure in his or her neighborhood and or the investor who leverage his or her 401K to purchase several properties all contribute to creating affordable rental housing along with moderate sales that contribute to the stabilizing property values. The problem is the unknown variable as to if whether or not the investor will take good care of the property.

    The answer to this question relies heavily on the investors' business model. Will it be a well maintained property that creates an affordable housing opportunity? Or, will it sit dormant with major code violations and add to the ever present crisis of blight? Mich Alta is aware that this is the problem and our business model is designed to empower the residents of each and every neighborhood to have control over the stabilization efforts taking place in their neighborhood.

    Best Practices and Stable Growth

    Mich Alta's core practice and stable growth initiative is not an issue of dollars and cents and or the potential of monthly cash flow. Our primary focus revolves around creating opportunity by putting the people first. Real Estate Agents need opportunities to make responsible deals to make money to feed their families, plumbers and carpenters need opportunities to work to earn money to feed their families, Families need an opportunity to work with nonprofits that will create the opportunity for them to educate themselves and learn the core values of budget and finance as it pertains to affordable homeownership. These are the core principals of our practice.

    Buying low and redeveloping the subject property with quality and integrity. Exercising restraint and placing limits on the sale price to maintain affordable housing is the key to stable growth. Accepting the fact that in certain situations the investor will spend more money on the subject property than what it is worth based on the current comparison value may be at any given time is no excuse to allow the property to sit in a mothball state while waiting for the market to return.

    Mich Alta's community investment strategies are direct and to the point.

    Purchase money mortgages from participating lenders. (Houses sold with sale limits to create affordable housing) Help less fortunate families with special credit risks to work with our nonprofit community organizations that specialize in home buyer counseling and use this as a catalyst to create an opportunity for participating lenders to work in their best interest to obtain affordable financing.

    Grants and Tax Credits. Many individuals may qualify for grants that can be used to assist them with down payment and closing costs. In addition there are grants offered through the planning and development department that are designed to enable individual home buyers to get money for rehabilitation of the subject property.

    Land Contract - Seller financing. This option makes sense in many situations where the borrower may need additional time to recover from foreclosure or bankruptcy but has other compensating factors that are not considered by lender due to compliance issues with NSP special credit risk stipulations.

    Buy, hold and rent (and manage responsibly). Renting out a property makes good economic sense in many markets, particularly where home sale prices are falling but rents remain relatively strong. By insisting the tenant use a third party servicing company to collect rents through automatic debit via checking or savings provides a third party rent verification record to support alternative trade line credit for future reference. (Section 8 also included)

    Buy, hold and lease for special housing needs. Adult Foster Care, Transitional Housing, Housing for Battered Women, Families Displaced, Foster Care for Children and other special housing needs. There is a lack of quality affordable housing for community organizations that are in urgent need of this service. Mich Alta's commitment to put the people first is always at the forefront of our decision making.

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