In less than six months in this calendar year of 2012, this once bank-owned Uptown duplex sold for 11% over its asking price, got renovated, and then promptly re-sold for well over twice its initial sale from the bank. From an asking price of $168,300 and a sale price of $186,000 in the spring to an asking price of $435,000 and a sale price of $414,000. For the record, I am a licensed agent and investor too but had no involvement whatsoever in facilitating any of these listings or sales; further full disclosure, I did have a client write an offer in the spring, but the bank chose otherwise. Nonetheless I followed the path of this property for a couple reasons, primarily because I live two or so blocks away, and this piece of Napoleon happens to be at the foot of Freret. And if you don’t know what’s happening on Freret these days, you’re probably not reading this either.
So I recently asked my next-door neighbor Sharon Goodson her thoughts on this, shall we say, chain of events, especially in light of the recent hubbub over higher assessments the city over. She replied:
“Our property tax is now two and a half times what it was in 2011, however when I bought my house in 1987 40 percent of the neighborhood was abandoned houses. Higher prices mean higher rent, which equals a better quality of renters and lower crime. Improved property excites future owners to invest and the quality of neighborhood increases. No one wants to be the first to renovate on a block, but if they see renovation activity, it stirs interest. Generally, high investment properties are maintained better over the years to safeguard their investment. Even seeing houses with new porches on them two blocks away energizes me to do improvements on my own house. No one wants to be the ugly house in the neighborhood — weird, OK; run-down, no. We don’t know if the house was occupied before and I assume after the sale that it will be fully occupied. New Orleans is no longer the blight capital of the US and I would like to continue our descent on that list to about 1,000th!”
But then I got to thinking about this specific flip, especially as the bank being the seller. The bank could have made a tidy profit here. And while I understand the bank is not exactly in the real estate business, maybe it should be. I mean if a private investor can come in and double the value of the property and then some — while restoring a blighted property to commerce — why can’t the bank? Answer is: they can. For all intents and purposes the bank can do absolutely everything this private investor did. Only it didn’t, and they won’t. Ultimately the bank operates strictly as the source, leaving the more profitable and albeit riskier role of middle man to private parties. And OK, let it go, the bank does what it does.
(Even if the bank did assume the role of slam dunking a duplex back into commerce to define market value, I highly doubt the proceeds from the sale would be reinvested back into the city or other real estate ventures. Conversely it would likely layer another golden parachute down the road, and no thanks! Enough bailouts and stock-optioned send offs.)
In this case the risk translated to reward, and the flip didn’t flop; the flipper benefited financially and so did we all figuratively. I want my neighborhood to have less blight and more occupancy, and to Sharon’s point we are on our way up and out. You want your ‘hood to do the same, don’t you? Of course you do. And this is how we recover. From Katrina, Isaac, or whomever. One house at a time. Private investment. Public risk. And a roll of the dice on timing.
Jean-Paul Villere is the owner of Villere Realty and Du Mois Gallery on Freret Street and a married father of four girls. In addition to his Wednesday column at UptownMessenger.com, he also shares his family’s adventures sometimes via pedicab or bicycle on Facebook, Twitter, and YouTube.