The new owners of the Villas at Oakwood are planning to turn rental units into for-sale condominiums priced at around $150,000 apiece. (Mike Platania photo)
By utilizing an unconventional real estate maneuver, a local firm is looking to bring over 100 lower-priced homes to the East End.
The investment arm of John B. Levy & Co. recently purchased the 130-unit Villas at Oakwood apartments for $10.7 million and is planning to convert those units into for-sale condominiums priced at around $150,000 apiece.
Located at 3526 E. Richmond Road, the 56-year-old complex was initially built as apartments before being “broken” and turned into condos around 2007, said John B. Levy & Co.’s Bram Levy.
Bram Levy
About 30 units were sold as condos before the real estate market crashed in 2008, with the rest remaining as apartments in the wake of the Great Recession.
Levy said the firm was spurred to take on the project after noticing on a given day that there are often fewer than 10 homes available for sale in the Richmond market for under $150,000.
“It’s laughable how little there is for a family to buy a home for that price,” Levy said, adding that it’s also a chance to offer homeownership opportunities in the majority-black Oakwood neighborhood, which sits east of Church Hill.
“There’s a 25 percent racial gap in home ownership between white and black families. That’s the highest it’s been in 100 years and the location and current demographic of these apartments are communities of color,” Levy said. “It’s an opportunity for us, we think, to bring 130 home ownership opportunities to East Richmond.”
The apartments, which are currently 98 percent leased, rent for about $1,050 to $1,100 per month. If the units were condos sold at the target price tag of $150,000, Levy said the total monthly payment would only be about $100 more for the residents.
But before they begin the process of converting, renovating and relisting the apartments as condos, the firm said it first needs to find four more lenders to sign on to the project.
Andy Little, a principal at John B. Levy & Co., said they need lenders that will treat the loans as “portfolio loans,” and agree to keep the would-be condo buyers’ mortgages on their own books, rather than sell and securitize them on the secondary market through the likes of Fannie Mae and Freddie Mac.
Andy Little
“This is an opportunity for (lenders) to put some loans on their books and take the risk in these communities to create long-term wealth,” Little said.
Added Levy: “We’ve had a few who’ve stepped up and said, ‘This is a chance for us to right a historical wrong and provide homes to families.’ But we still need four more portfolio lenders. If we don’t, we can’t pull it off. That’s the missing link.”
Levy said they need them to be portfolio loans because the guidelines changed in condo projects following the Great Recession.
So far they’ve gotten two lenders in Virginia Housing and Virginia Credit Union to commit to loans on 40 of the 130 units. Once they have commitments for the remaining 90 units, Levy said, they’ll be ready to start selling the condos. The original 30 condos that sold back in 2007 won’t be part of the project and remain privately owned.
Current tenants that qualify for the loans will have first right of refusal to buy their unit.
“We’d love to convert renters into homeowners. That would be the best outcome here,” Little said.
Little and Levy said that as units come available, they’ll be renovated drastically. Plans include replacing carpeting with plank flooring, redoing bathrooms, repairing roofs and replacing appliances.
“They’ll feel significantly cleaner and more modern when we’re finished,” Levy said.
The firm, which normally acts as an investment bank helping developers line up capital for their projects, is seeking the counsel of local housing nonprofits to help pull off this project, one Levy said they hope to be able to recreate elsewhere in the future.
“The affordable housing crisis is often being led by the nonprofit world, and what they’re all saying to us is, ‘We can’t do it alone, we need private capital.’ We were like, ‘Wait a minute, that’s what we do,’” Levy said.
Little added, “We see this as the first of many. If we can get this model right and … if we can get these portfolio lenders on board, I think we can really move the needle on (the affordable housing) problem.”
The new owners of the Villas at Oakwood are planning to turn rental units into for-sale condominiums priced at around $150,000 apiece. (Mike Platania photo)
By utilizing an unconventional real estate maneuver, a local firm is looking to bring over 100 lower-priced homes to the East End.
The investment arm of John B. Levy & Co. recently purchased the 130-unit Villas at Oakwood apartments for $10.7 million and is planning to convert those units into for-sale condominiums priced at around $150,000 apiece.
Located at 3526 E. Richmond Road, the 56-year-old complex was initially built as apartments before being “broken” and turned into condos around 2007, said John B. Levy & Co.’s Bram Levy.
Bram Levy
About 30 units were sold as condos before the real estate market crashed in 2008, with the rest remaining as apartments in the wake of the Great Recession.
Levy said the firm was spurred to take on the project after noticing on a given day that there are often fewer than 10 homes available for sale in the Richmond market for under $150,000.
“It’s laughable how little there is for a family to buy a home for that price,” Levy said, adding that it’s also a chance to offer homeownership opportunities in the majority-black Oakwood neighborhood, which sits east of Church Hill.
“There’s a 25 percent racial gap in home ownership between white and black families. That’s the highest it’s been in 100 years and the location and current demographic of these apartments are communities of color,” Levy said. “It’s an opportunity for us, we think, to bring 130 home ownership opportunities to East Richmond.”
The apartments, which are currently 98 percent leased, rent for about $1,050 to $1,100 per month. If the units were condos sold at the target price tag of $150,000, Levy said the total monthly payment would only be about $100 more for the residents.
But before they begin the process of converting, renovating and relisting the apartments as condos, the firm said it first needs to find four more lenders to sign on to the project.
Andy Little, a principal at John B. Levy & Co., said they need lenders that will treat the loans as “portfolio loans,” and agree to keep the would-be condo buyers’ mortgages on their own books, rather than sell and securitize them on the secondary market through the likes of Fannie Mae and Freddie Mac.
Andy Little
“This is an opportunity for (lenders) to put some loans on their books and take the risk in these communities to create long-term wealth,” Little said.
Added Levy: “We’ve had a few who’ve stepped up and said, ‘This is a chance for us to right a historical wrong and provide homes to families.’ But we still need four more portfolio lenders. If we don’t, we can’t pull it off. That’s the missing link.”
Levy said they need them to be portfolio loans because the guidelines changed in condo projects following the Great Recession.
So far they’ve gotten two lenders in Virginia Housing and Virginia Credit Union to commit to loans on 40 of the 130 units. Once they have commitments for the remaining 90 units, Levy said, they’ll be ready to start selling the condos. The original 30 condos that sold back in 2007 won’t be part of the project and remain privately owned.
Current tenants that qualify for the loans will have first right of refusal to buy their unit.
“We’d love to convert renters into homeowners. That would be the best outcome here,” Little said.
Little and Levy said that as units come available, they’ll be renovated drastically. Plans include replacing carpeting with plank flooring, redoing bathrooms, repairing roofs and replacing appliances.
“They’ll feel significantly cleaner and more modern when we’re finished,” Levy said.
The firm, which normally acts as an investment bank helping developers line up capital for their projects, is seeking the counsel of local housing nonprofits to help pull off this project, one Levy said they hope to be able to recreate elsewhere in the future.
“The affordable housing crisis is often being led by the nonprofit world, and what they’re all saying to us is, ‘We can’t do it alone, we need private capital.’ We were like, ‘Wait a minute, that’s what we do,’” Levy said.
Little added, “We see this as the first of many. If we can get this model right and … if we can get these portfolio lenders on board, I think we can really move the needle on (the affordable housing) problem.”
I like it ! Its a wonderful gesture on the part of a lending broker who has done very very well during this amazing housing growth. But it’s not going to solve the affordable housing crisis. The need is in the thousands and the need is widespread. Jurisdictions must act to provide builders incentives to provide affordable rents in Class A communities via real estate tax abatements based upon income and rent ceilings. If every new community targeted 10-20% of its units in this manner we could make a real dent in this problem.
Rent control, Bruce? Really?!
rent control has been tried and proven not to work Bruce. If you want to shut down investment in rental real estate, rent control is a great way to do it.
What a great idea !!!! While it won’t solve the affordable housing problem it’s certainly a step in the right direction. Creativity is what’s needed, not government planning, and that what John Levy’s company is doing. Get the private sector more involved. Even a private public partnership can work, if it’s not loaded with “red tape.”
Really? there isn’t any rent control in Richmond, Henrico or Goochland, and there also aren’t any affordable homes or apartments.
The private sector is only good at turning a profit, because that’s all hey try to do.
The moral, political and social cost of creating a permanent underclass will eventually spill over into an economic cost, and maybe people will act then.
https://www.wtvr.com/news/local-news/renter-protection-virginia-evictions-june-30-2022
Interesting story. I would love it if as a community, we could find a model where developers can still make a profit and develop an affordable product. That would be a real opportunity to turn up the volume, vs. being dependent on non-profits, grants and fundraising. It looks like they are purchasing the units for $82K ea, putting $30-40K in reno, and selling for $150K, so they’re still making 20% on their efforts. It sounds like a win-win to me. But I wonder how many properties there are that can be purchased this cheaply?
This is profiteering with a woke veneer. Many families stand to be evicted. The developer is grandstanding and trying to inoculate itself against charges of putting people on the streets by pretending that they’re doing good.