A New Yorker bets big on Baltimore’s vacant homes. ‘It’s going to be crazy down here.’ – Baltimore Sun

Members of a community development group gathered outside a vacant West Baltimore rowhouse on a cloudy winter morning, preparing for an auction, when a stranger in his 20s showed up with a New York accent and slicked-back hair.

As the auctioneer called out bids for the six vacant homes in the 2700 and 2800 blocks of West North Avenue in Coppin Heights, the man began bidding aggressively, and the community development group members grew worried.

They had been eyeing the abandoned properties along a three-block stretch for years, hoping to reverse the declining homeownership rate in this predominantly Black neighborhood. Many of the once-grand rowhouses along that corridor are vacant and crumbling. They are among the more than 15,000 vacant houses in Baltimore that many investors and developers long avoided — often requiring so much money to fix that they weren’t worth buying — but not anymore.

The price of vacant homes in Baltimore is rising and more investors and developers are taking note.

The Coppin Heights Community Development Corp. scooped up four vacant rowhouses in a single block for less than $10,000 apiece at a March 2021 auction. But at January’s auction, Shay Mokai, the man from New York, outbid the competition, driving the price of the vacants up to $30,000, $40,000 and $50,000.

The nonprofit community development group won only two bids for vacant homes — and had to bid $70,000 for one of them.

“Do you watch sports? Football? You know what a blitz is, right? That’s what it was,” said Meldon Dickens, the group’s deputy director. “It was a blindside blitz. The quarterback didn’t even feel it coming.”

The houses were auctioned by a nonprofit called One House At A Time, which works with a local auctioneer and the city’s Department of Housing and Community Development to sell vacant, foreclosed homes to the highest qualified bidder in a process called receivership.

According to One House At A Time’s executive director, Pia Heslip, the median sales price of vacant homes auctioned in 2019 and 2020 was $17,000. She said that number jumped to $26,500 in 2021.

“Just like the housing market in general, we are seeing a similar uptick in prices and demand,” Heslip said via email. “Anecdotally, we are fielding more calls from interested investors new to the Baltimore market or the receivership process.”

The deaths of three firefighters battling a blaze in an empty rowhouse this January in the New Southwest/Mount Clare neighborhood brought renewed scrutiny to the city’s vacant housing stock. At that time, Democratic Mayor Brandon Scott said the city had just over 15,000 vacant homes, 90% of which are privately owned.

Several developers interviewed for this story believe the number of vacant homes is far higher than what the city says — possibly double or more.

Mokai said he thinks his Infinite Homes can help the city solve its vacant housing crisis. With a series of more than two dozen LLCs, the firm has been buying up residential properties in Baltimore. Mokai said Infinite Homes has spent about $20 million buying property, with roughly 250 units split among 75 properties, including vacants.

Mokai did not disclose the investors in Infinite Homes. He said he worked in wholesaling and real estate management before coming to Baltimore.

“I’ve made people money before, so if you make people money, they trust you,” he said.

When it comes to buying vacant homes, Mokai said the most important thing is being able to buy the majority of a block to transform an area.

“We’re looking at just buying, buying, buying,” Mokai said. “We don’t really care where it is, what it is. If you give me 500 properties today, I will buy them. I would love to renovate 500 properties.”

Tom Coale, a Howard County attorney and board member of the Baltimore Regional Housing Partnership, a nonprofit that provides low-income housing, said it’s reasonable to be wary of outside investors, but they can do good work.

“The creation of safe, affordable housing and the replacement of these vacants with such housing is an unquestionably good thing,” Coale said.

It’s not easy, according to Brian Leibowitz, director of acquisitions at Dominion Properties, the renovation arm of a company that owns and manages more than 400 homes in Baltimore City. Dominion is selective about where it buys because Baltimore’s housing values vary wildly on a block-to-block basis, Leibowitz said.

He said Baltimore can appear deceptively cheap to outside investors who don’t understand that it can take far more money to fix up a vacant home than it will be worth.

“They just look it as value … ‘It’s so affordable, how can I lose?’” said Leibowitz, who doesn’t know Mokai or Infinite Homes and spoke generally. “In their mind, it is cheap. But in the world of Baltimore, they overspent.”

An investor can easily spend $200,000 buying, gutting and rehabilitating a vacant rowhouse, Leibowitz said, but that doesn’t mean it’s worth $200,000. If a neighborhood has shootings and drug deals instead of grocery stores and good schools, that newly renovated house may only be worth half of that initial investment, he said.

“I don’t see how anyone can afford to do that,” Leibowitz said.

According to Leibowitz, rehabilitating a vacant home typically costs $150 or $160 a square foot. Sometimes, Dominion can get that number down to $120 or $100 per square foot if the company is fixing up a large amount of houses, he said.

Mokai said it’s difficult for him to estimate cost as the conditions of Baltimore properties vary drastically.

“I hate that number,” Mokai said. “I hate that number because every property varies … I don’t like to give the exact number, but our average is looking at like $75 a [square] foot.”

Mokai spoke to The Baltimore Sun two blocks from the scene of the fire that killed the three firefighters, standing in front of a pair of vacant rowhouses that Infinite Homes has been renovating in the 1600 block of McHenry Street. Permits had been pulled for renovations and crews were going in and out of the buildings.

Two years ago, Mokai said, he was able to buy a shell — meaning no roof and sometimes not even floors — for $5,000, but it’s selling today for $20,000 or $25,000.

“People are just buying up. It’s going to be crazy down here eventually,” Mokai said. “Crazy meaning good.”

That’s a problem for Tia Richards, one of the leaders of The Coppin Heights Community Development Corp.

Richards said the nonprofit group has been guiding and nudging several vacant homes on West North Avenue through the receivership process, notifying the city that houses were vacant and monitoring them as they edged closer to public auction. It uses contributions and grants to fund its work.

When Mokai bought the four homes they had been targeting, he didn’t just disrupt their plans, Richards said; he potentially priced them out of future vacant homes in the area.

“Once they see that an auction took place previously and that someone was willing to bid $50,000 to $60,000 on a vacant, the next one, they are willing to bid more,” Richards said. “The [Coppin Heights Community Development Corp.] is using money that’s been allocated for this — for redevelopment in the neighborhood. The funds aren’t bottomless, you know? There’s a limit.”

She and Dickens spoke to The Sun inside the Walbrook Mill, a 65-unit, $21 million apartment building on West North Avenue that opened in 2020.

Osprey Development worked with the community development group and Neighborhood Housing Services to develop the complex, which Richards said will anchor this stretch of North Avenue. Coppin State University is nearby. The neighborhood’s only bank is in Walbrook Mill, and there are plans to open a food court with local vendors on the first floor.

“No one was paying attention or interested in redeveloping over here before, until now,” Richards said. “We have a lot of buzz right now.”

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Dickens and Richards want developers to invest in Coppin Heights, but said those developers need to sit down with the community and plan the future of the neighborhood collaboratively.

Coale, the housing advocate, agreed. Renovating vacant rowhouses and rebuilding neighborhoods is great news, he said, but the city needs to ensure that current residents can build wealth from this development, too.

“The greatest tragedy would be for Baltimore to have an opportunity for reinvestment, and the residents of Baltimore not participating in that reinvestment,” Coale said.

Mokai has had a few conversations with the Coppin Heights group.

Dickens called him a “decent young man.”

Those talks have changed his thinking, Mokai said, and he’s exploring how to add homeownership opportunities to Infinite Homes’ business plan.

“I always knew it was an issue, but they really helped open up my head to it a little bit more,” Mokai said. “They showed me what their plans are … And after sitting with them, I sort of got to think[ing] how I can work it out with my investors … I’m not going to say we worked it out yet, but it’s in the works.”