FORT WAYNE, Ind. (WANE) — Local developer John Nichols hasn’t completed renovations on the 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 for sure, sometimes daily, about the property and other properties that we may have. Emails, texts, inquiries definitely. I’d say the majority of them come from New York City,” Nichols said.
A homebuilder before he entered commercial development in 2008, the last two years have been remarkable.
“We’ve gotten inquiries from Indianapolis, Detroit, Columbus, Ohio, New York City, Chicago, looking for bringing in private equity groups – REITs – to purchase those properties,” Nichols said.
The most aggressive firms come from New York City with “Wall Street ties, some of those private equity groups,” Nichols said from his base on Westbrook Drive where he and his partners are in the final phase of Centlivre’s turnaround.
Local real estate investor Mike Anderson says the last year and a half, the problem has become “obsessive.” Three to four phone calls a day, five postcards and six or seven letters a week, emails, a couple of texts a day.
“They call late night. They’ll call 9-10 at night. They’ll call on weekends. They’ll call Sunday morning. It never stops.
And every single one of them is ‘hi Michael’ instead of calling me Mike, so I always know it’s triggered. They’ve looked at the property tax record card or they’ve called off that compiled list that you can buy and they will always ask if they can have the property. They try to lowball you as much as they humanly can and generally come in about half price on anything. It’s obsessive. It’s annoying,” said Anderson who owns about 200 properties, primarily in the West Central and Lakeside area with a few “down the Fairfield corridor.”
Anderson said there are reasons why outside investors are trying to snap up whatever real estate they can. Property values are skyrocketing and Fort Wayne is “an incredible place to invest.”
“People see an opportunity to make money. It’s impossible for them to steal property in New York anymore. It’s impossible to steal property in California or Florida anymore. They come here and they’re predatory. They take advantage of the locals to take the property,” Anderson said.
The investors don’t put the property in their names, Anderson said. “They simply 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 into their name. They never record with the county. They don’t pay any taxes. They just make the money. They buy it on paper. They turn around and try to sell it for $20,000 or $30,000 more and they put nothing in it.”
TRANSACTIONS AREN’T TRANSPARENT
Allen County Assessor Stacey O’Day backed up what Anderson had to say.
“We don’t always see the transaction,” she said. “They don’t change the name of the LLC.”
WANE 15 obtained data from the Assessor’s Office that shows how outside ownership has grown 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%.
Likewise the number of out of state firms owning residential rental properties has jumped from 10.4% in 2012 to 14.5% today. However, the number of apartments or complexes with 40-plus units hasn’t changed much.
Other local real investors interviewed for this story included Steve Barkus with Bartkus Auctioneers who’s seen a diverse mix of people “playing the investment game,” and that “comparables don’t really matter,” and Bill Bean, a real estate investor with considerable holdings, who said Fort Wayne hadn’t seen appreciation in real estate for years.
“Now it’s broken out of that and things are definitely heading up,” Bean said.
OUTSIDE INVESTORS POORLY MANAGE PROPERTIES
Jim Sack, an owner of rental homes, doesn’t truck with out of town investors and normally only sells to people who rent from him. Just in the last three years, he’s been hit with calls. At the peak, there were about 10 calls a day, he said.
Sack sees Fort Wayne as a relatively inexpensive property market with a reputation for being a good landlord rental market – that means low cost of entry i.e. buying a house is fairly cheap and high rents, so the margin is very good here.
“Here’s my problem with investors out of Fort Wayne,” Sack said. “They never come to Fort Wayne. They don’t see the property. They have a local manager and by and large, the managers do a second rate job of maintaining the property.
“They’ll buy in a low income neighborhood and let them go to seed or do the minimum maintenance to avoid Neighborhood Code (with the city.) A landlord can tie up a repair for a year,” Sack continued. “It’s bad for Fort Wayne. You can drive in almost any neighborhood and find the rental properties.”
WHO SELLS? PEOPLE IN ‘DIRE STRAITS’
Local folks sell these properties after they end up in “dire straits. Leaky roofs, burst pipes, so they sell to some like this – vultures,” Sack said.
Anderson says out of town investors from big cities just have a different approach.
“They come in with the mentality they’re from,” Anderson said. “In New York, it’s all about money. People in New York sit around and talk about money all day. We’re not just sitting around talking about dollars.”
One out of town investor who made a splash 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 hometown girl.
“As I’m writing 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’d had “zero desire” to visit. “Just because she grew up there (Fort Wayne) wasn’t enough, especially not enough for me to be ok spending 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 “100K per year in income from investments” came with remarks on what kind of landlord he was and it wasn’t flattering.
“If you told me a year ago I’d be moving to Fort Wayne, I’d have said you’re absolutely insane,” Tumbiolo announced in the same blog where he noted that his money goes farther here and he’s achieving his goals.
THE BLACK HOUSE ON WEST JEFF? IS IT TRENDY?
At least one real estate investor remarked anonymously that Tumbiolo has brought in the trendy, coastal aesthetic even to historic homes in West Central, namely the home on West Jefferson he painted black as if he took a thousand cans of black matte to the exterior and punctuated it with large white address numerals, 1802.
Tumbiolo, at least, is upfront 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 declined.
LOCAL INVESTORS HANGING ON
And local investors, no matter the competition, aren’t going away.
“Over 70% of residential income properties have been under local ownership for the last 10 years,” O’Day wrote in an email.