Investors bombard gentrifying areas in Charlotte with offers. But experts urge caution

This is how gentrification works in Charlotte

There are pros and cons to the changes that happen when new, more wealthy residents move into a historically low-income neighborhood.
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There are pros and cons to the changes that happen when new, more wealthy residents move into a historically low-income neighborhood.

When west Charlotte homeowner Greg Jarrell got a letter purportedly from “Code Violation Fines & Review” this month, he was immediately suspicious.

The return address was for a northeast Charlotte postal facility, not a government office. Inside, the letter was from New Legacy Property Group, not a code enforcement agency. The letter extended a bold offer: The firm had found that his house had an outstanding code violation, and local investors were ready to buy it, now, for cash.

“If htis (sic) property has become too much of a burden, we will pay you cash for the property ‘as is’. You do not have to fix it up,” the letter said.

The offer Jarrell received is a common experience for residents of fast-changing areas ringing uptown like Enderly Park, Druid Hills, Graham Heights, Seversville and Wesley Heights. Home values are skyrocketing and waves of new residents are transforming these historically black neighborhoods.

“When we have our community meetings and we ask the question, ‘How many of you are getting letters to buy your home,’ every hand in the room goes up,” said Rickey Hall, president of the West Boulevard Neighborhood Coalition.

Tom Bartholomy, president of the regional office of the Better Business Bureau, said his organization regularly hears from homeowners who receive similar offers from investors. And in the past month, he said, they’ve seen an unusually high amount, given that the prime homebuying season isn’t for another few months.

“They’re definitely targeting neighborhoods that are ripe to be flipped,” Bartholomy said.

“That ends up targeting people that are economically disadvantaged, and may not have the knowledge to say ‘OK, I need to sell my house, I haven’t been able to sell it any other way. Now here’s this guy that showed up on my doorstep — that’s the way I should go,’ ” he said.

The BBB urges consumers to be cautious of these types of offers, Bartholomy said.

“It’s not necessarily that they’re doing anything illegal, but it can be misleading at some level,” he said. “They’re not telling people all the information that might be able to help them.”

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‘A new wrinkle’

Jarrell, a pastor, author and activist, moved with his wife to Enderly Park in 2005 to create an “intentional community” to promote social justice and help their neighbors. He said buyers try to scoop up houses with all-cash offers that are often lower than sellers could get on the open market.

Investors who send letters from what appears to be an official address are trying to create pressure to sell fast for homeowners who might have code violations or owe taxes, Jarrell said.

“It was a new wrinkle on the kind of ... vulture practices that happen in dis-invested communities,” Jarrell said. Charlotte’s history of segregated housing and “red-lining,” or denying minorities mortgage financing in certain areas, makes some neighborhoods more vulnerable.

“Both the city and many, many private investors have not done the necessary maintenance to keep this neighborhood up for the past 40 years or so,” Jarrell said. “When you deprive neighborhoods of capital for decades on end, then that makes them susceptible to a wave of money coming in.”

Jarrell initially thought there were no violations listed against his property, because he’d recently had an inspector out to look at repairs that required building permits. But Charlotte Code Enforcement records show a case tied to his property was filed on Jan. 25.

The sign that initiated a code enforcement case tied to Greg Jarrell’s Enderly Park property. Courtesy Charlotte Code Enforcement.

Keith Richardson, assistant director of the city’s Housing & Neighborhood Services Department, said the case was opened because of a sign improperly posted on the telephone pole in front of Jarrell’s house. The inspector removed the signs and the case was closed four days later.

Douglas Walker, the owner of New Legacy Property Group, declined to comment.

Code violations are posted online and updated daily, with addresses and other information. Such cases, along with foreclosures and late tax bills, are publicly available and provide a source of leads for investors looking to buy houses that aren’t on the market.

Other investors identify houses in certain neighborhoods that meet their criteria — such as square footage, tax value and age — and send the owners letters. They often send out solicitations by the dozens or even hundreds, bombarding whole neighborhoods to try to find a few buyers who are interested.

Realtor Liz Millshaps Haigler doesn’t just hear about the letters from her clients — she gets them herself. Millshaps Haigler, a resident of the Oakhurst community in east Charlotte, said investors have ramped up their efforts in her neighborhood in recent years.

It started with the occasional postcard,” she said, “And now, it’s postcards daily, actual offers in the mail.”

Millshaps Haigler is also a member of the Charlotte Housing Justice Coalition, a community advocacy group.

She recently helped a resident who inherited a property in west Charlotte. An investor offered him $28,000, but Millshaps Haigler said the property sold for $56,000 on the open market.

Investors often justify their prices by pointing out that they don’t take commissions or other fees out of the sales price. But Millshaps Haigler said those advantages can be canceled out if the sale price is too low.

“Generally, the commission on the sale is a lot less than the money you’re leaving on the table if you sell directly to the investor,” she said.

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‘Getting scary’

When mortgage lending slowed down in 2013 and 2014 due to new regulations, it became more difficult for many buyers on the traditional market to get financing, said Richard Buttimer, director of the Childress Klein Center for Real Estate at UNC Charlotte. That created an opportunity for investors.

There’s nothing illegal about sending unsolicited letters to potential sellers, Buttimer said.

And he said the investors can offer some advantages: homeowners don’t have to spend money getting the house ready for the market. The investors likely price that into their offers, he said.

“It stated with sort of a financing advantage, but it turns out there are actually real efficiencies to doing things this way,” Buttimer said.

But longtime residents of many fast-changing neighborhoods around uptown said the practice is disturbing, as they are flooded with unsolicited offers on a weekly or even daily basis.

“It’s really getting scary to have people pursuing your property like this,” said Barbara Queen, who has lived in Graham Heights since 1967. She said she regularly receives cards, letters and even phone calls from investors offering to buy her house.

“Aggressively, it started about the middle of 2018,” she said. While reporting on the tax revaluation and rising values in neighborhoods near uptown, the Observer heard similar stories from residents in other neighborhoods.

Ninety-five years after Monica Pettiford’s great-grandfather built her home in Biddleville, she has a stack of letters with offers to purchase it. Some investors have even managed to get her cell phone number.

The Queens University of Charlotte graduate received a letter recently implying that she was experiencing financial hardship.

“They prey upon the elderly and the weak making cash offers that are an embarrassment,” she said. “Nobody in their right mind would ever sell their property for that.”

Unsolicited offers

Community activist Colette Forrest received a letter from Andrew Peacock, the owner of ACP Home Investments, last fall offering to purchase her home for just over $200,000. In its latest revaluation, the county said her home is worth over $320,000.

The solicitations include a “letter of intent” that homeowners can sign and return via taking a photo and emailing, so owners can respond quickly.

A letter Colette Forrest received offering to purchase her home in Wesley Heights. Courtesy of Colette Forrest

“It assumed that you are in a financially tight situation, that you would take advantage of what you would think would be a lot of money, $200,000,” she said. “To me, that’s predatory.”

Peacock said he makes clear to potential sellers that the price he offers isn’t necessarily what a home could fetch on the open market. For example, a letter sent to Druid Hills Neighborhood Association president Darryl Gaston stated, “We are not able to offer retail price.”

A letter sent to Wesley Heights homeowner and local activist Colette Forrest.

But Peacock said he offers other advantages: Speed, a quick and certain closing and all-cash purchases.

He’ll also buy properties without requiring repairs, pay back taxes and purchase without contingencies. Peacock said he raises money himself to finance purchases and reinvests his profits in the business to find more properties.

“I understand some individuals think their house is worth more,” said Peacock. “These offers aren’t tailored to the individuals who have a great condition house. That’s not the property I’m targeting... If you want retail price, I suggest you contact a Realtor and go the MLS route.”

Peacock said that he has bought from sellers near foreclosure, and looks for properties in poor condition.

“They need a ton of work. They’re not in finance-able condition. They can’t get a loan. They can’t get a buyer,” said Peacock, ticking off reasons people might want to sell him their home.

Jarrell, the west Charlotte homeowner, said he wants people to be aware of the tactics some investors use in case they receive a letter like the one he got from “Code Violation Fines & Review.”

“It’s really important that we shed some light on these kinds of practices,” he said. “These folks are not carrying out business in the light of day.”

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Ely Portillo covers local and state government for the Charlotte Observer, where he has previously written about growth, crime, the airport and a five-legged puppy. He grew up in Maryland and attended Harvard University.