An address appears on a big blue screen with no picture or information attached to it. Just a house number, a street name, and an auction parcel number. The lot that this address represents could be empty. If there is a house on it, it could be nothing more than a crumbling shell, but the bidders quickly raise their hands to offer up thousands of dollars for each of the properties.
More than 200 bidders gathered in a banquet hall at 3801 Market St. this morning for an auction of 196 properties owned by the Philadelphia Housing Authority (PHA), mostly in West and North Philly. The bidders included developers who scooped up properties near Temple for $40,000 to $77,000 — planning to rehab and rent them to students — to first-time investors and prospective homeowners who paid much less, sometimes as little as $4,000 for an empty lot or row house.
“The toughest thing about these auctions is they won’t let people into the properties,” says Sunil Darji, a developer who was outbid on two properties on Cecil B. Moore Avenue. The condition of a property, or even basic details like the number of rooms, were not made available to bidders. Darji checked out the exterior of the two buildings on Cecil B. Moore from the sidewalk, but his conclusions about their condition were all guesswork. Other attendees seemed less concerned with these details. Regina Evans of South Philly, planned to bid on properties in North Philly as an investment for her grandchildren. But prior to this morning’s auction, she had not looked at any of the properties in person and was not sure which addresses contained houses and which were empty lots.
Other bidders had more concrete plans for the properties they bid on. Robert Barrett, a first-time real estate investor, who entered the highest bid for a house on the 2400 block of North Bouvier Street, says he was able to inspect the property and thinks it will be relatively inexpensive to renovate. He plans to pay the $7,000 he bid in cash for the property and then use his own money to rehab it. Barrett hopes to recoup his expenses within a year by renting out the house.
Near the end of the auction, Jessica Meyers, a squatter who City Paper reported on two weeks ago, was able to outbid one other bidder on the house she has been occupying for the last eight years in Mill Creek. With financial help from her friend Amira Dvorah, an artist and real estate investor, Meyers placed the winning $8,000 bid on her home. The other bidder for the property was Meyers's neighbor, who told City Paper, earlier in the day, that he was not there to bid against Meyers. Meyers says the neighbor, who declined to provide his name for this story, left the auction in the morning and returned to bid up the price of her house. Meyers initially thought the later time of the bidding - which was caused by an anamolous reshuffling of her house toward the end of the auction list - would drive the price down. “I think somebody there [at PHA] is looking out for me,” Meyers says of the change to the list. Her neighbor's bids dashed these hopes for a relatively low price, but Meyers was happy to have a positive end to her struggle to assume ownership of her home.
For those interested in financing their new real estate investments, representatives from EastCoast Financial were passing out information and basic loan applications to winning bidders. Bernie Rubin, of EastCoast, says his company is “the softest of the hard money lenders” referring to the unconventional, often onerous, nature of the terms of the high-interest loans they issue. Rubin says the minimum loan amount EastCoast will issue is $100,000, so for someone winning a house for $4,000, their services don’t make sense, but for those who purchase properties near Temple for $50,000 or more, EastCoast’s loans can also cover renovation costs. The very lowest loan rates they offer come with a 9 percent APR, whereas conventional mortgage rates are currently at 3.25 percent.
Kelvin Jeremiah, CEO of PHA, says the properties being auctioned were acquired by the city agency in the 1960s and 70s, but over time became too expensive to maintain. PHA currently owns more than 4,000 Scattered Sites properties — homes that are integrated into existing neighborhoods, as opposed to separate PHA developments — down from a high of 8,000 properties before they began selling them off in earnest. Jeremiah says he is not concerned with who buys the properties, whether they are idealistic squatters, small-time personal investors or bigger developers. PHA, Jeremiah says, is only interested in selling to the highest bidder.
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