Housing Therapy

By Nancy E. Oates CorrespondentMarch 5, 2012 

Marelien Exantus’ business card says he invests in real estate. More accurately, he invests in people. A general contractor and remodeler, Exantus buys boarded up and foreclosed houses in neighborhoods close to downtown Durham that show decay. He renovates the houses and makes them available to low-income first-time homebuyers. But a couple of years ago, when lenders all but cut off low-income borrowers, the families Exantus wanted to sell to couldn’t get mortgages. He discovered another market niche: small, high-quality rooming houses. In the past several months, Exantus has converted some of his larger renovated homes into transitional housing for people not yet ready to rent a conventional apartment, much less buy a house. The arrangement is a triple win. People who need greater flexibility than a shelter or group home have a clean, safe, affordable place to live. Empty neighborhoods vulnerable to crime are filled with people who care about their community. And Exantus has a small revenue stream from the houses he has brought back to life. “I saw there was still a need,” Exantus said. “People couldn’t afford to buy, but they still needed a roof over their heads.” The transition from contractor to social worker, which is what Exantus is called upon to do ever more frequently these days, has exposed him to new worlds and experiences, some of which he’d rather not have. He has to be able to spot a con artist, a drug dealer or a prostitute who would bring illegal activities to the premises, yet still accept people trying to turn their lives around. “Everyone comes with a good A Game,” he said. “But after a week or two, you can see what kind of company they have hanging out.” Tenants sign a contract before they move in that understand the strict rules of conduct they must follow and that they are not entering a traditional landlord/tenant agreement. As the homeowner, Exantus allows police to search an individual room, for instance, without having to first get a warrant. Prospective tenants fill out an application and provide references, and Exantus is in the process of setting up a drug screening before accepting a tenant. “Drug testing will increase my costs,” he said, “but I’m doing it for the protection of the other tenants.” On the flip side, the houses do not have curfews, as some group homes do, which fits people who work evening hours. He also rents to mothers with teenage sons. A traditional shelter separates teenage boys from their mothers and divides husbands and wives. Because Exantus rents by the bedroom, families can live together in one house, sharing common areas of a living room, dining room and kitchen while having separate bedrooms. He also is working with some social service agencies to provide programming that will teach people the basics of moving into a more permanent living arrangement. This month, he’ll host a Ready to Rent workshop that will explain issues such as the reason for a deposit, budgeting for utilities and what’s involved in a credit check. “We’re trying to improve by putting different procedures in place,” he said. “It’s a work in progress.” Exantus owns several houses about a mile from downtown Durham, off Holloway Street near East End, Long Meadow and Grant parks. He has advised real estate investors David Burton and Tim Master, and manages a house that Burton owns on North Driver Street across the street from Exantus’ office. Burton’s house, a two-story brick home with a full basement, had been empty for a good five years before he bought it. Built in 1925, it has hardwood floors throughout and is on the Historic Register. “I never in a million years would have imagined myself in this environment,” Burton said. But he, too, has made the transition from investing in property to investing in the community. “I see housing as a therapeutic intervention. If people don’t have a safe place to live, every social service program you throw at them falls through the cracks.” Many social service agencies have referred clients to Exantus, Burton and Master. Those tenants often have a social worker who checks in on them regularly, which further stabilizes the living situation. As the houses fill up, more eyes are on the street to discourage crime that can be blatant in neighborhoods with many vacant houses. Exantus recalled seeing a man kick in the door of a house in broad daylight while the residents were at work. The burglar sorted through his haul on the front porch, then sauntered away with the good stuff. Exantus called 911 and tailed the suspect until police arrive. “This guy had no respect,” Exantus said. “I was like, Can’t you wait until nighttime when nobody’s looking?” Exantus and Burton hire local people, including some of their tenants, to help with unskilled parts of the renovation work, and they mentor others who are finding established jobs for the first time. One tenant found a job at a fast-food restaurant that would pay through direct deposit. The tenant didn’t know what that was. “He had never been inside a bank,” Burton said. Tim Master drove the man to the bank and helped him set up an account for his weekly paychecks. Renting to people who live on the edge can be a risky business strategy, even though most of the tenants in the homes owned by Exantus and Burton are involved with social service agencies. “If this was my way to make money,” Exantus said, “I’m in the wrong business.” Yet the investment makes financial sense as the neighborhoods turn around. Like Exantus, Burton renovates a house to the standard that he would feel comfortable living in it. Burton tells of one bank that had a buy-one-get-one policy for selling distressed, foreclosed houses. By buying houses so far below market value, he can put more into the renovation, which gives the house a higher assessed value. He sells below the assessed value, but higher than his costs. The house has some built-in equity, which is attractive to lenders, and he makes money on the sale. Using the space as transitional housing until the recession recedes opens opportunities for some folks in the midst of their challenges. “We’re not a charitable organization, but we’re not trying to squeeze every last dime out of the deal, either,” Burton said. “This is really about making a difference in the community, not that it is smooth sailing.”

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