David Sexauer has $250,000 and a list of about 120 properties he’d like to acquire from the city of Indianapolis.
It’s the beginning of a plan he hopes could one day turn around neighborhoods, plus generate income for other not-for-profits. Sexauer, a real estate investment manager, thinks he can accomplish that dual mission by doing on a large scale what other not-for-profits do a little at a time.
“My vision is, I want to change neighborhoods,” Sexauer said.
Sexauer formed Revisio Housing Inc. as a 501(c)3 this summer to take advantage of a state law that allows not-for-profits to acquire surplus property for no more than an administrative fee, $400. In Marion County, the provision has mostly been used by Habitat for Humanity or community development corporations to acquire one or a few vacant lots for new construction.
When Sexauer, 38, stumbled across the provision, he saw a big opportunity.
“I’m an entrepreneur,” he said. “If I could raise $1 million, I could take title to 50 houses.”
The other half of Sexauer’s mission stems from his involvement in the Indiana Ballet Co., a 4-year-old organization. He believes Revisio would provide philanthropists with a type of alternative investment. Their donations would fund rehab work on houses that would generate income to support other causes.
Sexauer secured the initial $250,000
donation from Greg Lennox, a wealthy family friend in California. Lennox, who also joined Revisio’s board, was willing
to take a chance on the business plan, Sexauer said. He believes others will jump on the bandwagon once Revisio takes title
to its first properties, perhaps in several weeks.
Although Sexauer’s dual mission is unusual, he’s not alone in eyeing the long list of properties affected by the real estate bust.
“There are several organizations attempting to do the exact same thing,” said Douglas Hairston, director of the Front Porch Alliance. “He, by far, has access to a lot more capital than most organizations.”
The Front Porch Alliance is a function of the Mayor’s Office, and serves as a go-between for faith-based and community organizations. Hairston put Sexauer in touch with groups working with people such as ex-offenders, or teens exiting the foster-care system, who need affordable housing.
Revisio would focus on renovations and property management but coordinate with those who specialize in social services, Sexauer said.
Two neighborhoods Revisio is targeting are Crown Hill and the near-east side. Russ Smith, the former executive director of Indiana Ballet Co., did most of the legwork to come up with a list of potentially viable properties, Sexauer said.
Smith has experience in real estate and left the dance company, where his wife is artistic director, to work with Revisio as a contract employee.
Long-term renters who may eventually buy the houses are essential to the plan, Sexauer said.
“We’re not here to make money off the backs of these people,” he said.
Sexauer added that his own firm, DAST Real Estate Services, doesn’t work with property in Center Township. It’s simply not a good investment, Sexauer said, but “it will become a good investment if you can turn around a neighborhood.”
Revitalizing urban neighborhoods is tough work, said Bill Taft, executive director of the Local Initiatives Support Corp.
“This is the business CDCs are in, and they find it very challenging to recoup their costs, let alone to have a net gain to pass on to other non-profits.”
Fall Creek Place is one example of a successful, large-scale rehabilitation, Taft said, but it required a lot of subsidies.
The other option, managing rental property, is also fraught with problems, Taft said. The former Eastside Community Investments found that out in the mid-1990s. The CDC was managing hundreds of rehabbed duplex units across the east side, as well as running other enterprises. ECI ran into cash-flow problems, leading to its demise.
“Projects like that cannot carry any debt,” Taft said.
Despite his warnings, Taft said he hopes Sexauer can make the numbers work.
“Right now, there’s a big challenge,” he said. “What do you do with this many vacant, single-family houses?”•