Maybe a certain notorious Buckhead real estate investor can fight City Hall. But it’s sure as heck cutting into his profit margin.
By how much? Let’s look at the numbers. But first, some history.
You may have read Atlanta Journal-Constitution reporter Katie Leslie’s update on the saga of Rick Warren. Mayor Kasim Reed has gone to war against him for buying up much of an impoverished neighborhood west of the Falcons stadium and leaving his properties in shambles. He bought up properties for as little as $260 a piece during the depths of the housing collapse. I wrote about him last November.
Enter the Arthur M. Blank Family Foundation, named after the Falcons owner, which promised to spend money to clean up English Avenue and Vine City as part of the football team’s $1.4 billion stadium deal. The charity’s attorneys and the Fulton County/City of Atlanta land bank authority were 90 minutes away from buying 25 of Warren’s derelict properties when Reed found out about the deal and halted it. If Warren got rich off the deal, it would be a “slap in the face” to residents, Reed said.
The planned purchase price: $667,500. Not exactly a high dollar deal in the world of Atlanta real estate. But in light of how cheaply Warren buys his properties, we thought it might be worth estimating how much he stood to gain if the deal goes through.
A tally of how much Warren paid to purchase the properties is harder to get than you’d think. Property databases show no record of him purchasing four of them.
Also, keep in mind that the difference between the total purchase price and the Land Bank’s offer isn’t a measure of Warren’s profit. Warren has spent some money on maintenance, even if he isn’t doing a good job. Whenever city code enforcement complains, he puts up new boards on the windows and doors of his houses. And now that he’s on trial and facing possible jail time, he’s had some unexpected legal expenses. In addition, investment companies snapped up two of them for unpaid taxes. He would likely have to pay money to get them back.
What we do know based on public records is that Warren paid about $67,000 for 21 of the properties, at an average of about $3,170 apiece. A majority of them were purchased for less than $1,000.
The Blank Foundation deal would purchase two dozen of them from Warren for about $28,000 apiece.
Even if Warren did spend, say, an average of $10,000 per property on maintenance and ownership costs, he’d stand to more than double his money. But if the city does try him on each of the dozens of counts that he faces in code enforcement violations, his legal bills may skyrocket, and his opportunities for big gains could wither away.