Buying Ypsilanti: Stewart Beal closes on his 30th house in the city

Stewart Beal hit a milestone this month when he bought his 30th house in Ypsilanti.

The Ann Arbor-based investor closed on 711 Washtenaw in the morning of Aug. 6.

Before lunchtime that day, crews were on site, cutting back landscaping and crowbarring water-damaged drywall.

With two of the three units already rented for Sept. 1 occupancy, Beal has to stick to a tight schedule. He’ll be repairing walls, installing hardwood floors, renovating kitchens and baths, and adding in-unit laundry.

“I’m doing everything but granite counters,” he said. “Our goal is to take the worst property on the block and make it the best on the block so we can achieve maximum returns by renting for more than anyone else is.”

It’s a goal that he’s set with his 29 previous purchases in the city since 2002. All of his homes have proximity to campus, with many clustered in the blocks of Washtenaw, Emett and Ballard. And several of the purchases have been in the past year.

Beal operates the portfolio under Beal Properties, part of his family’s construction, development and property management business.

His niche, started in 2002, has focused on Ypsilanti - and in recent years, that’s meant foreclosures that come in varying degrees of disrepair.

In every case, he says, he’s improved the values of the properties and their blocks - while building equity and a portfolio for himself.

Why Ypsilanti?

“Ypsi is affordable and an improving community,” said Beal, 26.

He also defines the risk differently than in other communities. It’s not the number of foreclosures or falling prices causing concern; it’s the low amount of capital he has to risk in order to yield a strong return.

“It’s less risky in my opinion because the real estate is affordable,” he said.

The lowestpriced homes in the county are in Ypsilanti, where the number of foreclosures have been highest, too. Investor activity also has been high due to the soft pricing.

But there’s a shift this summer: June data from the Ann Arbor Area Board of Realtors shows that prices in the Ypsilanti school districts climbed about 4 percent from June 2008, while the number of sales nearly doubled from 13 to 22.

Even amid that scenario, Beal is finding bargains. The house at 711 Washtenaw formerly was in Loren Romain’s portfolio, and the California-based bank that took it under foreclosure sold it to Beal for $58,000 - despite a $114,750 loan balance.

Meanwhile, the assessed value is $91,900, or 158 percent of the purchase price.

It’s a theme in many of Beal’s buys: like 52 S. Summit, which he bought on March 17 for $31,500 - or about 38 percent of the assessed value.

While campus-area rentals take on a renovation urgency at the end of summer, one recent buy - his 29th - can go at a slower pace. He bought a foreclosure on the historic south side to turn into his personal residence.

But he expects this 30th house to be his last for a while. It brings his total number of apartments near campus to 120, and with his other properties he’s now operating 190 units.

“At this point,” he said, “it’s a little addicting. It’s just exciting getting a new property, walking it for the first time and realizing it’s totally trashed, so you have to renovate it.”