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.”
Comments
Sarah
Tue, Mar 27, 2012 : 1:10 p.m.
What a joke. Drive by some of the Beal properties in Ypsilanti. Talk about slumlord.
Steve
Fri, Mar 12, 2010 : 9:02 a.m.
I can't help but marvel at Ann Arbor.com's never-ending love affair with Stewart Beal. I suspect that if you polled the tenants in his collection of houses, you'd find a group of people frustrated by empty promises and that his "re-habs" are not nearly as well executed as his shameless self-promoting press releases imply.
psa97531
Sun, Aug 16, 2009 : 10:25 p.m.
Kudu's for taking risk, improving foreclosed properties and managing a successful business. These are good-things. Stop complaining
ypsi4us
Thu, Aug 13, 2009 : 3:18 p.m.
the truth cannot be reported here. too bad that it can't.
old east sider
Thu, Aug 13, 2009 : 2:46 p.m.
Stewart Beal is not a good neighbor to the East Side of Ypsilanti. He has created an abandoned slum building out of the Thompson block which once housed people and businesses. He has brought down our property values.
The Picker
Thu, Aug 13, 2009 : 7:53 a.m.
I commend Mr Beal for his ambition, but at Ypsilantis' current tax rates his efforts are unsustainable. Ypsi taxes are similar to A2 but with half the rent. With routine maintenance,taxes, construction costs, debt service and the high level of code compliance required by the Ypsi building department, he'll be lucky to break even. If Ypsi can stay afloat for a few more years the coming mega-inflation may be his saving grace. Anyway in the mean time, he'll make things look a little better.
yhc
Wed, Aug 12, 2009 : 11:48 a.m.
The Beal's are really doing a great job for the community. In my mind, they have the potential to move into zingermans territory - offering quality products while employing the neediest of our community. And if Ypsi is ever going to get out of its economic rut, they will surely need people investing there at a time when everyone else is getting out. Stewart, I hope you recognize your ability to do good for the community and wish you much luck.
hotsauce_gm
Mon, Aug 10, 2009 : 1:03 p.m.
impressive for a 26 year old...
Paula Gardner
Mon, Aug 10, 2009 : 9:37 a.m.
We'll have a story on the Thompson Block soon. Stewart is making plans for that this year, too. Paula Gardner Business news director AnnArbor.com
Glen S.
Mon, Aug 10, 2009 : 9:27 a.m.
Obviously, Mr. Beal has lately spent a lot of time and money buying up and improving numerous rental properties around Ypsilanti. Too bad he hasn't applied the same level of dedication to improving the Thompson Building in Depot Town. More than two years after he was entrusted by the City to finally rehab this landmark historic structure (which had, at the time, suffered more than a decade of neglect), the building not only continues to be an empty eyesore, but it is frequently unsecured... creating an attraction for vagrants, and a potential fire hazzard. If Mr. Beal is too busy buying up rental properties to properly restore the Thompson Building, then perhaps he should consider selling it to someone who will.
halflight
Mon, Aug 10, 2009 : 9:01 a.m.
A2dude wrote: I mean this guy is rich, his family is rich. His family owns a long time successful construction company.... Construction is a high risk business-- sometimes it pays big, and sometimes you take a big hit. I know of several projects in town where J.C. Beal took a loss because property owners went bankrupt and didn't pay their bills. Considering how vulnerable construction companies can be, it's a sign of good management that the Beal family has money to invest in undervalued properties in this economy.... If I remember the story correctly, Stewart started his real estate investments with income generated from a lawn care service he ran with a couple of friends beginning in high school. This wasn't given to him. I don't know how much the family businesses have invested in Stewart's ventures, but it's none of my business, either.... I'd much rather have the Beals investing in local income properties than absentee landlords. As long-time residents of Washtenaw County, they have more at stake-- the family's social reputation and future restoration construction work in the community-- if they don't maintain their investment properties.
Marge Biancke
Mon, Aug 10, 2009 : 8:32 a.m.
Happy to see that someone is keeping the money in our area. Too many are fleeing Michigan. Hope that the state doesn't tax his enterprise out of business.
a2grateful
Mon, Aug 10, 2009 : 7:25 a.m.
Kudos to Mr. Beal for investing in a market that others have abandoned or abused.... Ypsilanti's EMU campus rental housing stock has declined for many years. Although numerous investors have rehabbed properties, improvements receive extreme wear from typical student use, and need constant attention.... An owner with a construction company can easily make repairs, keeping his crews busy during a recession when building activity is curtailed.... Ypsilanti is know by some for being a smart investor's market. Investment is returned through cash flow. Cash flow return is far safer than speculative reversionary returns, as many Ann Arbor student property investors know, in a painful manner.... Student rental property ownership is maintenance and management intensive. Credit Beal for preserving some old houses through his work ethic. His tenants benefit from having code-compliant and safe properties. His investment is not guaranteed. His endeavor is not passive like a mutual fund investment.... Good work, Mr. Beal. You employ yourself and others, while improving the community.
KathyToth
Mon, Aug 10, 2009 : 5:45 a.m.
Great spot Paula. The reader can get the feel for all the work required and respect the investor, Suart Beal, for the risk he takes. info@KathyToth.coom
Alan Benard
Mon, Aug 10, 2009 : 1:31 a.m.
A2dude: Looking at this another way, he could have taken his advantages in life out of the area, out of the state. Instead, he's improving structures in Ypsilanti, a town that needs improved structures. His money is circulating here when there might be a better ROI investing in any number of other things somewhere else.
Jerome
Sun, Aug 9, 2009 : 10:21 p.m.
Oh but ain't that America for you and me. Ain't that America something to see baby, Ain't that America home of the free, Little pinks houses for you and me.
A2dude
Sun, Aug 9, 2009 : 9:25 p.m.
How amazing is this really? I mean this guy is rich, his family is rich. His family owns a long time successful construction company. This story is an example of how the wealthy and connected can mass buy undervalued homes. Pulling more money out of ordinary hands and putting right into the pockets of the already rich. America at its finest.