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Roy Nash, President and CEO, NeighborWorks Waco
Challenge: The 2008 housing crisis was devastating for Waco, Texas. As more houses went into foreclosure, residents were evicted and affordable housing and mortgage loans became difficult to find.
When the housing crisis hit in 2008, foreclosures were taking a toll across the nation, and families, especially in Waco, Texas, were having trouble getting mortgage loans. Prior to the crash, NeighborWorks Waco generated most of its revenue through housing development sales and mortgage loans. Revenue from these activities was $380,000 in 2006, but by 2010, in large part because of the housing crash, revenue had fallen to $79,000.
NeighborWorks Waco responded to the housing crisis with PEARLS and PRIDE: Purchase-Efficient-Affordable homes, Rehab, Lease and Sell; Purchase-Rehab-Invest-Delight-Enjoy. The program acquires and rehabilitates distressed single-family properties and leases them to clients who are not yet ready to purchase but may want to buy in the future. Local banks helped with seed money and the NeighborWorks network gave unique access to grants and low-cost capital to buy the properties.
Rehabilitation capital has largely been supplied through grants from NeighborWorks America, and loans through NeighborWorks-related capital sources, particularly, the Capital Funding for the Rehabilitation of Affordable Housing, which provided a total of $650,000 for 2010 and 2011.
In 2008, Waco resident Zenia Evans was renting a house just a couple of houses down from her mother. When the economy took a downturn, the property she was renting went into foreclosure and she was evicted.
She came to NeighborWorks Waco and went through the program and educational classes required to become a tenant. At around the same time, NeighborWorks Waco bought the house Evans had rented, completely unaware that Evans had lived there. Soon, Evans was reunited with her mother in the same house, now owned by NeighborWorks.
As a single mother and head of household, Evans persevered with rent for more than a year before deciding to purchase. At the time of this writing, she was making her mortgage payment without any assistance and happily enjoying her home.
PEARLS and PRIDE is self-sustaining and has grown to a total of 85 homes, all rehabbed, all for low and moderate-income families and individuals. Since one our goals is to provide income for our organization, we choose the homes for this program very carefully.
Rental income has grown from $23,000 in 2008 to $313,000 in 2015. In addition, between 2008 and 2011, PEARLS and PRIDE renters converted to homeowners at a rate of about one tenant per year. Now that number is five to seven per year.
We have learned much along the way: Make policies and procedures very clear. Make sure to strictly abide by those policies and procedures, particularly when it comes to rent deposits, inspections and tenant selection. And pay attention to the marketplace. For example, we discovered that we needed to maintain a more diverse inventory of single-family homes.
In more general terms, we have learned that as the economy recovers and Waco continues to grow, NeighborWorks Waco must continue to evolve and improve to best accommodate those in the community looking for assistance as they move towards homeownership. And that’s just what we will continue to do.
