Nonprofit Launches Housing Acquisition Fund To Block Outside Investors

Acts Housing, the Milwaukee-based nonprofit focused on home-buyer counseling, lending and rehabilitation, is launching an acquisition program aimed at ensuring low-to-moderate income Milwaukee residents — instead of out-of-state investors — are able to buy affordable housing.

“Annually, there are hundreds of families with LMIs that have graduated from the Acts Housing homebuyer education program. They’re financially prepared and approved for homeownership, but they’re missing out on the most affordable homes,” said Acts Housing president and CEO Michael Gosman in a press release announcing the effort. “That because predatory, out-of-state investors have purchased massive quantities of single-family homes to use as long-term and often poorly maintained rentals.”

The nonprofit is launching the Acts Homeownership Acquisition Fund with a $1 million gift from the Zilber Family Foundation and $2 million in other contributions. Acts has an $11 million goal for the fund, which would include $1 million in operational expenses and $10 million for a revolving loan fund.

The fund aims to purchase at least 100 single-family or duplex homes per year that would otherwise likely be sold via off-market deals, portfolio transactions involving investors or by the city out of property tax foreclosure.

The organization hopes to create an inventory of homes with prices between $90,000 to $140,000 and resulting monthly housing costs of $900 to $1,200. The intended goal is to create homeownership opportunities for individuals making less than $25 per hour.

That’s in line with the goals of the Community Development Alliance, which is supporting Acts effort. The newly-formed organization, also backed by Zilber, released a report in September that calls for 32,000 new Black and Latino homeowners across 30 years and identifies gaps within Milwaukee’s current housing marketplace for both owner-occupants and renters.

CDA reports that 40% of Milwaukee’s inventory of homes valued at $125,000 or less are now owned by investors. An earlier report from the Marquette University Law School found that since 2005 the number of single-family and duplex houses owned by out-of-state landlords in Milwaukee has quadrupled.

“With the Acts Homeownership Acquisition Fund, we’ll be able to provide families with affordable housing opportunities that otherwise wouldn’t be available,” said Dorothy York, Acts’ vice president of real estate. York will lead a team that identifies purchase and rehabilitation targets. Taking a page from the outside investor playbook, the fund intends to quickly purchase homes with cash and no contingency offers.

The initial CDA report found that in the Milwaukee area white residents are twice as likely to own their home as Black residents and 1.4 times more likely than Latino residents. Due to lower incomes and/or living in older properties that can require more spending, more than 55% of renters and 31% of homeowners spend more than 30% of their household income on housing, a level the federal government and other agencies have labeled as “cost burdened.”

Acts was launched in 1995 and added its lending arm in 2013 following the Great Recession. Since its inception, the organization reports that more than 3,000 individuals have purchased homes with Acts support, including a record 300 in 2021.

“Now faced with growing land grab by predatory investors,” Gosman said, “Acts is positioned to innovate once again to further grow local homeownership.”