(Photo by Apache1322 at DeviantArt)
The corner of southeast Texas where I grew up has been through its share of ups and downs. In that regard it’s like most places. Few places can offer prosperity for everyone all the time. Sometimes it’s all good. Sometimes the bottom falls out. Sometimes the well-to-do are okay while everyone else is hurting.
When I look back, I grew up when the southeastern corner of Texas was in its heyday. It wasn’t idyllic, but it was bustling. Most parts of town were in good shape. The schools were among the best in Texas, rivaled academically only by a wealthy district in a metropolitan area.
The entire local economy revolved around oil. The oil crash in the early 1980s devastated everything.
After many years, the area came back as oil came back. Much of the liquified natural gas (LNG) warming and lighting the UK and Europe ships out from there. The largest catalytic cracker in the USA was added to the local refining capacity about 20 years ago. On the surface it seems like the area is in a heyday again.
But the grim periods between heydays leave scars that don’t necessarily all heal when money flows again. Downtown is a hollowed-out shell of what it once was. Highways are in good condition, but local streets often aren’t. Even in a desirable neighborhood, a combination of damage from hurricanes and grim economic periods left the condition of the houses patchy. You can drive down a street and see lovely, well kept houses next to houses that look like they are barely standing.
Investing Where Scars Are
Most people avoid the scarred parts of a town. If you have the resources, vision and nerve, sometimes the scars are the best place to invest.
When I stepped up from owning a rental house to something a little more ambitious, I was working in New Hampshire and could see that New England was just beginning to emerge from its latest (and devastating) real estate crash. It was the ideal time to buy property there. I spent the winter and spring looking at what was available. When I bought at last, it was a small apartment building. The seller had bought the building out of foreclosure and renovated it. That’s what he liked to do. He didn’t like to operate rental property, so he sold it to me.
It was the only multiunit housing for low income people that wasn’t a dump in the entire town. I took in Section 8 tenants, cleaners for the local hotels, workers for the local coffin factory that you could see from the top floor.
This is how scars in a town begin to heal.
Healing is Not a One-Step Wonder
There’s more to this story. My first property managers were terrible. (I needed property managers because my work took me all over the country.) Eventually I found good ones who chose stable tenants, took care of the tenants and the building, and just generally kept everything on an even keel.
Things puttered along until my property managers decided to move up in the world and not operate in the poor part of town any more. I didn’t think I could find replacements who would measure up to the job they had done, so I decided to sell.
First I approached the nuns across the street. Yes, you read that right. A pair of nuns ran a home for unwed mothers across the street from the apartment building. In addition to shelter, they provided training in parenting skills and life skills, making sure the mothers would be more ready to navigate the world when they left. At first the nuns thought my building would be a good expansion for them, but after a closer look they decided it wasn’t quite what they wanted.
They put me in touch with the local soup kitchen, which wanted to start providing transitional housing for the homeless. The soup kitchen bought the apartment building and expanded their operations.
In the middle of the poorest part of town, the nuns and the soup kitchen made a one-stop source of hope and rescue. If you can achieve a critical mass of stability and decency in an area, it starts to affect everything around it, pulling the area up. As I understand it, when I sold my building, that gave them critical mass.
It's how scars in a town heal enough to not seem like scars any more. It’s how the next heyday comes along a little sooner than it would have otherwise and uplifts more of what got shattered in the latest crash.
It didn’t start in a heyday. This had to start not long after the real estate market hit bottom, when it looked its worst.
The next time you’re looking at the wounds left by economic pain, if you’re in a mood for investment, think about the next heyday. Maybe the damage right in front of you can help bring the next heyday to life.