Cloudy / Windy
Mar 15, 2017
INDIANAPOLIS -- Brian Pachciarz is just about ready to plant a "sold" sign in the front yard of 847 Eastern Avenue.
He hopes it's a sign of good things to come.
Pachciarz is part of a vanguard of real estate investors who try to turn a profit on risky properties in distressed neighborhoods. He looks for boarded up, vacant and dilapidated homes other investors are too risk-averse to touch.
Right now, his firm, BLP Realty Group, is invested heavily in St. Clair Place in the Near Eastside. The area was hit with a sucker punch in the 90s when the RCA/Thomson plant was shuttered – taking thousands of jobs with it. The housing bubble crash of 2008 didn't do it any favors, either.
The entire Near Eastside, in fact, has struggled with a crime problem that has plagued it for years. The neighborhood as a whole led the city in homicides last year. The area just a short distance east of St. Clair Place, at 10th and Sherman, was the second-deadliest half-square-mile in the entire city.
But now a wave of federal grant money, plus a share of the city's windfall from the 2012 Super Bowl, is fueling redevelopment efforts in St. Clair Place. A re-energized downtown and Mass Ave. are drawing young professionals back into the city's urban core. And with no signs of the boom market slowing down in the desirable Irvington neighborhood to the east, St. Clair Place is well-poised to take advantage of all of it.
Pachciarz hopes he is too. He's just got to sell that house.
Citywide, it's a great time to be selling a home.
Indianapolis has seen six straight months of increased closings across the metropolitan area. And home prices are rising too – an average of 6.4 percent year-over-year, according to MIBOR, the city's Realtor association.
That's good news if you're trying to redevelop the gap, as Artisan Realtors owner Dan Adams calls it, between Lockerbie to the west and Irvington to the east.
Adams' business sits on Washington Street right in the heart of Irvington. Business is booming there -- census data shows the median home value increased by more than 30 percent in parts of the Irvington area from 2000-2014. Lockerbie, which sits on the west side of I-65/I-70 to about Delaware Street, saw home values increase by more than 40 percent over that same period.
In between -- in the "gap" -- median home values remained stagnant over that period.
It's no coincidence that those gap areas have also struggled for years with crime.
Twenty four people were killed last year year in the area between Lockerbie and Irvington known as the Near Eastside -- more than any other neighborhood in the city.
Since the beginning of the year, there have been 44 assaults, 24 burglaries and 17 robberies within a half mile of Pachciarz's 847 Eastern Avenue. Two people have been killed in that same area – 11 percent of all the criminal homicides in 2017 thus far.
Eyesore properties are also a menace to the area. While 847 Eastern's own block is filled mostly with pleasant-looking, well-kept homes (save for one vacant residence a few doors down), you need only turn the corner to see the intersection of 9th and Rural Streets -- bounded on all four sides by boarded-up homes.
All of that means Pachciarz and his partner rely on a special kind of buyer who sees the promise through the problems.
"People do have issues with knowing that historically certain areas have high crime rates, but I think we are lucky in Indy right now that there is an overall theme of redevelopment that's been going on 25-30 years, so most folks are open-minded to the idea of urban living," Pachciarz said. "The idea of urban living is widely accepted enough and romantic enough that it helps people overcome the stigma of historical crime and low home value issues."
St. Clair Place and other Near Eastside neighborhoods are also given a boost by Irvington's success, as folks priced out by high demand look to the surrounding areas.
"The neighborhood immediately to the [west], which is Bosart Brown, to the north Little Flower, to the south, Christian Park – all of those have benefited from what's happening in Irvington," Artisan Realtor's Adams said. "Bosart Brown a few years ago was a lot of foreclosures and a lot of boarded up houses. Now there are three-bedroom, two-story homes selling in the $150,000 range, which a few years ago they'd have been lucky to sell for $80,000."
On the flip side, those persistent crime issues to the west may help keep prices in Irvington (which had 0 homicides last year) a little lower than they'd normally be, Adams said, because prospective buyers hear "east side" and think crime.
"You know, I mean, honestly there are still people who say, 'Gee, is it safe over there?' I've actually had conversations with people in our parking lot that wonder if the neighborhood is safe," he said. "Well, it is safe. But people who don't have any idea, all they hear is the newspaper talks about the east side."
847 Eastern Avenue's last listing in April 2013 was for $32,000.
The 1910 Victorian-style cottage has three bedrooms and two baths and comes in just under 2,300 square feet. Its last remodel, before Pachciarz took ownership of it about a year ago, was in 1960.
Aside from the extensive remodeling, Pachciarz scrapped the yellow-and-tan color scheme and repainted it a soft, royal blue with white trim.
He thinks it's worth $155,000 now – and that's what he's hoping to get out of it.
The concept of "flipping" a house has received a bad rap from predatory buyers and get-rich-quick real estate seminars. But Pachciarz says what he does, at a basic level, is inject value into neighborhoods. 847 Eastern's 2013 sale price was just $13 a square foot. Now it could sell for $68 a square foot – almost a 425-percent increase.
"It's adding value. It's adding value to an area," he said. "This is not an easy job. It's definitely a risky proposition. I think that's the negative part. But the positive part is, investors like myself and other people we know, who are doing legitimate deals, are going in and we're improving a neighborhood. We're going in and we're producing a product that was an eyesore at one point in time, and the neighbors didn't like it – maybe it was abandoned, there was a chance for higher crime – and we go in there and solve a problem."
If Pachciarz does solve the "problem" of 847 Eastern, it could pave the way for more risk-averse investors to reconsider the area – much like a successful oil derrick helps prove an oilfield.
Jason O'Neil, the new board chair for Marion County's real estate trade group MIBOR, says that first market-rate sale is key.
"It just takes one house to get redevelopment started in a neighborhood," he said. "Once you see somebody get that $150,000 - $200,000 number, then the rest of them just fall into place."
O'Neil says getting that momentum going is key to propelling ongoing redevelopment efforts throughout the Near Eastside to completion.
"What the folks that are investing there are counting on seeing is the redevelopment filling in between Lockerbie and Irvington," O'Neill said. "As that happens, it will go street by street, block by block, house by house, as long as people are willing to live there."
Pachciarz might be an optimist, but he's also a pragmatist; he does his research before laying his money down.
"One thing we learned is that we have to ride along with bigger coat tails, because we could waste our money trying to effect change in the wrong areas," Pachciarz said. "The reality is, when local – legitimate, well-backed and longstanding – non-profits get funding for certain areas, they aren't going to miss the market, because they are setting the market. The areas they choose are the ones where change happens, so it's best to come alongside of them to help the cause rather than go rogue and hope for the best."
St. Clair Place has benefited from millions of dollars in federal redevelopment money via NEAR – the Near East Area Renewal organization.
In the past seven years, NEAR has helped build or refurbish around 90 homes in St. Clair Place. The majority of those homes are designated as affordable housing and offered below market value to families they hope will help rejuvenate St. Clair Place.
"We did that in response to the quality of life plan for the Near Eastside, and in response to the fact that this area of the neighborhood had over a 40 percent vacancy rate," NEAR Executive Director John Franklin Hay told RTV6 in November. "They were really hard-hit by the foreclosures. We've only built on vacant lots or abandoned houses – there are plenty of those – but through that we hope to revitalize the neighborhood and make this a safer place to live."
All along Hamilton Avenue, NEAR's "coming soon" signs can be seen alongside ongoing construction projects. Pachciarz says investors like him augment NEAR's efforts in two ways. First, while NEAR is focused mostly on income-restricted housing, Pachciarz is helping prove market-rate prices will sell in the area. Second, he said he can help "evangelize" for the ongoing redevelopment efforts to skeptical neighbors.
"Neighbors who own are usually very receptive to supporting change, although some feel like they are going to be pushed out – which is just an unfortunate reality of re-gentrification," Pachciarz said. "Most, though, are excited to see homes get fixed up and values to rise."
For Pachciarz, 847 Eastern is just the tip of the iceberg for his evangelism efforts. BLP Realty has already purchased several more houses on Eastern Avenue, and is in the beginning stages of a small, mixed-use retail project in the area as well. Pachciarz says he's confident the investments will pay off, and the formerly thriving neighborhoods of the Near Eastside will see a resurgence.
"It's all very exciting," he said. "We foresee the Near Eastside getting very connected to downtown. We believe in the next handful of years, all of these pockets like Mass Ave., St. Clair Place, Woodruff Place, Little Flower, Windsor Park, Englewood, etc., will all see dramatic upticks in value, safety and overall quality of life – creating a very connected east side from downtown to Irvington."
Until then, Pachciarz has a house to sell.