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Milwaukee Sells Foreclosed Homes for a Dollar

Milwaukee is trying a new tactic to put foreclosed homes back in use.

Hundreds sit boarded up or abandoned after their owners failed to pay property taxes.

The eyesores attract crime and destabilize neighborhoods, so the city is fixing some of the houses and offering to sell them for a dollar.

But first, the buyers must lease the property and prove they’d be responsible owners.

Bobby McQuay grew up a few blocks away from Washington Park, one of largest green spaces in Milwaukee’s Central City. He says it was a great place to spend his childhood, but a lot has changed.

“I graduated from Washington High School, spent about 12 years and 37th and Sarnow, which is unfortunately, is sitting boarded up now.”

And McQuay’s boyhood home isn’t the only one. Drive through the neighborhood and you see how the recession decimated the older housing stock. Vandals have ruined some abandoned properties. Thieves ransacked others for copper.

Even so, McQuay chose to return.

We’re sitting in the home he rents with his finance and three kids on North 40th Street. He had arranged a deal with the owner – McQuay would fix up the place and eventually buy it. He flips through photos showing just how much work it needed.

“Ok, this was the bathroom, everything had to come out of the bathroom, most of the stuff I just had to replace,” McQuay says.

Thieves had literally torn the plumbing out of the walls and ripped up the flooring. So McQuay got busy bringing the house back to life. Now, I see fresh paint on the walls, a totally rebuilt kitchen and shiny dark wood floors.

“We did a family project, did the floors. We removed the carpet, sanded the floors, me my kids my fiancé. It took us a little longer, it wasn’t perfect but it was a good job and it looked a lot better than, as you can see, on this photo,” McQuay says.

Before he knew it, McQuay had spent $10,000 on repairs. Then a shoe dropped. The owner had failed to pay the property taxes, so the city took ownership.

Now, what often happens with these foreclosed home is, the tenant is evicted. But because McQuay had invested so much sweat equity in the house, the city was eager to work with him.

Under its new lease-to-own program, he has to pay $500 a month in rent to the city for two years. During that time, he must maintain the house and take home-ownership counseling. If McQuay meets those requirements, the city will sell him the property for $1.

“And not only that part, the city has came in and really helped bring the house up to snuff with some of the things that needed to be done and made the house more comfortable, a lot safer,” McQuay says.

Work to rebuild the foundation in McQuay's basement is expected to cost nearly $20,000

“If you can look here, the foundation is a brick foundation, has been compromised. See how the wall’s bowed through here? The clay pressure’s pushing in the walls,” says McInnes.

Bob McInnes inspects foreclosed homes for the city, and draws up rehab plans. He says the city budget allocates $20,000 dollars for repairs to each property involved in the rent-to-own program.

“Typically roofs, windows, walls. The mechanicals, like electrical, plumbing. So there’s a budget of $20,000 per house, but do most houses need more work than that? Yeah, pretty much,” McInnes says.

City officials say they know of about 40 people so far who want to take part in the new rent-to-own program. Many, like McQuay, were tenants in the homes before foreclosure. But the program is still quite small considering the scope of the crisis.

In his recent budget address, Mayor Tom Barrett said the number of city-owned foreclosures tops 1000.

“That’s more than 13 times the number before the financial meltdown. It has presented challenges for departments and our resources. More importantly, it’s a burden for many of our neighborhoods,” Barrett says.

And city taxpayers foot the bill. The mayor says the foreclosure problem is the main reason he’s asking for a tax increase in the 2014 budget.

This is the home Bobby McQuay rents on N. 40th Street in Milwaukee. The home is one of more than 1,000 tax-foreclosed properties in Milwaukee.

Bobby McQuay, who’s on his way purchasing a foreclosure near Washington Park, says he hopes more people re-invest in battered neighborhoods.

“The power of the people will make things a lot more tolerable and livable. And the neighborhood will always change when you have more homeowners of people with a stake in a community that’s living in a community,” McQuay says.

The father of three says he’d love to see the neighborhood begin resembling the one he grew up in decades ago.