May 23, 2013 [Lee Chilcote, Freshwater Cleveland]
When developer and landlord Chuck Scaravelli first heard about the deteriorated house on Schaefer Avenue, he wasn’t sure he could do anything with it. Sure, it had a cool slate roof, but the interior was fire-damaged and the house needed a lot of work.
Then the East Cleveland pizza delivery guy who told him about it named his price: $500. Scaravelli thought, What do I have to lose? A year later, after investing just $10,000 to renovate the property into a loft home, it rents for $500 a month.
Scaravelli’s renovation is part Rust Belt chic, part urban hodgepodge, and 100-percent Cleveland. He’s removed walls to create an open loft-like feel, textured over damaged ones to create a “Tuscan” look, put up inexpensive light fixtures from Habitat for Humanity’s ReStore, and built a kitchen island out of old wood wrapped in aluminum sheets.
With his loft home, Scaravelli has pulled off what some people thought was impossible: He’s renovated a crumbling Cleveland foreclosure into a unique and desirable home. Call it “reverse scrapping” — rather than cart materials off, he puts them in. And he’s doing it for a fraction of what it typically costs to renovate a foreclosed home.
The home might not be right for everybody, but it does offer a taste of downtown, done on a dime.
Now, through a partnership with St. Clair Superior Development Corporation and the Cuyahoga Land Bank, Scaravelli is expanding his efforts to additional homes in the neighborhood. He’s hoping to rescue solid homes from the wrecking ball.
“We’re making homes built around the turn of the century more acceptable to how people live today,” says Scaravelli, standing beneath the exposed beams of a double on Addison Avenue that he’s converting into a two-bedroom with 20-foot ceilings. “We are compelling people to move back into the city.”
The City of Cleveland estimates that it has as many as 15,000 vacant homes. While many are in such poor condition that demolition is the only option, many others retain their structural integrity long after they’ve been looted of plumbing and scrap metal. They’re for sale, but there are no buyers. They stand like ghosts of a bygone era, magnets for crime and trash, dragging down the property values of an entire neighborhood.
Public officials beat the drum for more demo dollars for hard-hit cities like Cleveland — and rightly so, in many cases — but there’s one thing you won’t hear very often. Many of those empty, abandoned and foreclosed properties could easily be saved if there was even the slightest amount of housing pressure to entice developers. But there’s no market for them right now, so they’re being torn down.
Dennis Roberts, Director of Programs and Acquisitions for the Cuyahoga Land Bank, says that demolition is an important first step in the renewal of urban neighborhoods.
“Northeast Ohio’s housing stock was developed to serve a much larger population than we have now, so we have an oversupply of housing,” he explains. “Very real things happen in vacant houses: crime, rape, arson. Let’s say that we hold some of these properties across Cleveland. If so, we hold them until when? What do we expect to happen?”
“You don’t contribute to the decline of an area by removing a house,” he adds. “You stabilize it.”
Demolition is touted by leaders as having a stabilizing effect on urban neighborhoods, but Andrea Bruno, Housing Coordinator with St. Clair Superior, says that aggressive tear-downs also can have the opposite effect. They can be the nail in the coffin that stops a community from returning to prosperity in the foreseeable future.
“The houses we’re working on were all scheduled for demolition based on viability of the market, not their condition,” says Bruno. “If you demolish all of the houses on a street, it won’t come back. It becomes a forest, much like sections of Detroit have now become.”
The next loft home
Addison Avenue once was the backbone of the proud St. Clair Superior neighborhood. At the turn of the 20th century, immigrants from Croatia and Slovenia lived here after moving to Cleveland to work at the industrial businesses north of St. Clair Avenue.
Yet in the past 25 years, this once-solid neighborhood has begun to unravel very rapidly. The foreclosure crisis started early here, and dozens of homes already have been demolished along Addison, a mile-and-a-half-long road that bisects the neighborhood. There still are homes with character, but also plenty of missing teeth.
To bolster this battered street, Scaravelli is renovating a home that was boarded up, vacant and bereft of plumbing, but still solid. The partners selected it as the next test case for their innovative loft home project.
To understand how a vacant, vandalized home can be renovated for $10,000, you have to think creatively. Scaravelli’s homes are not typical rehabs. There are no custom kitchen cabinets or shiny granite countertops, just repurposed materials cobbled together on the fly. For the Addison home, for example, Scaravelli purchased a patio door from Habitat for a mere $15.
Scaravelli also saves money by selecting houses with century-old balloon framing, which are strong enough to withstand the removal of interior walls and ceilings. The net effect is that Scaravelli can fix up his houses more cheaply. “I don’t have to fix that wall because it’s not there,” he quips, gesturing at the open space.
He also pinches pennies by hiring cheap labor through a man he calls the Preacher. This neighborhood contractor runs a nonprofit organization that hires local residents, some of them ex-cons, and provides them with workforce training.
Though Scaravelli might label his methods unorthodox, he will not call them shoddy. “It’s not cheap, it doesn’t look cheap, but it’s very inexpensive to do,” he says. Apparently, it’s working; he already has three homes rented and currently is renovating three others.
The eccentric developer is fond of calling his real estate dealings “poetic” — and there’s some truth to that. After all, he didn’t choose the $10,000 number arbitrarily. That figure reflects the cost of tearing down a home.
“He set himself a challenge by saying, ‘If it costs $10,000 to demo a home, what can I do for that?’” offers Michael Fleming, Executive Director of St. Clair Superior. “We are saving homes we’d otherwise have to demolish. I don’t anticipate new construction in this neighborhood for years. This is a really cool space that’s attracting young people.”
Replicating the model
The question becomes, is there a way to transfer more of these vacant homes into the hands of responsible owners? If Scaravelli’s loft home is a model for urban development, can you replicate it and ensure homes are properly renovated?
While initially skeptical, Roberts and Cuyahoga Land Bank Director Gus Frangos are thrilled with the success of Scaravelli’s loft homes. They recently provided him with a two-year, low-interest loan. The homes are evidence of a novel Cleveland rehab that is at once practical, affordable, cool and authentic, they say.
“He’s bootlegging it, like the artists who occupied the Warehouse District buildings downtown in the ’80s — all they wanted was a sink and a toilet,” says Frangos. “We believe that additional homes in Cleveland can be renovated using the same cost structure, but must be eligible structurally and in terms of condition and location.”
Roberts says that although $10,000 is very low for a rehab, the investors he’s working with aren’t that far off the mark, putting anywhere from $20,000-$50,000 into houses. If costs can be lowered by using this stripped-down approach, it could widen the market, making it possible to save homes that otherwise would be demolished.
“The market is picking up,” says Roberts, hoping the spring buying season will provide new opportunity for the land bank to sell more homes to responsible rehabbers.
Since being created in 2009 to help acquire properties and return them to productive use, the land bank has torn down about 2,000 homes and sold about 700. When the agency acquires a property, it evaluates the home’s condition and the market potential of its location before deciding whether the house should be torn down or offered for sale.
Only about 30 percent of the homes it acquires are saved from the wrecking ball, says Roberts. Homes deemed viable enough to be salvaged are offered to investors, owner-occupants, community development corporations and nonprofits. Others are renovated by the land bank itself and placed on the market.
The land bank ensures that rehabbers fix up the homes properly by maintaining a “deed-in-escrow” program that delays transfer until all work is completed and inspected.
If a land bank home doesn’t sell right away, it might end up facing the wrecking ball after all. “If they don’t move in six months, we put them back in the demo pile,” says Roberts, reiterating that unwanted and vacant homes only serve to bring down communities.
Supply vs. Demand
Scaravelli is not the only creative investor rehabbing homes on the cheap in Cleveland. Dontez Sanders is a landlord who built up an impressive portfolio of 34 properties during the recession. He started with just one house that he purchased for $5,000, and with the help of investors (including his high school football coach), he now runs a profitable business.
“I help build up a neighborhood, attract good tenants from [places like] the Cleveland Clinic and University Hospitals, and make a little cash doing it,” says Sanders, whose homes primarily are in Cleveland Heights, Bedford Heights and other eastern suburbs.
His business model is not unlike Scaravelli’s: He purchases single-family homes for $20,000 to $30,000 and puts $30,000 to $40,000 into them, renovating them with brand-new everything and higher-end finishes. He then rents them quickly for $1,500 a month.
If Cleveland neighborhoods can attract more investors like Scaravelli and Sanders, then there’s hope that our oversupply of houses eventually could be absorbed by the market.
Fleming says he hopes to expand Scaravelli’s model and begin offering loft-style homes for sale. He believes many artists would be interested in cheap housing.
The value and cool factor are what attracted Arleen Crider, a nurse and interior designer who recently moved into her new loft home on E. 47th Street. “I never would have moved back, but it was a great value,” she says. “I feel like I’m living in an art gallery.”