
Neighbors Got Together to Buy Vacant Buildings. Now, Renting to Bakers and Brewers - sebkomianos
http://www.yesmagazine.org/new-economy/neighbors-got-together-buy-vacant-buildings-renting-bike-shop-brewer
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GigabyteCoin
I suppose if the buildings every go up for sale, this would be a possibility.

In my hometown, approximately 50% of the retail space in our downtown has been
vacant and listed "For lease" for I'd say about the past 2 years now.

The owners are very wealthy, continually raise rental prices, eventually
driving everybody out.

The problem is, they never intend to sell.

I witnessed an old bank building sit vacant for literally 20 years before they
found a new tenant who was willing to renovate and start paying. Somebody was
paying the property taxes on it the entire time, and they weren't even
actively marketing it's lease as much as they could have been.

Another old store went under about 2 years ago, and it has been empty ever
since with a for-lease sign on it. Nobody has entertained the new lease, but
the owners refuse to lower the price or sell the property.

In fact, I have never in the life of me seen a for sale sign on any of the
downtown retail properties. It just doesn't happen.

Old money can be one hell of a burden on old communities, it would seem.

~~~
x0x0
If you called with a serious offer, do you think you would be turned down?

Though I guess stuff like this happens even in sf. Que Tal -- a coffee shop in
mission -- got kicked out by their landlord massively increasing rent in
August 13. I walked past their old location a month ago and it was still
empty, and it didn't look like there was construction going on. So the
landlord has eaten 17+ months of rent so far.

~~~
GigabyteCoin
In the case of the beautiful old bank building that sat vacant for 20 years.
There wasn't even a number to call.

Everybody just walked past it for decades saying "I wonder what if anything
they'll ever do with that place?".

I'm assuming you had to know the "right people" to even get an appointment to
purchase or lease, but I'm not sure why.

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remarkEon
I grew up in Minneapolis and went to high school in downtown right off St.
Anthony. I haven't lived there since 2006, but have been peripherally aware of
the "revival" going on in Minneapolis and how it's been just a little bit
different than other types of urban gentrification you see in other cities
(like Seattle, where I'm living now). Minneapolis has always been a "friendly"
city, so to me it's no surprise that something like this has popped up. This
seems to be an investment instance where incentives are aligned in the right
ways - community buy-in is necessary for this to work.

 _The homeowners who are members know that the healthier the commercial
corridor is, the more their homes are worth._

Indeed, and I hope this continues. I spent a lot of my childhood driving to
rural Minnesota, Iowa, and South Dakota and doing those drives now can be
depressing. The failure of community banking has left the towns dotting the
212 between Minneapolis and Watertown destitute. Curious if there's any way to
adapt this model to rural areas that are faced with things like the forced-
consolidation of school districts, among other issues.

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ChuckMcM
I think this is really awesome. At the same time it illustrates the serious
impact that losing 'home town banks' has had on a lot of places.

~~~
eldavido
If banks are just capital aggregators, do you think another party could play
that role in the future? Like a mini-family office where 2-3 families get
together, put in 10-20k each to get enough equity, and invest in a portfolio
of assets?

Or am I just living in a bubble where people aren't in massive consumer debt
and have disposable income?

~~~
ChuckMcM
Capital aggregation isn't the only role of the bank but it is an essential
one. And certainly groups of people can provide that same service, at some
point though it might seem simpler to simply be a bank[1] :-) but putting that
aside it is almost exactly the VC model.

[1] I know that sounds ridiculous, because being a bank is anything but
simple, but back in the 90's I watched some investment "clubs" become large
enough to attract the attention of the SEC which then required a bunch of
legal work and various other financial regulation compliance issues until it
seemed like they had morphed into banks.

~~~
eldavido
Chuck as I'm sure you know, VC is just a subset of the larger world of private
equity in general.

What I'm wondering is why PE has traditionally been practiced only by high-net
worth households/institutions. I wonder what it would take to get a $50k
neighborhood investment club together. My father told me his father used to do
this with a few friends back in Illinois in the 50s and 60s, but it seems less
common now, maybe because more people have brokerage accounts and commissions
are lower? Hard to say. But I don't like how "professionalized" investment has
become, there's so much more to it than that, and I know for sure there's lots
of small-town restaurant/grocery store/real estate deals happening that are
small-scale and organized by a few friends.

~~~
ChuckMcM

       > why PE has traditionally been practiced only by 
       > high-net worth households/institutions. 
    

Short answer to your question is liability. If you can meet the requirements
of "qualified investor" then the club has no liability if you lose all your
money. They can say "Hey, before you invest you should know you might lose all
your money." and you say "Ok, here is $1,000". If you lose all their money,
even if you did stupid things with it, they are unable to sue you to recover
it[1]. Recent changes have made is possible for non-qualified investors to
participate but the rule making on that is incomplete (much to the irritation
of places like WeFunder no doubt).

So your Father might not do this with his friends, if they were not qualified
investors and he was, because if the friends lost money they might choose to
sue your Father to cover their losses and they would have a decent shot of
winning that case. At the very least it would cost your father a lot of time
and energy and probably wipe out any gains at all the project came up with, or
worse amplify any losses.

So to put together your $50k neighborhood investment club is simple if your
tolerance for risk is high, and harder if you don't want to be sued by the
other members. A simple partnership can often work (liability is spread around
to everyone) but consult competent legal counsel before proceeding. Investing
in real estate and then structuring it as a landlord deal gives you a level of
protection between the investment group and the tenants, that can be handy if
you get bad tenants.

[1] Caveat that anyone can sue anyone, and there are gross negligence issues
that have carve outs, but _generally_ it shields the partnership from
liability.

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spiritplumber
Brilliant! This is how you fight urban blight. Bottom up solutions may not
scale up well, but they are efficient and the only sort that makes sense at
this level.

~~~
taurath
Sometimes the goal is to scale at exactly the size of the group doing it, and
stay there. If everything is mass market then there's no individualism or
culture.

~~~
wozniacki

      If everything is mass market then there's no individualism
      or culture.
    

Would you expand on this? I'm interested in knowing how you mean this.

I ask in the context of the larger debate of who deems a commercial
establishment - a place of commerce - culturally relevant and which ones
culturally distracting.

Does the neighborhood take a poll on a NextDoor bulletin board as to whether
let a Wine bar set up shop, down the street but not a Gastropub, because you
know it attracts a culturally misfitting crowd? So the majority wins? As
simple as that?

Then what's stopping a billionaire buying up some four blocks and instilling
his own brand of culture, you know cigar shops, vintage firearms shops and a
boutique golf shop, through a bunch of proxies and trusts?

These are very valid questions that need answering if we want to meaningfully
advance the debate of who gets to manufacture "individualism" and what is
vended as "culture".

~~~
kristopolous
they are totally different. The workers having sovereignty over their own
business produces a dramatically different outcome than classical capitalism.

The constitution of a thing is partially dependent on the infrastructure
behind it.

For instance, I have a local grocer who owns the grocery shop. I have asked
the grocer to stock things I'd like to buy which aren't there. The grocer has
stocked them. I buy them so predictably that the grocer sets a quantity aside
for me individually.

These patently obvious social courtesies at a corporate level become policy
decisions with a marketing campaign. If some big chain did it, they'd give it
some stupid name like "YouChoose" and then have a jingle and some commercial
to go along with it. The idea of engaging with the customer in this way would
be commoditized an shoved down our throats.

If some entrepreneur thought of it, they'd turn it into some consumerist
share-style phone app backed by $10 million in VC capital.

The first one is totally different from the last two. It's not the same thing.
Quantifying a value is not the same as Qualifying an experience.

Starbucks has done this recently - trying to fight independent coffee shops,
not with hiring competent people and giving them liberty to make purchasing
decisions and take control of the means of producing coffee, no. They have
introduced a new machine called the "clover" that supposedly makes better
coffee. They are going up against local roasters and people trying to take
food service seriously with yet another shitty little product from corporate
america. big fucking whoopdie doo - that's all they do.

so when you have a distant billionaire try to come up with a new variation of
westfield and then structure it like a process based corporation, it simply
won't work.

people are sick of being characterized as consumers, the culture of
consumption, sick of being advertised to where everything becomes a product
with a sanitized, transactional exchange of goods and money, to go about some
soulless mechanized existence. Capitalism and community are enemies.

The classic structure of neo-liberal consumer capitalism is completely
incompatible with this movement - it's a fundamentally different constitution
of culture, control, and capital.

~~~
awerijfeorfae
And how was Burning Man this year?

~~~
kristopolous
Huh?

I am clean cut, drug free, and have a regular job.

Desiring a substantive community is becoming a mainstream thing - just like
community-based open source free software is now in use, well, everywhere.

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drpgq
You can do things other than just invest in regular stocks and mutual funds
with your RRSP? I've got to look into this.

~~~
khuey
In the US equivalent, the IRA, you have to be very careful with this. You're
not allowed to e.g. buy a blighted property with your IRA, fix it up with your
labor/materials purchased with money from outside the IRA, and then sell and
accrue the gains in the IRA. If you were it would effectively allow you to
circumvent the contribution limits.

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brudgers
Non-profit redevelopment corporations have long been a tool for urban
redevelopment. Often they are public-private partnerships, but often they are
independent.

~~~
jubjub
These businesses are not non-profits. That's a common misconception about
cooperatives.

------
aaron695
Although trolling the second comment in the article I think said a lot

"TL;DR: White folks stay winning."

This is not a sustainable model and I really don't get why people think
because a place once had people it always should have people.

Some people fear change I guess, things should stay the same as it has always
been within their life span, this realy isn't aimed at the poor who can't
afford to move.

~~~
remarkEon
I think this comment is ill-conceived. There is no reason this model is
exclusive to whites. Northeast Minneapolis in particular is considerably more
racially integrated than other satellite urban areas. Here's a great
visualization of this fact [1]. If you take a look, you'll notice that there
are areas of Minneapolis that are considerably less racially integrated than
others. In those cases, again, I do not see a reason why this model is
exclusive to whites.

[1]
[http://demographics.coopercenter.org/DotMap/index.html](http://demographics.coopercenter.org/DotMap/index.html)

~~~
aaron695
It's more around first world problems. This article is a rich person problem.
Only they are so arrogant they think the suburb should fit them. Poor people
just struggle.

The white bit is purely about dumb rich white people thinking the world is
about them because their hundreds of thousands dollar morgage weighs them
down.

The two billion on 2 dollars per day are mostly not white

~~~
ianstallings
So the moral of the story is stop trying to improve your neighborhood because
there are more important issues in someone else's life?

I've actually been poor in my life. Like on welfare government cheese
Appalachian coal-mining-town-went-busto poor. And for some reason, these
people improving their own neighborhood doesn't make me feel bad at all.

