These Old Houses
The Inner City 100
Rego Realty brings dilapidated buildings back to life -- and livelihood
The first thing Jose Reategui did when he bought 50 Allen Place, a brick apartment building in Hartford, was chase out the drug dealers. That accomplished, the CEO of $2.9-million Rego Realty Corp. (#9) prepared to paint over graffiti, seal holes where the plasterboard had been kicked in, and repair broken windows. But one problem remained: the derelict building across the street. "Forty-five Allen Place was bringing us down," says Reategui. So he did what any savvy urban developer would do: he bought the offending property.
In just six years Rego's inner-city holdings have grown from a single five-family dwelling generating $30,000 to 32 residential buildings comprising 300 apartments and generating $1.5 million in rentals. The 29-employee company recently moved to larger offices, and Reategui has added a construction arm to rehab Rego's buildings.
Reategui credits his success to large investments in renovation and prompt customer service regarding maintenance problems. "The key to renting an apartment is to show it as if you could live there," says Reategui, who does, in fact, reside near the homes he markets.
As a community insider, Reategui gets the early skinny on available properties. Local brokers seek him out. Neighborhood meetings keep him on top of city-development plans. And the CEO looks for buildings with liens, not just by checking public records but also by scanning the streets for boarded-up buildings that might be delinquent in taxes. When he finds one, he pays what's owed (way below market cost) and adds the address to his management rolls. "We buy a building in bad shape, we fix it, we rent it, and as soon as we rent it, we get a permanent mortgage," he says.
Reategui admits that the urban real estate market is not one big unstoppered fount of opportunity. At one time about 15% of his revenues went to evicting people and repairing vandalized apartments. "When I had 150 apartments, I was in housing court a lot," says Reategui, who's learned to carefully screen prospective tenants. Getting property insurance is another challenge. Reategui has to pay more than landlords in other locations because big insurance companies are reluctant to cover inner-city apartments. "How can I turn around the area if they won't insure me?" he asks.
Yet Reategui is turning around the area -- and doing well for himself in the process. "Here you can buy cheap, and then you can make good money through rental income. We don't complain," he says.
Thea Singer is an associate editor at Inc.
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