BY GRETA GUEST • FREE PRESS BUSINESS WRITER • March 23, 2008
Ever wonder what happens to those half-done subdivisions?
Sometimes, the owners walk away, leaving the whole neighborhood in the hands of a bank that doesn't really want it.
That's when companies like Pinnacle Homes of Farmington Hills and Livonia Builders in Livonia enter the picture.
Pinnacle, a homebuilding firm run by a former Pulte executive, has picked up four projects throughout metro Detroit after workout deals with banks.
The projects are unfinished subdivisions in Lyon Township, Commerce Township, Lake Orion and Novi.
Howard Fingeroot, managing partner of Pinnacle Homes and the former president of Pulte Land Development Co., said the projects are the result of many contacts to banks.
"We started looking in 2006 because it became evident when the market turned down that the banks would be saddled with a number of properties that they would have to take back," he said.
Fingeroot said some of the projects were purchased from the banks. In other deals, Pinnacle agreed to finish building the homes and handling marketing and sales for the banks.
Kirkway Estates in Lyon Township is one such project. In a venture with AmTrust Bank of Cleveland, Pinnacle will finish building 85 homes in the 100-lot development for a fee and the bank retains ownership. The homes will range from 2,800 to 3,400 square feet and will list around $330,000, Fingeroot said.
Pinnacle is providing the same service for Comerica Bank at the Hills of Oxford in Lake Orion, a 200-home subdivision with 150 homes left to build.
Pinnacle purchased the Novi project from Citizens Bank and changed its name to Bella Terra. There were 67 fully developed lots with plans for homes ranging from 2,800 to 3,800 square feet. The company has not started building there yet.
And at Greenbriar, a 102-unit duplex development in Commerce Township, Pinnacle purchased the project from Comerica Bank. Fingeroot said he plans to convert 50 of the duplexes to single-family homes to reposition it in the market. The properties are to start at 1,900 square feet and $200,000.
"We were fortunate that when the downturn took place, we weren't strapped with a lot of inventory at high prices," Fingeroot said. "You can't make money in times like these. The best you can do is position yourself for the market to improve."
He did not disclose the purchase prices for the projects.
Danny Veri, partner in Livonia Builders of Livonia, also saw the market bust coming and was prepared for it. Now he's buying unfinished projects and building homes to sell.
He's recently bought four projects and is negotiating on a fifth.
"Housing was so good for so long that some people never thought it would end. Being that I am a second-generation builder, I saw what my parents went through in the late '70s and '80s, and it put a caution into what we were doing," Veri said.
Plans scaled back
Generally when a second builder comes in to finish a project, the houses get smaller and sell for less.
Veri said that was the case at Covington Estates in Westland. About 21 homes were completed out of 57 when the building stopped. Two years went by before Livonia Builders purchased the project last January. By July, the rest of the homes were up and selling.
These were single-family homes from 1,600 to 1,800 square feet selling for $169,900 to $200,000. When the homes were first selling with the original builder, prices were starting at $275,000, Veri said.
"Initially, residents were displeased. But those homes that they had were much bigger than the ones we were building," he said. "At the speed that we got in and out of there, they were very happy. What was an abandoned subdivision where there was construction debris, is now finished."
He said he brought the scope and prices of the homes down because that's what is selling now.
Livonia Builders also purchased projects at Newberry Estates in Westland, Brookfield Estates in Westland and Cherry Hill Village in Canton. It is negotiating to buy Forester Square in Auburn Hills, where there are 47 unfinished lots.
Michelle Grant, a homeowner in Kirkway Estates in Lyon Township, is looking forward to having Pinnacle come in and fill out her neighborhood.
Grant was one of the first three buyers in the subdivision of upscale homes in August 2006. She paid in the mid-$500,000 range for her 3,200-square-foot colonial and had three neighbors before work halted. The new homes are to start at $330,000.
"It's a beautiful neighborhood and house. We are about three and a half miles from downtown Northville," Grant said. "We thought this is really going to take off. Then, of course, things started to deteriorate."
The undeveloped lots have taken on a sort of prairie look, she said.
"Pinnacle is coming in, and we have high hopes for that. We want to maintain the integrity of the neighborhood because that's all we have in terms of resale," she said.
"Our biggest concern was that a builder would come in and build much lesser homes. It's not what we really bought into, but life does go on and you have to keep hopeful," Grant said.
Ever wonder what happens to those half-done subdivisions?
Sometimes, the owners walk away, leaving the whole neighborhood in the hands of a bank that doesn't really want it.
That's when companies like Pinnacle Homes of Farmington Hills and Livonia Builders in Livonia enter the picture.
Pinnacle, a homebuilding firm run by a former Pulte executive, has picked up four projects throughout metro Detroit after workout deals with banks.
The projects are unfinished subdivisions in Lyon Township, Commerce Township, Lake Orion and Novi.
Howard Fingeroot, managing partner of Pinnacle Homes and the former president of Pulte Land Development Co., said the projects are the result of many contacts to banks.
"We started looking in 2006 because it became evident when the market turned down that the banks would be saddled with a number of properties that they would have to take back," he said.
Fingeroot said some of the projects were purchased from the banks. In other deals, Pinnacle agreed to finish building the homes and handling marketing and sales for the banks.
Kirkway Estates in Lyon Township is one such project. In a venture with AmTrust Bank of Cleveland, Pinnacle will finish building 85 homes in the 100-lot development for a fee and the bank retains ownership. The homes will range from 2,800 to 3,400 square feet and will list around $330,000, Fingeroot said.
Pinnacle is providing the same service for Comerica Bank at the Hills of Oxford in Lake Orion, a 200-home subdivision with 150 homes left to build.
Pinnacle purchased the Novi project from Citizens Bank and changed its name to Bella Terra. There were 67 fully developed lots with plans for homes ranging from 2,800 to 3,800 square feet. The company has not started building there yet.
And at Greenbriar, a 102-unit duplex development in Commerce Township, Pinnacle purchased the project from Comerica Bank. Fingeroot said he plans to convert 50 of the duplexes to single-family homes to reposition it in the market. The properties are to start at 1,900 square feet and $200,000.
"We were fortunate that when the downturn took place, we weren't strapped with a lot of inventory at high prices," Fingeroot said. "You can't make money in times like these. The best you can do is position yourself for the market to improve."
He did not disclose the purchase prices for the projects.
Danny Veri, partner in Livonia Builders of Livonia, also saw the market bust coming and was prepared for it. Now he's buying unfinished projects and building homes to sell.
He's recently bought four projects and is negotiating on a fifth.
"Housing was so good for so long that some people never thought it would end. Being that I am a second-generation builder, I saw what my parents went through in the late '70s and '80s, and it put a caution into what we were doing," Veri said.
Plans scaled back
Generally when a second builder comes in to finish a project, the houses get smaller and sell for less.
Veri said that was the case at Covington Estates in Westland. About 21 homes were completed out of 57 when the building stopped. Two years went by before Livonia Builders purchased the project last January. By July, the rest of the homes were up and selling.
These were single-family homes from 1,600 to 1,800 square feet selling for $169,900 to $200,000. When the homes were first selling with the original builder, prices were starting at $275,000, Veri said.
"Initially, residents were displeased. But those homes that they had were much bigger than the ones we were building," he said. "At the speed that we got in and out of there, they were very happy. What was an abandoned subdivision where there was construction debris, is now finished."
He said he brought the scope and prices of the homes down because that's what is selling now.
Livonia Builders also purchased projects at Newberry Estates in Westland, Brookfield Estates in Westland and Cherry Hill Village in Canton. It is negotiating to buy Forester Square in Auburn Hills, where there are 47 unfinished lots.
Michelle Grant, a homeowner in Kirkway Estates in Lyon Township, is looking forward to having Pinnacle come in and fill out her neighborhood.
Grant was one of the first three buyers in the subdivision of upscale homes in August 2006. She paid in the mid-$500,000 range for her 3,200-square-foot colonial and had three neighbors before work halted. The new homes are to start at $330,000.
"It's a beautiful neighborhood and house. We are about three and a half miles from downtown Northville," Grant said. "We thought this is really going to take off. Then, of course, things started to deteriorate."
The undeveloped lots have taken on a sort of prairie look, she said.
"Pinnacle is coming in, and we have high hopes for that. We want to maintain the integrity of the neighborhood because that's all we have in terms of resale," she said.
"Our biggest concern was that a builder would come in and build much lesser homes. It's not what we really bought into, but life does go on and you have to keep hopeful," Grant said.
