Philly real estate program hits $50 million in loans

After creating a curriculum, Weinstein started hosting training sessions for people interested in renovating residential properties in Germantown, a mixed-income community with its fair share of blight. Initially, each session had 10 slots. Weinstein now teaches 50 people at a time and the program has gone citywide.

“I originally thought, ‘Let’s try this unique idea and see how far we go and maybe it fails after a year due to lack of interest. But it’s amazing how many people in the Germantown area and around Philadelphia still have not applied and we’re getting applications literally every day for our training program,” said Weinstein.

The goal of the program is to help new developers create affordable housing in middle neighborhoods. These are neighborhoods with reasonably priced real estate that are neither rapidly gentrifying nor “grappling” with concentrated poverty, according to the Reinvestment Fund. The majority of Philadelphians live in these communities.

“The idea is if we can help folks improve their own community and at the same time build wealth locally, then we have found a way to improve neighborhoods while keeping gentrification at bay,” said Weinstein.

More than half of each Jumpstart class has no experience with real estate development. The rest have completed no more than five projects before signing up.

The $125 program includes 16 hours of instruction that teach participants the basics of real estate development, including how to source a property, find financing, develop a design, and procure permits, among other topics. The program also provides mentoring and help securing acquisition and construction loans with below-market interest rates. The Reinvest Fund, LISC Philadelphia, JP Morgan and TriState Capital Bank have all contributed to the program to make those loans possible.

Graduates, who must put up some of their own money, use the loans to buy and renovate single-family homes to sell or rent. Under the program, the expectation is that each project will take 12 months to complete. Borrowers don’t have to start repaying the loan until construction is finished.

The average Jumpstart loan is $122,000, and there are limits on how much the properties developed through the program can be sold or rented for. The hope is that participants can turn a “decent” profit, said Weinstein, but the loans are not designed to be used in neighborhoods with hot real estate markets like Fishtown or Northern Liberties.