We at Fortus are concerned with the important issues raised by a recent Bridge Magazine article about the University of Michigan’s $30 million investment in our real-estate company.
Detroit, as with other major cities, has suffered from widespread foreclosures causing people to lose their homes that may have been with their families for many years. We are also aware of predatory landlords who evict tenants unfairly and without care.
These issues, among others affecting our city, are tragedies we wish never occurred. Despite these unfortunate and prevalent issues, Fortus must respond to the incorrect statements and misrepresentations featured in the article.
We welcome this opportunity to briefly share our experiences investing, working, and moving from Los Angeles to this unique, historical city. For six years, Fortus has invested nearly $95 million in residential properties throughout Wayne County. We are proud to have raised $65 million of that capital from investors outside the state of Michigan that have never invested in the City of Detroit.
Our companies’ primary focus is increasing availability of affordable, quality housing for the city’s residents through direct rehabilitation of single-family homes and apartments. Fortus actively avoids acquiring occupied homes and purchasing properties from traditional sales. Only a small fraction of our Detroit acquisitions homes were purchased at the Wayne County tax auction, which sells tax foreclosed homes.
In fact, we have no plans on buying homes at the auction in the future, due to interior pre-inspection restrictions Wayne County places on bidders, which limits our ability to ensure homes are unoccupied. Additionally, once a bidder wins a property, it may take months for the county to send a deed— a lengthy duration barring us from securing the home properly and confirming property is unoccupied.
We did, however, buy some homes out of auction last year, and the Bridge Magazine article focused largely on one family whose home was served with a notice of eviction.
The home’s previous landlord stopped paying taxes but continued to collect rent after it fell to foreclosure. We attempted to reach the family for five months – during which time the city issued us fines for not securing properties – before serving the eviction. We are now working with them to move back to the soon-to-be-renovated property and become a tenant.
Fortus made every effort to ensure that homes were unoccupied before purchasing them at tax-auction, physically visiting each property before bidding on them. County rules, however, bar auction buyers from entering the homes before bidding.
Jordan Friedman and Corey Hanker are managing partners of Fortus
After the auction, we learned 26 of the homes we bought in Detroit were occupied, but only one had a previous landlord. The other occupants unlawfully moved into the homes after Fortus acquired the properties With each of these 25 occupants, Fortus worked diligently to contact and work out a favorable agreement. Most occupants refused to respond to our attempts.
We are honored to be a small part of the city’s rebirth and committed to the future work that lies ahead. It was with great care and thought that we made our first acquisitions in 2013 with our own capital. A large part of Fortus’ mission is to bring jobs and provide career opportunities for Detroiters and since then, we’ve hired locally to build a company currently employing over 30 local Detroiters and providing work for more than 300.
After working with multiple third-party property management companies, we realized the need to build our own and thus Hela Management was born. Property management is as rewarding as it is challenging -- our Hela team takes great care and strives to be better at every opportunity.
As difficult as it is to discuss, this city we call home has a property blight issue. The population of Detroit has shrunk dramatically over the last five decades and the result is thousands of abandoned, blighted homes. This issue affects all neighborhoods throughout Wayne County and causes harm in a myriad of ways; including neighborhood safety and decreased property values. At great expense and time, Fortus has restored hundreds of blighted homes with respect and care to the history of the properties and neighborhoods.
The company's long-term goal is to increase community home ownership by helping our tenants become homeowners. Our team educates tenants on how to improve their credit and secure home financing. On a larger scale, Fortus is working with local and national lenders to increase lending to our market.
It was disheartening after six years of dedicated work and commitment to the city to see our company’s work put in a negative light. Additionally, without speaking on behalf of the University of Michigan Endowment, it is our strong belief that the University of Michigan Endowment should be applauded for their investment in Detroit. The endowment has made a significant investment in the neighborhoods to improve the quality of housing. While many banks and large institutions are primarily focused on the downtown corridor, the U-M Endowment stood up and chose to invest directly in the neighborhoods. We are most fortunate to have their support and look forward to executing on our mission for years to come.