Patrice didn’t join her. Thinking of Sherrena, she said, “She wouldn’t survive a day in our house.”
11.
THE ’HOOD IS GOOD
As her plane touched down, Sherrena looked out the window and sighed. That morning, she and Quentin had been in Jamaica. Milwaukee looked chilly and damp, like a left-out dishrag. Sherrena switched her phone back on and saw that she had forty voice messages.
Jamaica had been amazing. Sherrena and Quentin took long walks on warm, white beaches, chartered a glass-bottom boat, and zipped around the Caribbean on Jet Skis. Quentin bought a walking stick and had it engraved. Sherrena got her hair done in two thick braids that met in the back. They had stayed for eight days.
Sherrena and Quentin always planned their vacations so that they were back before the first of the month, when their days went long with eviction notices to pass out, new moves to manage, and rents to collect. Because most of their tenants didn’t have bank accounts, collecting rent was a face-to-face affair.
A few of Sherrena’s voice messages were from Tabatha, a social worker who made weekly visits to the Hinkstons’ house. When Sherrena returned her call, Tabatha cited the plumbing situation at Eighteenth and Wright and tried to advocate for some repairs. Not long after Doreen paid a plumber herself, the pipes backed up again. Sherrena was not hearing it. “I can’t believe that you are on my phone complaining to me about the sink being stopped up when they’re the ones doing it!” Sherrena said. “They pull hinges off doors…have clothes piled to the ceiling. The whiff of shit hits you in the face when you open the door….I cannot believe that your organization is allowing her to have a house that looks like that.”
Then Tabatha made a mistake, telling Sherrena that Doreen was looking for another place. Sherrena got off the phone and headed for the courthouse. If Doreen was withholding rent so the family could move, Sherrena would call her bluff. Sherrena paid the fee and scheduled a court date, giving Doreen an open eviction on CCAP. Now moving would be much harder. If the Hinkstons were going to go, Sherrena decided, they would go on her terms.
After Quentin delivered the pink papers, Doreen called Sherrena to clear things up. “We do need a bigger place,” she said. “Natasha fittin’ to have a baby, and we can’t be stacked up in here like this. But I didn’t mean immediately. I can’t see myself trying to move in the middle of the winter….She be delivering sometime in May. Maybe then we can try to find something bigger.”
Sherrena told Doreen she wasn’t calling off the eviction.
“I got you,” Doreen said. “I got your money.”
But Sherrena refused to accept it, citing the stress the family was putting on her unit. “What if the state come up in there?” she asked. “Then they shutting my place down, and we all gonna be in trouble….I can’t have all those people living in my apartment like that. Too much wear and tear.” All Doreen could do was pray that Sherrena would change her mind before they met in eviction court.
—
On the first of the month, Sherrena and Quentin flirted and giggled as they drove from one property to the next. They had brought some of Jamaica back with them. Their skin was sun-kissed and their spirits were buoyed. They caught Ricky One Leg outside, waiting for UPS to deliver a computer for his daughter.
“A computer?” Sherrena asked when Quentin climbed back in the Suburban.
“Yeah.” Quentin smiled.
“See. See! He got money for a new computer but not for the rent. That’s okay. ’Cause I got ’em. The rent’s going up.” Sherrena paused for effect. “Inflation!”1
Laughter filled the Suburban as it pulled onto the street. Quentin’s seat was leaned so far back he was resting more on his hip than his rump. Air fresheners swayed from his rearview mirror and a large speaker in the back thumped bass whenever one of them was not on the phone, which was almost never.
As night fell, Quentin took a call from a rooming-house tenant, touching his Bluetooth earpiece. When the call ended, he said, “They money burning a hole in they pockets. You know, they got habits.”
Quentin parked in front of the rooming house and went through a small ritual. He tucked his chains into his shirt, removed his pinky ring, and slid a sweatband over his thick bracelet. He had learned that “some people think you’re out to take their rent money to buy, you know, fancy things.” A tenant had recently pointed to Quentin’s bling and said, “You just want to collect my rent to live your own life.” When he relayed this story to Sherrena, she shrugged and said, “How else we supposed to do it?” To live, she meant.
The rooming-house tenants had smoked something but had not yet run through the rent money. The place was filled with music, laughter, and that carefreeness the benefits of the first of the month bring and the bills of the fifth of the month shoo away. The only tenant who appeared sober was an old man who had just moved in. He sat on his bed, shirt buttoned to the top. “Coming at night, huh?” he asked with a Mississippi drawl.
“When do you want to pay your rent?” Quentin replied.
“I’m ready. Always owing something.”
Up walked another tenant with glazed-over eyes. “Hey, nigga!” he addressed Quentin, holding an unlit cigarette and leaning on the wall for support. “I, I be at the bar, man. They be fucking with me, man!”
“Straight up?” Quentin asked, sliding the old man’s money in his pocket and heading for the door.
Back in the Suburban, Quentin presented Sherrena with a wad of cash. She had to admit it: “Those crackheads pay the rent!” They laughed.
It was almost nine p.m. when Sherrena asked Quentin to drive to the home of a new prospective tenant. Ladona invited Sherrena in and introduced her eight-year-old son, Nathaniel. A working single mother, Ladona was eager to move. “They shoot in broad daylight, right in the middle of the block,” she said. “We got a hidin’ place upstairs. And I’m getting tired of running up there.”
“They need to get the National Guard up in here,” Sherrena replied.
“Something. I’m leaving.” Then Ladona handed Sherrena $500. “I want that house, and I’m not playin’ with you. So Friday I’ll give you another hundred. And then the following Friday, another hundred. And then the following week, another one seventy-five.”
Sherrena climbed back in the Suburban, which Quentin had kept running. “She’s crazy about that house.” Then she went on: “There are so many rent-assistance people that have been calling me. You wouldn’t believe it.”
“Ah, they been calling me too,” Quentin said.
“For single families?”
“For anything.”
Ladona had a housing voucher. Sherrena and Quentin didn’t accept rent assistance in most of their properties because they didn’t want to deal with the program’s picky inspectors. “Rent assistance is a pain in the ass,” Sherrena said. Voucher holders made up a small share of the market anyway—only 6 percent of renter households in the city—and were not worth the headache. (The “SSI people,” on the other hand, “now, that is an untapped market,” Sherrena thought.)
But Sherrena had recently purchased the house that Ladona coveted, a two-story gem, and she was pretty sure it would pass inspection. If it did, the payout could be significant. With a housing voucher, Ladona would pay a small portion of the rent—30 percent of her income—and taxpayers would pick up the rest. Sherrena’s rent would be virtually guaranteed. It would also be above market rate.
For each metropolitan area, the Department of Housing and Urban Development sets a Fair Market Rent (FMR): the most a landlord could charge a family in possession of a federal housing voucher.2 FMRs were calculated at the municipal level, which often included near and outlying suburbs. This meant that both distressed and exclusive neighborhoods were thrown into the equation. New York City’s FMR calculation included SoHo and the South Bronx. Chicago’s included the Gold Coast and the South Side ghetto. This was by design, so that a family could take their voucher and find housing in safe and prosperous areas
in the city or its surrounding suburbs. But the program did not bring about large gains in racial or economic integration. Voucher holders more or less stayed put, upgrading to slightly nicer trailer parks or moving to quieter ghetto streets. It could, however, bring about large gains for landlords.3
Because rents were higher in the suburbs than in the inner city, the FMR exceeded market rent in disadvantaged neighborhoods. When voucher holders lived in those neighborhoods, landlords could charge them more than what the apartment would fetch on the private market. In 2009, the year Ladona was hoping to move into Sherrena’s new property, the FMR for a four-bedroom unit in Milwaukee County was $1,089. But the average four-bedroom apartment in the city rented for much less: $665.4 When landlords were allowed to charge more, they did. Although Sherrena didn’t think the Housing Authority would approve the maximum amount, she was planning on charging Ladona $775 a month, $100 more than the average rent for similar units but still well below the FMR limit. Ladona didn’t mind. With a voucher, what she paid was a function of her income, not Sherrena’s rent.5 Her rental expense wasn’t affected; the taxpayers’ bill was.
In Milwaukee, renters with housing vouchers were charged an average of $55 more each month, compared to unassisted renters who lived in similar apartments in similar neighborhoods. Overcharging voucher holders cost taxpayers an additional $3.6 million each year in Milwaukee alone—the equivalent of supplying 588 more needy families with housing assistance.6
The idea of a “rent certificate program” was first proposed in the 1930s, not by some Washington bureaucrat or tenants’ union representative but by the National Association of Real Estate Boards.7 That group would later change its name to the National Association of Realtors and become the largest trade association for real estate agents, with more than a million members. A rent certificate program would be superior to public housing, they argued. Landlords and Realtors saw government-built and -managed buildings offered at cut-rate rents as a direct threat to their legitimacy and bottom line.8 At first, federal policymakers disagreed and at midcentury decided to fund the construction of massive public housing complexes. But real estate interests kept lobbying for vouchers and were joined by numerous other groups of various political persuasions, including civil rights activists who thought vouchers would advance racial integration.9 Eventually, after America’s public housing experiment was defunded and declared a failure (in that order), they would have their day. As housing projects were demolished, the voucher program grew into the nation’s largest housing subsidy program for low-income families. In policy circles, vouchers were known as a “public-private partnership.” In real estate circles, they were known as “a win.”
—
Sherrena bought the house she was going to rent to Ladona a few weeks before flying to Jamaica. It was a large, late colonial–style home with a round turret and generous porch. Someone had recently painted it black and white. The roof was new and so was the water heater and so were the wood-framed windows. The front door opened into a living room with a vaulted ceiling and an intricate mosaic fireplace. There was one bedroom downstairs and three upstairs, which you reached by mounting a long, bending staircase. Thick carpet lined the upstairs bedrooms, two of which, judging from the paint, used to belong to children. The house was in such fine shape that the inspector told Sherrena that he wanted to move in himself.
The black-and-white house was on a quiet street in the inner city. Sherrena judged the block stable “because it’s been vacant one whole year and not one fucking window is broken” and because “the people lock it down. If you come over [to the house], they out on their porch like, ‘Can I help you?’ They have their eyes on the street.” Sherrena’s new pride and joy had cost her $16,900. She paid cash for it. She had purchased properties for less—$8,000, $5,000—but none were as stunning as this one. A few days before Ladona was scheduled to move in, Sherrena stopped by the house to check on the repairs. She walked through its rooms and smiled in disbelief. When the feeling welled up, she did a little dance.
Since the foreclosure crisis, Sherrena had been buying properties throughout the North Side at a rate of about one a month.10 In some cities, as many as 1 in 2 foreclosures was renter-occupied. The crisis had provided landlords an almost magical opportunity. “This moment right now,” Sherrena reflected, “it’s going to create a lot of millionaires. You know, if you have money right now, you can profit from other people’s failures….I’m catching the properties. I’m catching ’em.”
“If you have money right now”—that was the rub. The mortgage sector had shriveled up during the financial downturn: in 2007 alone, the number of loan organizations fell by 25 percent.11 Fearing insolvency, banks still in operation turned into miserly lenders, instituting stricter lending standards, requiring pristine credit, and demanding large down payments. “If you want a loan this year,” the Washington Post reported, “you’re going to have to pay more—thousands of dollars more in some cases.”12 Landlords, naturally, were more succinct. “Banks went from stupid to stupid,” their assessment went, meaning that banks had spun an about-face, going from being reckless to overly cautious. That was too bad for real estate investors not flush with cash because there were deals to be had: gorgeous, unprecedented deals. Rents had soared during the run-up to the crisis, in large part because the housing boom and aggressive property flipping left landlords with bloated mortgage payments and higher tax bills. After the crash, property values fell (and with them mortgage and tax bills)—but rents remained high. In January 2009, the Free Foreclosure List distributed to Milwaukee real estate investors displayed around 1,400 properties, each listing for “$30,000 or more below assessed value.” The properties were ordered from least to most expensive, beginning with a two-bedroom unit listed at $2,750. Ten properties down, there was a three-bedroom going for $8,900. Ten more down: a four-bedroom for $11,900.13
If Sherrena couldn’t buy a property outright, she financed the purchase in a number of ways. She took out conventional or even adjustable-rate mortgages. When she saw a deal but didn’t have the down payment, Sherrena sought out “OPM” (“other people’s money”) or “hard money”: shorthand for rich white guys from Brookfield or Shorewood who offered high-interest loans that didn’t require any money down but instead placed a lien on the property. Sherrena put it this way: “Usually the banks say, ‘We want twenty percent down.’ Here’s this private money guy saying, ‘Hey, I’ll give it to you, but your interest rate is going to be twelve percent, and you have to give me this money back within six months or a year.’ ” If Sherrena defaulted, she would lose the house to the private lender.
The same thing that made homeownership a bad investment in poor, black neighborhoods—depressed property values—made landlording there a potentially lucrative one. Property values for similar homes were double or triple in white, middle-class sections of the city; but rents in those neighborhoods were not. A landlord might have been able to fetch $750 for a two-bedroom unit in the suburb of Wauwatosa and only $550 for a similar unit in Milwaukee’s poverty-stricken 53206 zip code. But the Wauwatosa property would have come with a much higher mortgage payment and tax bill, not to mention higher standards for the condition of the unit. When it came to return on investment, it was hard to beat owning property in the inner city. “You buy on the North Side because they ‘cash flow’ nicely,” said one landlord with 114 central-city units. “In Brookfield, I lost money. But if you do low-income, you get a steady monthly income. You don’t buy properties for their appreciative value. You’re not in it for the future but for now.”
Sherrena looked for properties that would give her a cash flow of at least $500 a month, after expenses. The house Ladona would rent easily cleared that bar. Sherrena owned it free and clear, the repairs only set her back $1,500, and the monthly rent would be $775. If the house inspired Sherrena to dance, it was because she knew she would recoup her total investment in about two years. She was used to this rate of return. Shortly aft
er buying the black-and-white house, she bought a duplex off Keefe Avenue for $8,500, repairing it for $3,000. It would take only eight months to make that money back. After that, “it just cashed out.”
Sherrena estimated her net worth at around $2 million, but equity was icing on the cake. The real money was made in rents. Every month Sherrena collected roughly $20,000 in rent. Her monthly mortgage bills rounded out to $8,500. After paying the water bill, Sherrena—who owned three dozen inner-city units, all filled with tenants around or below the poverty line—figured she netted roughly $10,000 a month, more than what Arleen, Lamar, and many of her other tenants took home in a year. As Sherrena liked to put it: “The ’hood is good. There’s a lot of money there.”
—
Quentin pulled the truck onto a dark and deserted street. There was one more stop to make: Terri on Cherry Street. This was Sherrena’s most far-flung property, located on the West Side of Milwaukee, near Washington Park and a fifteen-minute walk to the colossal Miller Brewery. Sherrena pounded on Terri’s door, loud the first time and even louder the second. The porch light flicked on and shone down on Sherrena. She was in the fur-lined Coach boots with matching purse she had bought in Jamaica.
“Who’s that?” a gruff voice barked.
“It’s the landlord.”
“Oh,” the voice said, resigned.
“That’s right,” Sherrena whispered to herself as the locks came undone.
Inside, the house was warm and smelled of dinner fried in grease. A single, small lamp was on, stingy with its light and leaving parts of the room veiled in shadow. Sherrena found Terri in the company of some elderly kin and older children. Terri was a plump and pretty woman, with dark skin, long braids, and an empty stare. She was mentally slow and received SSI for her condition. Her boyfriend, who had answered the door—Antoine, a bony man with slicked-back hair—leaned against the wall, just beyond the edge of the light.
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