When four friends moved to Detroit as 2012 Venture for America fellows, they never thought they'd buy a house and spend a year fixing it up. The VFA program, which is the entrepreneurial equivalent of Teach for America, places college graduates with startups. The friends—Tim Dingman, Sean Jackson, Scott Lowe, and Max Nussenbaum—thought they'd be spending the year downtown, not shoveling masonry in a quiet residential neighborhood.
"We did the project kind of on a whim and it's been much bigger than we expected," Nussenbaum, 24, says. "I entered the area offhandedly, and now I'm dedicated to it. It's funny how things turn out."
The friends first saw the place with a flashlight late at night. Jackson was renting in the area, and knew it was empty. So, all four broke in through a window to take look. There was no other way of viewing it. The house was being sold at tax auction, which means buyers don't usually get to see the property before purchasing.
"It was totally, totally destroyed," Nussenbaum says. "It had been abandoned for three years, and there was a lot of half-hearted restoration where people had tried to do things as cheaply as possible."
They organized a $10,000 crowd-funding campaign and secured some money through a VFA competition. But funding the rest of the project has been difficult. They were declined for a government-backed home improvement loan, and no bank would touch them because the house was essentially worthless.
Eventually, they got a loan from private investors who could see an obvious income to pay the principal: other VFA fellows coming through Detroit. "Projections for the rental income made an appealing investment," says Nussenbaum. "The biggest problem for landlords is bad tenants. With the VFA fellows, we've basically got pre-vetted tenants coming to the city every year, who want to find a place to live with other people from the program."
The friends plan to start living in the seven-bedroom house soon (when the heating comes on) together with four roommates. Most of the second floor will be a co-working space, where the partners plan to grow a separate house-management start-up called Castle. Another entrepreneur will base his chickpea pasta business—Banza—at the house.
"I think what we're doing is really aligned with VFA's mission, because it's a nice mix of entrepreneurialism and social benefit," Nussenbaum says. "It's not charity by any means. But, at the same time, we're contributing to a neighborhood and becoming part of a community in a way people don't if they live in a high-rise."
Nussenbaum insists the investment (now totally $190,000) isn't a flip, though there's no telling where the fellows, who are all in their early-twenties, may end up.
"I'm 24. Picturing where I'll be in six months from now is impossible, let alone in 10 years. But the great thing is we can still run this as a community space for VFA fellows, even without personally living here."