Adam Noel and Tom Anderton have purchased and renovated seven historic, multifamily buildings near Boston Edison in eight years.
Their development company, Timeless Properties Detroit, bought the buildings when they were either vacant or in serious disrepair. Over the years, Noel and Anderton have been able to keep the costs of redevelopment in check, which has meant they can keep rents at those buildings below average.
Construction costs and rents got out of hand since the start of the COVID-19 pandemic. The cost of lumber in Michigan alone increased 178% from 2020 to 2022. But Noel and Anderton have managed to keep both these costs down primarily, Noel says, by acting as general contractors and property managers at all their projects.
“You have to live it,” Noel says. “Nobody’s gonna work as hard for you as you work for you.”
Noel lived in one of his buildings for several years and was on call for repairs before they hired full-time maintenance staff.
“You don’t want to be 1,000 miles away when something happens,” Noel said. “You want to be nearby, you want to be able to see your project, you want to be able to talk to your contractors.”
Another key to their success, they think, is having their buildings close together. All are within several blocks near the Lodge Freeway and Glynn Court. Each successful renovation raises property values for the rest. It’s a strategy other developers have used with some success in other areas of the city.
They say they’ve also gotten lucky.
Noel, 39, is originally from metro Detroit but moved away for college and work. He said he saved up some money while working as a marketing consultant in Denver before moving to Detroit in 2014 and rehabbing a home in Boston Edison. But he and Anderton, who have been friends since they were 5 years old, didn’t have the $400,000 they needed to buy their first investment property with cash. They also couldn’t get a loan.
“Banks weren’t going to loan hundreds of thousands of dollars to a couple of 30-year-olds with no real estate experience,” he said. “Especially back in 2015.”
Fortunately, the owner of that first property, now called the Henley, agreed to finance the deal. Noel and Anderton said the owner gave them a $300,000 loan, and the partners had to make a $100,000 down payment. That property was in decent shape, and Noel and Anderton only spent an additional $70,000 on renovations.
They bought their second property from the same owner who again helped with financing. Once they started renting the units and the property values increased, they could finally get a traditional mortgage from a bank for future projects.
Noel and Anderton use a kind of real estate investment strategy often called the “BRRRR method,” which stands for “buy, rehab, rent, refinance, repeat.”
“We have, from the very beginning, been taking every little bit that we make and reinvesting and plowing it into the next thing,” he said.
Here’s how it works. Their buildings appreciate in value once they rehab and rent them out. Noel and Anderton will then take out a bigger mortgage and use that money to pay off the smaller mortgage. Whatever is left they’ll use towards buying another building. Repeat.
Noel says they were “overwhelmingly lucky” to be able to work with an owner that could help with financing on their first couple of deals. They might never have been able to get off the ground without it.
Their two most recent purchases — multifamily buildings in the same neighborhood — got help from the Detroit Housing for the Future Fund, a private investment fund created by the city and run by Detroit LISC. Timeless has reserved all 50 units at the two buildings for households making between 50% to 80% of the area median income for the next 13 years. Noel and Anderton have taken out more than $4 million in loans from the fund.
Rental rates at these two latest projects aren’t much different from those at their other rentals. Most of the 225 units across all their buildings from studios to three-bedroom apartments rent for between $700 to $1,250, according to prices listed on Timeless’ website.
“We’re not downtown or in New Center, we’re in a neighborhood,” Noel said. “We don’t have the luxury of walkability that some other places do. Would we like to charge more? Sure. But we’re not there yet, and we don’t have the luxury to let apartments sit open.”
For Noel and Anderton rehabbing old buildings instead of building new ones has been cost-effective.
That’s not always the case with older buildings. The buildings they’ve bought are all around 100 years old, and in some cases like the Art Deco-styled Glynn Court, quite impressively detailed. However, they’re not in a neighborhood with a historic designation that requires more expensive renovations to maintain the buildings’ character or materials.
The buildings they’ve acquired, while often needing major repairs, have had solid bones.
“The building’s already there. It’s connected to the sewer and water,” Noel said. “So we can value-engineer what’s essentially a brand new building for a lot less than what other people are doing.”
“You don’t want to be 1,000 miles away when something happens. You want to be nearby, you want to be able to see your project, you want to be able to talk to your contractors.”
Adam Noel, one of the founders of Timeless Properties Detroit
For example, the Archdiocese of Detroit and MHT Housing are constructing the mixed-use Cathedral Arts Apartments down the street with 53 units of affordable housing at a cost of $19.7 million, or more than $371,000 per unit. Timeless’ latest building created 28 units of housing at a cost of $3.19 million or around $114,000 per unit. It’s not a perfect comparison — the Cathedral Arts building will have 6,000 square feet of commercial and programming space — but the cost difference is significant.
Noel and Anderton’s experience might make developing historic buildings sound fairly straightforward, but they’ve had to learn some hard lessons about development. Contractors split on them, taking tens of thousands of dollars. Noel said the pandemic “crushed” them as dozens of tenants couldn’t or wouldn’t pay rent, and getting renters to fill out paperwork for emergency rental assistance was inconsistent.
Right now, they say they’re barely making a profit. They’ve had to completely renovate some units recently, leaving them at 90% occupancy. Noel says it’s enough to just pay their bills.
Despite the challenges and the work, Noel and Anderton love their business and are excited about the future. That includes their latest project, an old 41,000-square-foot former office building at Hamilton Avenue and Glynn Court the partners will turn into a mixed-use building with around 50 apartments and ground-floor retail. Noel says there might be a coffee shop, a small grocery store or a daycare. They hope to finish the project late next year.