The face of free market 'affordable housing'

Looks a lot like Ronnie Bourgeois

Ronnie Bourgeois doesn’t just understand what “affordable housing” means on Cape Cod. He owns it, manages it, and as the biggest private player in the space you might say he defines it.

Ronnie wouldn’t agree with that last part; the economy defines what it means to be affordable, he’d say. But no disagreement that he lives, understands, and works this edge of the market with the dogged, pragmatic approach of someone who is self-made and guided by what the numbers say, versus going by anything nostalgic or romantic. And he has plenty to show for it:

He owns 198 units mostly in Hyannis, Yarmouth, and Dennis. He manages another 120 properties for other landlords all over the Cape under his umbrella, Bass River Properties.

“These are not ‘A’ properties,” he allows. “They’re ‘B’ and ‘C’ properties.” A studio might go for $1000 a month. One bedroom -- $1200 to $1400, maybe $1600. Two bedroom -- $1500 to $1800, maybe $2000. Three bedroom -- $1750 and up.

Half of them are “Section 8,” meaning the federal government supports and guarantees rent. Ronnie figures there are about 2800 Section 8 units on Cape Cod. His books show that he has placed between 1700 and 1800 of them. He says he has played a role in nine percent of all multi-family units sold on the Cape since 2003.

This little empire didn’t just happen. Bourgeois started moving real estate in New Bedford when he was 18 years old; he’s 56. He “lost” his first five properties there and came to the Cape in 1994, rented an office where he kept a pillow in a filing cabinet drawer because he was sleeping there too. He bought his first duplex in 1998, keeping focused on the bottom of the market, selling, buying, managing – hustling. He has survived divorce and downturns, and now he can say that every property he owns cash flows positive; a handsome renovated home on Route 6A in Yarmouthport offers proof of income.

So who are Ronnie’s tenants?

“A lot of immigrants,” he says. “Jamaicans, Brazilians, Ecuadoreans. I love them, they have an amazing work ethic just to get to this country, and it’s the same once they’re here.” They’re restaurant workers, contractors, housepainters and cleaners. There also are people with disabilities on Section 8. About half of the total are single tenants, a quarter couples, another quarter bigger groups and families. He prefers the ones and twos -- less noise, less hassle, less wear and tear.

Many of them “are spending 40 to 50 percent of their income on rent.” That’s a fact he shares with some amazement but no apology. The evening before our meeting he showed one of his newly vacant apartments in Sandwich; three showings at 3:40 pm, five showings at 4 pm, another five at 4:20. One bedroom cottage, nice little place, $1350 a month plus utilities. One of the possible tenants was trying to talk him down to more like $1200, “she was seeing me as the big greedy landlord,” but he wasn’t budging and does not feel she was right nor should he wax guilty about charging what the market bears.

For his own units he takes first and last months’ rent upfront, but for properties he manages it’s first and last plus a month security. That alone can knock a lot of people out of the market.

Paying that kind of rent month after month looks a lot like paying a real mortgage, only you don’t wind up owning anything, you build no equity. Ronnie knows that full well:

“Whenever I see someone who has their act together, I say, ‘Do you know what you can buy for this?’” He whips out his calculator and runs payments on a 30-year mortgage to see what the $1350 rent in Sandwich would get; a $320,000 loan is the ballpark. But with insurance, taxes, maybe condo fees, you’d have to bump that to more like $1800. For a $400,000 loan, call it $2000. You get some income tax breaks, so that’s good. “I say to people, ‘If you have two or three years of decent employment, you should be buying.’”

But with inventory miniscule, and prices driven out of sight even at the bottom of the market, that’s way easier said than done. Ronnie doesn’t believe anyone should expect him to charge less than supply and demand justifies. Neither does he see any way demand will drop, barring catastrophe. So really there’s only one way to go: Increase supply.

Is there any place on Cape Cod where there might be opportunity to create enough affordable housing to make a real difference? My mind goes to one long ribbon: The Route 28 corridor, especially the mid-Cape section, with so many low-slung, aging motels and other funky commercial entities ripe for redevelopment and resurrection, allowing for an emphasis on affordable housing and mixed uses including adding second stories to storefronts.

Ronnie sees it too, as have other developers. A handful of Route 28 motels have been demolished and/or converted; Captain Gladcliff, the Cavalier, to name just two. Zoning challenges are daunting; town planning boards might be sympathetic but they’re never quick, easy or cheap to deal with, let alone the regulatory overlay of the Cape Cod Commission. Ronnie had hoped to turn a rundown motel in West Yarmouth into 22 housing units but he couldn’t make the numbers work given the town’s requirements and process.

Ronnie Bourgeois didn’t get where he is by giving up. He’s got a new project: He just bought a property on Route 28 in West Dennis, home to 13 office condos. If the puzzle pieces fit, his hope is to turn it into 24 small apartments, six of them deed restricted for qualified affordable housing. It was $750,000 to buy, he’d put in another $1,000,000 to renovate. But if it works, he’d have a valuable new asset that would cash flow for sure, create another small addition to the low-end housing supply – and expand his empire yet again.

If there’s any way the free market can deal with this crisis, and that’s very big if, it’ll be guys like Ronnie Bourgeois who do it.

NEXT: WHAT DO CEZANNE, PICASSO, CAPE COD (AND ME?) HAVE IN COMMON? YOU’LL SEE.