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Strip mall to offer low-income investment opportunity

John Sepulvado Oct 14, 2015

Strip mall to offer low-income investment opportunity

John Sepulvado Oct 14, 2015

Dawn Luethe says she’d love to be an investor, but she doesn’t have the money or the assets. A few years ago, the Portland, Oregon, resident threw out her back working on an ambulance. Since then, her house was foreclosed on, her credit’s gone downhill and she’s working at an apartment building in exchange for housing. Still, Luethe has seen a couple of investment advisers to try and plot a financial comeback.  

“You know, they say ‘Yeah, $5,000, $10,000 to invest,’” Luethe said. “I don’t have that kind of money.”

John Haines is hoping a strip mall in East Portland will make it easier for Luethe and other people who are asset poor who live in her neighborhood to invest. Haines is the executive director of the humanitarian nonprofit Mercy Corps Northwest, and the driving force behind Plaza 122. It’s a three-sided strip mall with a parking lot in the middle.

According to a 2010 Urban Institute report, 20 percent of Americans have become asset poor since the recession. That means if you took all their property, savings, and investments and added them up, the total would be less than $6,000. 

While passersby might just see an Allstate, hair salon and chimney repair at Plaza 122, Haines sees a potential game changer to alleviate poverty.

“This, in my mind, is where Marx meets Milton Friedman,” Haines said. “It’s making the markets work for everybody.”

That’s because Haines is offering people who live in this economically challenged area of Portland a chance to own their piece of the strip mall. Mercy Corps Northwest bought the strip mall for $1.2 million, and set up areal estate investment trust. Haines wants to make that complicated financial tool available to those in asset poverty.

He said it would work like this: Investors would take a financial class, then put in $10, $20 or $100 a month. Time goes by. Appreciation goes up, strip mall tenants pay their rent, and if a profit is made, investors get a dividend.

While it’s small money in investment circles, Haines said it could be a big deal for people seeking financial security. Reed College professor of economics Noelwah Netusil agreed, saying that for these investors, $10 a month can be a significant amount.

“Do they break that cycle of poverty? What benefits do we see to their children, and grandchildren?” Netusil asked. “And so it’s a longterm investment in helping people get on to a better trajectory.”

Netusil also said it’s not quite Marxist. After all, she points out, “there’s no guarantee of a return.” So will people actually buy into it? Apartment manager Dawn Luethe said she would.

“I love the idea on people who, like me, are not in a position to go out and put money in places to invest,” Luethe said.

Luethe said she’s going to take the financial class and invest $10-a-month, and she’s going to tell her neighbors to do the same thing.

That’s exactly what Haines wants to hear. He said if it works in Portland, he’ll take the model nationwide.

Correction: An earlier version of this story misspelled Dawn Luethe and Mercy Corps Northwest, and misidentified the Urban Institute. The text has been corrected.

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