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Little Rock Developers Find Niche in Historic Properties

6 min read

When Jill Judy and Mark Brown moved to Little Rock from Florida in 2006, they planned to retire with rental properties, but when the housing market crashed a few years later, they realized they needed a new strategy. What started as rehabbing a few historic homes quickly became “addictive” and things moved quickly from there.

The husband-and-wife co-owners of Downtown Dwellings, Little Rock based property development and management company, are building an empire downtown, where they have renovated more than 60 properties and manage around 273 apartment units.

They started with buying and rehabbing historic single-family homes, and then, in 2013, bought their first commercial apartment building, the Lofts at SoMa, then Eastside Lofts, which had been foreclosed on by Bank of America.

Jill Judy and Mark Brown

Downtown Dwellings apartments are pieces of Arkansas history. The Lofts at SoMa are a prime example: built in 1904, the building was Little Rock High School from 1905-27, replaced by Central High School, then Eastside Junior High from 1927-64. It then housed the district’s Adult Education Department from 1965-76. In 2002, the 65,000-SF building was turned into the loft apartments Judy and Brown saw potential in.

The lofts are just one of the many historic properties the couple owns. Their portfolio contains Victorian-style mansions that house two to eight apartments, low-rise brick apartment buildings and even more historic properties like the Kramer School, built in 1895, and even the previous Greek Orthodox Church on Center Street, built in the late 1800s. Judy and Brown have since sold the church, but still manage the Kramer School.

Some other notable buildings: The Thurston House, a victorian built around 1900, The Johnson House, an American four square also built about 1900, both on the National Register of Historic Places, and Trapnall Place Apartments, a two-building property built in the 1920s.

While Brown has taken a step back from day-to-day operations, he’s still fully involved in major decisions. And Judy has no plans to slow down.

Downtown Dwellings recent projects include overhauling Cromwell Court, a 12-building, 46-unit project off East Seventh Street. Half of the buildings were renovated and the other half built in the 1970s. Another recent project is the renovation of their Lofts at SoMa property, where they’ve been restoring brick and adding storm windows to every window on the building.

Additionally, they’re adding solar panels to their properties, with installations already on the roofs of Lofts at SoMa and their Kramer School property. The company also plans to install electric charging stations for any tenant who has an electric vehicle, a service Judy said has has been growing.

Preserving history

Their focus is almost completely on restoring historic properties downtown, something Judy is passionate about.

“When you’re preserving older buildings, you’re preserving your town’s cultural history. When you get rid of the original schoolhouse and go and put in a gas station or something, does anyone even remember that aspect of Little Rock’s history anymore?” Judy said. “If you look at MacArthur Park and the Governor’s Mansion district, it was a different time; it tells us a lot about who we were and what Little Rock was. And how special is that? It really is preserving your culture.”

One thing that certainly helps is historic tax credits the city awards for keeping original features of the properties. Judy works closely with Preserve Arkansas, a North Little Rock-based nonprofit focused on preserving historic sites, and prioritizes restoration in her projects.

“It is a balance and our balance has changed over the years. We have found that most humans love the idea of living in a historic structure, but need and demand modern conveniences,” Judy explained. “We have the luxury because we work for ourselves and tax credits allow us a little buffer to make it as nice as we know how to. If you’re rehabbing things for profit motive only, you don’t do that. You just don’t.”

Judy said that while it does cost a lot more upfront to restore historic properties, tax credits help them maintain momentum. When they finish a project and receive the transferable credits from the state, they sell them and use the money as a down payment for the next property.

And other than tax credits, they don’t take public funds for any of their work.

“It’s a lot more expensive to rehab a historic home rather than do new construction because you have to fix everything, and go under crawl spaces and nothing is new, so it takes a lot more effort,” Judy said. “It’s been shown through lots of studies that tax credits really revived downtowns because downtowns tend to be historic, so they need the work. It is a lot upfront, but tax credits make it make sense.”

A lot of standards have to be met to receive the credits, so they don’t come easily. Downtown Dwellings also has to implement a two-hour fire rating system, which almost always means adding a new layer of sheetrock. Other challenges include dated systems like plumbing, air conditioning and electric, maintaining historic integrity and stringent rules on what they can do per property.

Judy added it is also a challenge to figure out what to save and what not to save.

“I love to say we take a 100-year-old building and prepare it for the next hundred years, and we are afraid to sell properties because we’ve put so much of our heart and soul in it. It’s not only saving the properties, but it’s also community redevelopment.”

Doing things differently

With new construction arriving, there would seem to be more competition in the downtown market. But Judy isn’t worried.

She explained that while the upfront cost of their work is higher than newer builds, the upkeep is actually comparable to newer construction, because their buildings are like new when they’re complete. But they have to do it correctly and not cut corners, which means accepting a “very expensive” rehab.

One bonus, Judy said, is the distinctive architecture of the properties, which sets them apart from modern structures.

“All of our properties are historically unique because in the 18 and 1900s, there was a greater emphasis in doing structures that would last for a generation or two and were more aesthetically different,” Judy said.

While Downtown Dwellings does mostly focus on historic buildings, they’ve recently invested in newer properties.

They bought South Village at SoMa, a new development finished in 2015 and the Rainwater Building, which although built in 1914, was renovated within the last 10 years. Rainwater is the most they have ever paid per apartment, Judy said, but they had a “real love” for the building.

They also recently bought a brick and mortar office space for themselves, the original home of Park Hill Cleaners built in the 1980s, along with the dilapidated quadplex next door built in 1920, but they still exclusively work residential.

“We don’t do office rentals at all,” Judy said. “We’re scaredy-cats, we stick with what we know.”

A hesitancy that has paid off, Judy said, with more people working from home.

Like any other developer, Judy and her team have faced supply chain issues and rising costs of materials. When it comes to paying higher prices, “you just do it,” Judy said. “We are not unique,” she said, adding that having a good relationship with their bank has helped them continue their trajectory.

Another thing she believes helps set them apart is their management style. Judy describes herself as a “hands-on” property manager and says Downtown Dwellings is run differently than most other companies. They don’t manage anything other than what they own and Judy won’t rent anything she wouldn’t live in.

Downtown Dwellings has six employees who directly report to Judy every morning.

“Usually what happens is a property owner will hire a property management company. Property managers often make a lot of their money through late fees. We don’t do late fees,” Judy said. “It’s in our best interest to keep our properties in great shape. If someone has a leak under their sink, I want to hear about it, because I’ll get it fixed. So that’s a real difference.”

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