ST. PETERSBURG — It's an irresistible pitch for a sagging real estate market.
Earn a 12 percent return! Learn how at a seminar at the Vinoy Resort! Do it now!
But the full-page ad that promotes house flipper Joe Cavaleri in this month's issue of the Northeast Journal gets better.
None other than St. Petersburg Mayor Bill Foster is photographed under the banner "Take Action Today! Like My Investors Have."
"It's a great investment," Foster is quoted as saying. "Joe and his team are really making a difference. I'm very impressed."
Huh? Is Foster endorsing house flipping, a real estate practice that spawned a frenzy in speculation that helped collapse the economy in 2008?
Foster insists he is no fan of flipping and said he knew nothing of the ad in the neighborhood publication.
"I didn't authorize the use of my name for marketing purposes," Foster said. "There's no way in the world I would ask people to invest in a for-profit company."
Foster is not an investor in Cavaleri's company.
So what gives?
Cavaleri acknowledged that the ad's layout could give that impression.
"We didn't have anywhere else in the print ad to put him," Cavaleri said. "Maybe I should take out, 'like my investors have' before his name. Then that's okay. Do you see anything wrong with that?"
Well, there is the matter of Foster saying he didn't even endorse Cavaleri's company.
"We took what he said from the video," Cavaleri said. "You can go back and look and it's word for word. We didn't fudge anything."
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The video in question aired on WSPF, St. Petersburg's television channel. Shot in February, it was the brainchild of City Council member Karl Nurse.
Nurse has long been concerned with the Melrose Mercy neighborhood, an area awash in foreclosed and abandoned homes north of Lake Maggiore. Nurse has spent months trying to get the city's housing department to change its strategy in rehabbing homes. Rather than fix up and buy homes individually, Nurse advocates a block-by-block approach.
It was in this troubled part of his district that he met Cavaleri, who started a company in 2009 called Community Development Network of Pinellas. Cavaleri and other investors snatch up distressed properties, fix them up, and flip them for a profit.
"I hate to use the term 'flip,' " Cavaleri said. "It has a negative connotation."
Whatever the term, Nurse liked what Cavaleri did on Russell Street. Cavaleri bought two four-unit apartment buildings ridden with bullet holes and smashed glass. One building he bought last year for $10,000. After a $140,000 rehab, it's now under contract for $185,000, Cavaleri said.
Nurse thinks this is exactly what the city needs.
"This was a serious drug street," Nurse said. "And Joe had come in and did a first class rehab job. My interest was to encourage him to do more of that."
Nurse invited the city's TV station to give Cavaleri's work some free publicity. Foster tagged along.
The five-minute video shows off wooden kitchen cabinets and granite countertops, refinished bathrooms and new floor tile and windows. In the video, Nurse grips a city microphone and provides a ringing endorsement.
"We're looking forward to (Cavaleri) succeeding here and doing more work in the neighborhood," Nurse said.
Although Cavaleri said he objects to the term flipping, he uses the word in the video to describe what he did.
"The building behind me we purchased for $35,000, we rehabbed it, and we're getting ready to flip it back onto the market," Cavaleri says. "If you're an investor interested in buying in southern Pinellas county, you have to buy now. The deals, the banks, they're practically giving stuff away. So go ahead and invest. You won't be disappointed."
Foster appears in the video, but mostly as an observer. It's not until the end, when Foster sees the finished product, that he offers up what sounds like an endorsement.
"Wow," Foster said. "It's incredible. It's a great investment. Joe and his team have really put forth a tremendous effort to revitalize an area. . . . Joe and his team are making a difference. I'm very impressed."
The video is now on Cavaleri's website, under the heading: "Endorsment (sic) From The Mayor of St. Petersburg Bill Foster."
"The video is something that's very beneficial for my company," Cavaleri said. "I really take pride in what he said."
Foster said that's not what he intended. "I can only attest to the fact that they did beautiful work," he said. "But I would frown upon the fact that I didn't know my name was being used to seek investors."
Cavaleri's method of real estate investment is not how Foster hopes to improve the city's housing market.
"Flipping was not discussed," he said. "When you're looking for stability in the housing market, you're looking for long-term relationships."
• • •
Flipping will work this time, Cavaleri said. Banks aren't just lending to anyone, he said. Now they require things like down payments and steady income.
"They're not giving money away," he said. "That's the big difference."
Pinellas County property records show Cavaleri's real estate track record isn't the best.
Between 2006 and 2009, at least seven of his properties racked up dozens of code enforcement actions.
Asked about a few of them, like the $3,700 fine assessed on his 800 Grove St. N house in 2006, or the $2,800 fine filed on his 3219 18th St. N house that same year, Cavaleri said it wasn't all his fault.
"That was a long, long, long time ago," said Cavaleri, who lived in California at the time. He owned the properties with other investors, who later abandoned him.
"They left me high and dry."
He went bust. Again and again.
Between September 2007 and May 2009, nine of his homes were foreclosed, property records show.
"It was pretty embarrassing," Cavaleri said. "But it taught me a lot. If I didn't go through that, I wouldn't be able to do this now."
The main lesson: Use cash so banks can't foreclose.
Though he didn't know about the foreclosures or the code enforcement liens, Nurse said it didn't matter.
"Developers of all sizes crashed and burned in the bust," he said. "I saw the job he did on Russell Street. He's the real deal. He does good work."
As for the video, it continues to run on Cavaleri's website, with Foster and Nurse included.
"I'll take a look at this," Foster said. "If we have to take action, we will."
Times researcher Natalie Watson contributed to this report. Michael Van Sickler can be reached at (727) 893-8037 or [email protected]