Smells like an investment banking scheme to me. "Buy When There's Blood In The Streets"
Mystery Bidder Bids $3.2M for 6000 Detroit Homes
21–30 of 105 posts
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#22It's only possible to have a "mystery bidder" because real estate is exempt from money laundering regulations. I'd bet 2:1 it's shadily acquired money from overseas looking to be stashed out of the reach of local anti-corruption agencies.
You also need to sink another ~$24 million into the property to demolish the houses, and if you don't make sufficient progress it will be repossessed. That's gonna be a bunch of jobs, so I'm not sure Detroit would care.
I also would think that you would probably want to have more liquid property, or at least something that might possibly generate some marginal income.
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#23The value of one single house is basically negative because of the bad neighborhood, bad surrounding homes, high crime, etc. By buying a larger number of contiguous homes, you can greatly reduce those problems. Sounds like a fantastic idea.
There is some contiguousness but they are mostly spread all over the city. Take a look at the red properties on this map (zoomable):
https://whydontweownthis.com/2014/mi/wayne/detroit#15/42.347...
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#24It's only possible to have a "mystery bidder" because real estate is exempt from money laundering regulations. I'd bet 2:1 it's shadily acquired money from overseas looking to be stashed out of the reach of local anti-corruption agencies.
You also need to sink another ~$24 million into the property to demolish the houses, and if you don't make sufficient progress it will be repossessed. That's gonna be a bunch of jobs, so I'm not sure Detroit would care. I also would think that you would probably want to have more liquid property, or at least something that might possibly generate some marginal income.
It can't be "repossessed" if you own it. (And it wouldn't be repossessed anyway since the bank probably doesn't want it back :p)
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#25Sounds like a possible Dan Gilbert project. Context: http://www.forbes.com/sites/joannmuller/2014/09/29/gilbertvi...
Very doubtful. Gilbert has only bought skyscrapers in the downtown area. He bought the buildings for what it would cost to rent that much space for a year in Manhattan. Lately Gilbert has been outbid at auction by Chinese investors so he's exhibited financial discipline.
This mystery bidder is paying $500 per house and it would cost ten times that much on the low side to tear down the house. Somebody needs a large chunk of land and for some reason wants it in that specific area. Maybe Piston's owner, Tom Gores, is planning a downtown stadium?
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#26So, things like this always interest me, maybe it's long term living in a similar city or just idealism. Anyways, I've always wondered when these places will get so cheap, and so readily available that a single, long term interest, entity will buy a large portion of a major city. At some point, even with the tenants, tear downs, clean up, and taxes, land with that amount of infrastructure around it has to bottom out…
Clear development land in Wayne county is selling for $25,000 an acre (and more, I looked a bit for large lots, which should at least somewhat mitigate location).
At those rates, you could maybe expect a nice return with a simple tear down and wait strategy.
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#27The value of one single house is basically negative because of the bad neighborhood, bad surrounding homes, high crime, etc. By buying a larger number of contiguous homes, you can greatly reduce those problems. Sounds like a fantastic idea.
There is some contiguousness but they are mostly spread all over the city. Take a look at the red properties on this map (zoomable): https://whydontweownthis.com/2014/mi/wayne/detroit#15/42.347...
"but they are mostly spread all over the city"
6000 homes spread out also means you can also create a mini company town by essentially luring people (for a new company) to the city and giving them a choice of different properties, renovated and ready to go with efficiencies gained by having so many to deal with. (Similar to when, say, Levittown was built (all in one area of course but same concept with construction).
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#28I wonder what the property taxes, per year, will be on the 6000 parcels.
And, since many cities allow you to challenge the stated value, it could be very expensive, in time, to challenge 6000 parcel values.
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#29Earlier quoted context omitted.
I was under the impression that most US houses in that price range will be cheapish wood and drywall? Not sure you'd get much reclaimed lumber worth anything out of there. Still - innovative idea.
These are older houses, most of them likely made from much better materials. Still, with the kind of weathering an empty house would get in Michigan, a lot of it could be totally ruined.
> most of them likely made from much better materials.
Unfortunately lots of lead paint as well. It is still a very real issue.
Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes
#30Earlier quoted context omitted.
There is some contiguousness but they are mostly spread all over the city. Take a look at the red properties on this map (zoomable): https://whydontweownthis.com/2014/mi/wayne/detroit#15/42.347...
"but they are mostly spread all over the city" 6000 homes spread out also means you can also create a mini company town by essentially luring people (for a new company) to the city and giving them a choice of different properties, renovated and ready to go with efficiencies gained by having so many to deal with. (Similar to when, say, Levittown was built (all in one area of course but same concept with construction).
This was my idea as well. I also wondered if the owner of the land would attempt to join adjacent lots to create larger plots of land - which could then be drawn together further.
I'm not a city planner and am not very well versed in municipal zoning laws in Detroit so I wonder if its even a possibility.