Mystery Bidder Bids $3.2M for 6000 Detroit Homes • Hacker News Board

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#61

Post by deelowe » Fri, Oct 24, 2014, 5:40 PM UTC

seanmccann wrote: post #17

The 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.

I seriously doubt that's what's going on here. You can't really approach gentrification like that. You'd quickly run into issues with the local government and regulations.

My guess is that this is speculative property investment, likely as part of a private REIT/hedge fund. I bet the buyers plan to turn around and sell these off in small lots (usually 10 - 100 at a time) for a small profit.

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#62

Post by trhway » Fri, Oct 24, 2014, 5:41 PM UTC

>Everything is sold as is: The homes may lack furnaces or wiring and they may come with mold, tenants, or both.

mold or tenants, they don't make distinction between them...

Interesting that Detroit government still burdens these properties with extremely high taxes (thanks God and voters for prop 13 in CA :) even though the only service the Detroit government provides there is "foreclosure service".

What are the chances that a buyer of huge amount of parcels can separate that area from the city?

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#63

Post by talmand » Fri, Oct 24, 2014, 5:43 PM UTC

deelowe wrote: post #58

watty wrote: post #56

Earlier quoted context omitted.

Can you explain the "scam" part?

Evidently, speculation == scam now. Also, I'm one of those people who buy 1-5 properties from bigger investment firms. My return (with rentals) varies between 17-20%. So, no, I don't feel had.

Depends on how the speculation is defined for the investment. If the speculation is that one can buy low and sell high, then no problem. If the speculation is that one can buy low and convince others with falsehoods to buy high, then that's a problem.

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#64

Post by 650REDHAIR » Fri, Oct 24, 2014, 5:56 PM UTC

Detroit gets a bad rap.

I've traveled quite a bit from 18-24- going coast to coast by car at least a dozen times. I always avoided Detroit because of the bad press it gets. This year Apigee hosted #apicraft in Detroit and it was AWESOME. I fell in love with the city. The outskirts are still rough, but Midtown to downtown was really, really good. The "opportunity Detroit" slogan everywhere paired with the local's can-do attitude makes me want to invest more time and energy into the city.

I can't wait to go back!

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#65

Post by mynegation » Fri, Oct 24, 2014, 5:58 PM UTC

freehunter wrote: post #47

abbottry wrote: post #41

Earlier quoted context omitted.

Property taxes in Detroit are surprisingly expensive.

When you look at it, they have a massive amount of infrastructure for a huge city that lost of a lot of taxable individuals in a relatively quick timeframe. Unless they can move everyone to a more densely populated area of the city and shut down the infrastructure, they have to bear the cost of being a huge city without the tax base of a huge city. That's why tax is so expensive. Well, that and massive corruption.

I wonder if anyone in Detroit calculated pros and cons of "defragmentation": moving people to several designated areas and shutting down infrastructure in vacated blocks. I understand that US is not North Korea and it is easier said than done, but still would be an interesting calculation.

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#66

Post by maxerickson » Fri, Oct 24, 2014, 5:58 PM UTC

trhway wrote: post #62

>Everything is sold as is: The homes may lack furnaces or wiring and they may come with mold, tenants, or both. mold or tenants, they don't make distinction between them... Interesting that Detroit government still burdens these properties with extremely high taxes (thanks God and voters for prop 13 in CA :) even though the only service the Detroit government provides there is "foreclosure service". What are the chan…

If I understand correctly, the voters of Detroit would get to decide about creating the separate area (I'm guessing it would require amending the city charter).

I don't find it all that likely that such a thing would happen, but who knows.

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#67

Post by danielweber » Fri, Oct 24, 2014, 6:03 PM UTC

mynegation wrote: post #65

freehunter wrote: post #47

Earlier quoted context omitted.

When you look at it, they have a massive amount of infrastructure for a huge city that lost of a lot of taxable individuals in a relatively quick timeframe. Unless they can move everyone to a more densely populated area of the city and shut down the infrastructure, they have to bear the cost of being a huge city without the tax base of a huge city. That's why tax is so expensive. Well, that and massive corruption.

I wonder if anyone in Detroit calculated pros and cons of "defragmentation": moving people to several designated areas and shutting down infrastructure in vacated blocks. I understand that US is not North Korea and it is easier said than done, but still would be an interesting calculation.

The people that have stuck around thus far tend to be really attached to their current location. If you get them to up and move, they might as easily move to another city (maybe where their kids are) then to the new district.

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#68

Post by jmspring » Fri, Oct 24, 2014, 6:05 PM UTC

trhway wrote: post #62

>Everything is sold as is: The homes may lack furnaces or wiring and they may come with mold, tenants, or both. mold or tenants, they don't make distinction between them... Interesting that Detroit government still burdens these properties with extremely high taxes (thanks God and voters for prop 13 in CA :) even though the only service the Detroit government provides there is "foreclosure service". What are the chan…

Thank god for Prop 13?

Oh jeez. You mean the fact that businesses can sit on commercial properties for more than either of our life times and not pay much more in taxes?

Or the part where a family with a bunch of kids pays less in local property taxes, yet uses public resources more than a single individual who bought their house 5-10 years later?

The idea of Prop 13 has merit, but the disparity it has raised and the hole this state has been dug into, not so much.

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#69

Post by sedachv » Fri, Oct 24, 2014, 6:12 PM UTC

deelowe wrote: post #58

watty wrote: post #56

Earlier quoted context omitted.

Can you explain the "scam" part?

Evidently, speculation == scam now. Also, I'm one of those people who buy 1-5 properties from bigger investment firms. My return (with rentals) varies between 17-20%. So, no, I don't feel had.

Where in the country are you that you're realizing those kinds of profits?

Re: Mystery Bidder Bids $3.2M for 6000 Detroit Homes

#70

Post by therobot24 » Fri, Oct 24, 2014, 6:12 PM UTC

IkmoIkmo wrote: post #38

therobot24 wrote: post #4

Land grab? Maybe. But at least someone is buying the property. The prices are very low for a reason, very little demand. I believe a renovation plan needs to be in place within 6 months of purchase. I very much doubt it'll happen for all 6000 homes, but will probably happen for at least some portion of them. I really hope the city doesn't twiddle its thumbs following up on these.

True, sort of. But the contrary point is that they want to discourage e.g. people from New York buying some home for $10k out of pocket, not doing anything with it and hoping to flip it in 20 years, as in any big city a plot like that alone is worth $50-60k. Demand is great, but you really want to get people to actually live there, too. Haven't heard of any requirements for a plan, can you elaborate? Afaik, you own t…

I'll have to find it a bit later, but i remember reading when Duggan announced the auctions that a plan for remodeling/renovation/etc needs to be set within 6 months. The idea being that you can waive back taxes if you plan on actually doing something with the property other than letting it sit, however I can't remember if it only applied to planned occupancy or across the board...