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Mystery Bidder Bids $3.2M for 6000 Detroit Homes

businessweek.com

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

#3

Post by drcode »

Pretty easy to see how this'll turn out: Some moderatley rich person with access to a 10% down payment of 3.2M is taking a gamble and is in way over their head...

Just wait, within a year they will lose ownership of all these properties in bankruptcy and they'll be back in the hands of the city.

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

#4

Post by therobot24 »

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.

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

#5

Post by valarauca1 »

There is a huge market for international property speculation especially with American property.

The owner will likely sell each house for a tidy profit (to another investor), the new owner of only 1-5 houses will turn around and try to sell those back to Americans, realize s/he got had.

TL;DR international property scam

References

http://www.nuwireinvestor.com/articles/waterfront-properties...

http://www.crainsdetroit.com/article/2013102/NEWS/310209983/

http://michiganradio.org/post/no-chinese-investors-arent-buy...

P.S.: If the parcels are located semi-close to the new arena complex it maybe a serious investment, but I doubt it.

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

#6

Post by atwebb »

So, 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 right? Back of the napkin stuff and some assumptions:

6000 parcels (so assuming separate pieces of land)

average of .25 acres a piece (sourced from no where except where the dots lie on the maps in relation to sizes I'm used to seeing and accounting for some larger properties)

Gives you 1500 acres, or ~2.3 sq miles. That's in a city that's total 138 sq miles.

Again, assuming the article figures are accurate it will cost ~27M total to buy and deal with those 6,000 properties. So for 27M dollars you can own about 1.7% of the entirety of a major metropolitan city. That's 1500 acres. It's not the most desirable, it's surely a pain, you may be able to recoup some cost on some properties or by selling scraps, it may cost $50M in total, who knows. I just think it's interesting you can by one very large house on the coast, or 1500 acres in a still major, and formerly powerhouse, city.

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

#7

Post by DanBlake »

drcode wrote: post #3

Pretty easy to see how this'll turn out: Some moderatley rich person with access to a 10% down payment of 3.2M is taking a gamble and is in way over their head... Just wait, within a year they will lose ownership of all these properties in bankruptcy and they'll be back in the hands of the city.

Loans dont work that way in 2014. There is no bank in their right mind who would grant a loan to buy this, even at 90% down. The 2007/8 crash changed how banks and loans operate.

If anyone lent any money, it would be private investment- But those guys generally dont fuck around for sub 10mm deal size.

This is one dude using his own/biz's money/

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

#9

Post by waterlesscloud »

Half the homes need to be torn down, and 2000 lots are already empty.

So it's just 1000 actual homes that may be re-inhabited, and 5000 empty or soon empty lots.

That could be pretty tough to deal with, whatever your plan. Probably not dense enough without re-building to avoid the blight returning again. All those empty lots would hurt. So some huge money will have to be poured into it to accomplish much.

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