Detroit Housing Auction

[amandamechele]

Hi Everyone,

I am a long time reader, first time poster.  I have just been soaking it all in, up until this point.

This morning, in one of the major newspapers in my area, there was an article about buying a home in Detroit for just $1000. This peaked my interest and so I followed the link to the below website.

http://buildingdetroit.org/Home

The city is auctioning off empty houses with a starting bid of just $1000. There are a few attached rules, such as having to fix it up within 6 months . Today's house sold for $35,500.

Here is who can bid:

"You must be a Michigan resident, a non-Michigan resident who will live in the property after rehab, or a company or organization authorized to do business in Michigan.
You cannot have lost property to back taxes in Wayne County in the last three years.
You cannot have material unresolved blight or code violations in the City of Detroit.
Any bidder who misrepresents himself on these qualifications is subject to loss of payments and/or property.
In addition, the Detroit Land Bank reserves the right to exclude bidders with a history of delinquent taxes or code violations."


This seems like a great way to own a home outright for far less money. And, if you are already FI, lack of employment in the area will not be an issue.
I am not a US resident, so I don't qualify, but I thought I'd share with others here who may be.

Anyone care to weigh in?

[SDREMNGR]

Looks like market prices.  Not as good a bargain as at tax sales.

[Gen Y Finance Journey]

From what I understand, those houses need a lot of work to get them up to code, and even then they won't be worth much. Maybe if you firmly believe that Detroit will make a huge comeback and housing prices will shoot up dramatically it could be a good investment, but it seems overly risky to me.

[Eric]

And, if you are already FI, lack of employment in the area will not be an issue.

Even if you need a job, lack of employment will not be an issue.  You'll probably be murdered for your shoes before the month is up.  There's a reason that they're practically giving away these houses.  No one would live in these neighborhoods voluntarily if they had any other choice.

[brewer12345]

Bring your Kevlar pants and a 12 gauge if you choose to try this:

http://www.bloomberg.com/news/2013-08-21/abandoned-dogs-roam-detroit-in-packs-as-humans-dwindle.html

[arebelspy]

Stay away from Detroit City, IMO.

I invest and own homes outside the city (north of it).  I wouldn't touch something (similar to what was linked) in Detroit proper if you PAID me $1000 to take it.

[workathomedad]

Take the others advice.. some things are *very* expensive even when they look "cheap."

[TreeTired]

There was a good article somewhere (Marketwatch?)  making the case that these homes were NOT a good deal.   All of the constraints put on the buyer are a problem.   All of them need major repairs/components, which is a problem.   Perhaps the biggest problem is that the city does not adjust property taxes to reflect the new price/value, so your property taxes will be ridiculously high after you buy the house. 

[imustachemystash]

I just looked at the link you posted and it made me sad.  Those homes have a lot of character and style. What a shame they are being wasted, and I can't help but think of the families that occupied them in better days. 

[Argyle]

And note that when you look at the inside photos, many of the houses have bars on the windows.  That's how safe the neighborhood is.  Very sad.

[MayDay]

I just looked at the link you posted and it made me sad.  Those homes have a lot of character and style. What a shame they are being wasted, and I can't help but think of the families that occupied them in better days.

That was my thought.  Most of them are beautiful, and just the perfect size for a family.  I wish my town had had growth during the decades those houses were built! 

[iris lily]

I live in a gentrified neighborhood where, when we first moved in 25 years ago, 1/3 of the houses were boarded up on my block. You could get a house on my block, a "desirable" neighborhood for those with adventure in their souls for $5,000. But you can't assume that it is habitable, none of them were, including our house when we first bought it. No working plumbing or electric. No central heat system. old windows. and etc.

In less desirable neighborhoods, today in my city, you can get the same deal, house structures for $1,000. It's still a hard sell because only the adventuresome move there. And you have to have cash because loans are nearly impossible to get.

Or else you could buy a habitable house for $20,000 where systems work (although not well.) But what's the attraction of that? Those neighborhoods are pure crap, why live in places like that?

That said, there are some awesomely gorgeous houses in Detroit city, just don't expect to ever get your money out of it.

[freeazabird]

arebelspy can you expound on why you wouldn't invest in Detroit?

[amandamechele]

I was also struck by the beauty of these old homes but wondered about the safety of the neighborhoods. I googled around a bit, but nothing beats actually being familiar with a neighborhood.

Thanks to everyone for their thoughts. I like to think that I am adventurous enough to consider creative solutions to reaching FI more quickly, but it isn't just me who would be affected. And, maybe, this just isn't the right solution to consider.
 
Where I live (in the Greater Toronto Area) home prices are exceptionally high. And though I wouldn't call my mortgage debt crushing, it does feel like a very deep hole some days.

[arebelspy]

arebelspy can you expound on why you wouldn't invest in Detroit?

Safety.  Management.  Bankrupt city.  No city services.  Lack of tenant quality.

But mainly that first one.

There are lots of decent places to invest there, some within a few miles.  Just not south of 8 mile.

[kkbmustang]

So, so sad.

[SDREMNGR]

There are lots of decent places to invest there, some within a few miles.  Just not south of 8 mile.

I learned that from Eminem.

[arebelspy]

There are lots of decent places to invest there, some within a few miles.  Just not south of 8 mile.

I learned that from Eminem.

Some of his advice you gotta watch out for though.

I lost myself in the music the other day.

Took me hours to get out.

[Cheddar Stacker]

There are lots of decent places to invest there, some within a few miles.  Just not south of 8 mile.

I learned that from Eminem.

Some of his advice you gotta watch out for though.

I lost myself in the music the other day.

Took me hours to get out.

You forgot to "own it" "don't ever let it go"

I went to Detroit once. ONCE. 15+ years ago, and I didn't think much of it then. Somehow I don't think it's improved much. However, I know a few people who live there and they say it's making a very, very strong comeback. Time will tell.

[Albert]

Would Detroit be the largest bankrupt, semi abandoned city in the developed world? At least I can't think of any other place even remotely close. It's a sad story of mismanagement, racial issues, changes in economy and neglect from the government. I wonder if it will ever recover to the extent that people want to move there (like NYC)...

[iris lily]

Would Detroit be the largest bankrupt, semi abandoned city in the developed world? At least I can't think of any other place even remotely close. It's a sad story of mismanagement, racial issues, changes in economy and neglect from the government. I wonder if it will ever recover to the extent that people want to move there (like NYC)...

North St. Louis has blocks and blocks that look like Detroit. The website Vanishing St. Louis documents that:

http://vanishingstl.blogspot.com/

I have to wonder about those who can't visualize why these houses are not a good buy. Perhaps you all live in Europe where real estate is hardly ever a down market? But downtrodden urban America is not a place to live. I will walk some of these place in Vanishing St. Louis during the day. I like architecture and will, once a year, walk along St. Louis Ave where once grand houses stand, decaying more each year. I am watching it go and it is sad. But I won't walk there at night or live there.  And I take off my rings before I go there during the day.

[Argyle]

And Gary, Indiana -- not as big as Detroit, but possibly even more desperate.  Wonderful archietcture and houses, all abandoned.  They sell them for $1 in Gary but can't get takers.  They've even got an abandoned Frank Lloyd Wright house.

http://www.mymodernmet.com/photo/city-methodist-church-gary
http://onesmallproject.org/frank-lloyd-wright-gary-indiana/
http://theoperablewindow.blogspot.com/2011/02/gary-indiana-abandoned-burned-out-and.html

[Albert]

I have to wonder about those who can't visualize why these houses are not a good buy. Perhaps you all live in Europe where real estate is hardly ever a down market? But downtrodden urban America is not a place to live. I will walk some of these place in Vanishing St. Louis during the day. I like architecture and will, once a year, walk along St. Louis Ave where once grand houses stand, decaying more each year. I am watching it go and it is sad. But I won't walk there at night or live there.  And I take off my rings before I go there during the day.

I think the only person in this thread wondering whether they had any value was the original poster from Canada. Having said that urban renewals do happen in America, with NYC probably being the best example.

I wish I could claim all if fine and dandy with European cities, but it's not really true. There are plenty of rundown neighbourhoods unsafe for night time visits even if not really on the level of "top" examples in US. Certain suburbs of London, Paris, Marseille as well as some areas in South Italy immediately come to mind. Usually it's a long distance from the central areas, though.

[401Killer]

arebelspy can you expound on why you wouldn't invest in Detroit?

There are lots of decent places to invest there, some within a few miles.  Just not south of 8 mile.

^This comment is 100% not true.

While I agree that the city is a total mess and you really want to do your research there a many neighborhoods that are making strong comeback, very strong in fact. Don't ask people about Detroit and its neighborhoods on this forum who live everywhere but Detroit, ask Detroiters...

http://www.detroityes.com/mb/forumdisplay.php?3-Discuss-Detroit

Yes, there is a safety concern, nobody will deny that, but people who say they would not live here if someone paid them are the people Detroit don't want here as well. Watch the Anthony Bourdain show Parts Unknown on Detroit and you will see the good, the bad, and the ugly.

There is so much good going on in the city its overwhelming but you will rarely see it on national news. I'm actually part of the Detroit Mower Gang and we help cut abandoned parks in the city limits. Yesterday we had 70+ volunteers working, we cut and cleaned 19 parks in one day. 

https://www.facebook.com/MowerGang

[arebelspy]

I didn't say I wouldn't live there if you paid me.  Don't put words in my mouth. 

How much are you paying?

I said I wouldn't invest south of 8 mile right now.

Would you?

(I mean directly south, not necessarily downriver or something.)

If so, why, when there's frankly better places very close by?