I've thought about the idea of establishing a micro community in Detroit. Buy up cheap adjacent houses and lots and get entrepreneurs interested in a combination of tech business(to draw outside money) and local service businesses(restaurants, stores, etc to service the community members and attract more people) to move in. The biggest investment would be establishing good security, utilities and internet.
I'm interested in this, maybe as an investor too. I like the idea of ways to enhance the 'buy and hold cheap houses' investment concept. I also have one or two ideas on how to do that. Send me a message if you go ahead with it. My email is in my profile.
I wonder what goes to an ecosystem first, talent or funding. For the latter, one approach should be to get the auto giants interested. GM, Ford, etc. are already investing in both automated vehicles and ride-sharing, they want a piece of that action too. If cars are the next big product space to be disrupted by tech, Detroit has potential for that. Also get Eminem involved, if he hasn't diversified in being a celebrity VC yet.
For the former, maybe appeal to disgruntled devs who are getting priced out of the Bay?
The thing about Detroit houses is that they sell for much lower than they are assessed for, so buyers would be paying taxes that are very high compared to the selling price.
Yea except this neighborhood is about as sketchy as you can get. The last event I went to at the old Detroit City airport was staffed with a perimeter of heavily armed guards. I know a couple people who purchased houses in Indian Village and nobody even takes garbage out after dark. Comparing Detroit and Austin is a stretch at best.
Hah. I once worked with a guy who put essentially his entire life's savings into 10-15 of these Detroit properties a few years back in 2013-2014. Suffice it to say I was right--there's been little-to-no upward pressure on home pressures in the area, despite the fact that he thought he was soon to strike it rich.
The old mantra holds--like any publicly available asset--if it were a great deal--it would already have been sold!
I'm not saying you're wrong but I'm curious what you have to back that statement up. Detroit is rapidly losing population[0] with no end in sight. Typically for prices to rise, there has to be some kind of demand. I guess you could just gut the supply by wholesale tearing everything down and seeing if you can sell what's left.
Property eventually appreciates, you just have to wait long enough. Now, at the extreme you may need to wait longer than a lifetime, but that's not likely to be the case here. However, it could very well be more than 20 years depending on how much he paid.
I don't think it's unreasonable to hold an asset for that length of time if the projected value makes it worthwhile.
Ghost towns say otherwise. Property usually appreciates, given enough time, but it's never a guarantee; Detroit is dying-globalization killed manufacturing-it's a bad bet to think it'll appreciate when much of the city is already abandoned.
Yup. You really need some momentum, or some hope of momentum. Cheap prices ain't gonna do it. Right now Detroit is essentially competing with rural areas in price, but giving none of the benefits of a city: proximity to jobs, vibrant culture, amenities. It has many of the disadvantages of a city, in excess, like crime. And the momentum is not positive.
Can Detroit rebounce? Surely. But I don't think a smart investor would make a bet on it, outside of specific neighbourhoods and projects.
Areas of Detroit are apparently rebounding [1] to the point where it's even a bit controversial. (Gentrification is forcing out some black-owned businesses.) But it's very uneven and, yes, I wouldn't bet on the rust belt in general.
Yep. People have been thinking Detroit would turn around since about 1955. And they've been wrong every year for 60 years now.
If Detroit ever returns it'll be slowly, organically, and not driven by speculation. Nearby neighborhoods are more attractive and inexpensive than downtown (Dearborn, Livonia, etc). Until higher-end businesses and lifestyles return to central Detroit, (not to mention basic city services), surrounding city property values will never climb.
I wish Dan Gilbert the best, but having grown up in the area, I've heard it all before.
I always hear there's lots of caveats to this. e.g. sometimes the water, electricity and internet aren't available. Or the house costs $10k but you need to buy the unpaid taxes, too, plus pay property taxes on a home that's valued at 50k+ when it's worth a fraction (I think in this case it's also listed on zillow, property valuations for tax purposes being 2x the listing), etc etc.
I mean absolutely, it's a cheap deal, even all this considered, but not as good as it looks. The final cost is probably a multiple of the listing, and you're still in a neighbourhood that's sketchy. Lots of interesting stuff has been written about Detroit and the various initiatives to buy a fixer upper, things like 'if you call an ambulance or police, they don't come, or they arrive 30 minutes late', feature commonly in such articles.
http://www.zillow.com/homedetails/11451-Lansdowne-St-Detroit...
...looks like a nice neighborhood, and the inside seems we'll maintained. So that's $0.04/sq-ft/month.