Parsad Posted June 12, 2009 Share Posted June 12, 2009 I've been reading a bunch of articles on Detroit's housing problems. They've been dealt a double-whammy from the economic downturn, plus the failures of Chrysler and GM. I've also been looking online at various real estate sites, and have found some crazy real estate deals available in Detroit. Just wondering what anyone in the area is witnessing and if they could comment. Some properties have hit the 10% of value price that Templeton was talking about. Most places, you can buy a property, fix it up and rent it for double digit profits even after paying the property manager, utilities and property taxes. Crazy stuff! Ideal time for first time homeowners or young investors living in the area. Cheers! Link to comment Share on other sites More sharing options...
Smazz Posted June 12, 2009 Share Posted June 12, 2009 Sanjeev, I dont live there but I wouldnt speculate in that area of housing. Really, all in IMO its not worth it. There was a realestate thread on here a while back - I wont duplicate what I or others wrote there but the downside would be magnifide from the general points that were made in that thread. Smazz Link to comment Share on other sites More sharing options...
Parsad Posted June 12, 2009 Author Share Posted June 12, 2009 Hi Smazz, no I'm not investing there. Just fascinated when I see markets that are disrupted in such a magnitude. Some crazy prices. Cheers! Link to comment Share on other sites More sharing options...
ubuy2wron Posted June 12, 2009 Share Posted June 12, 2009 The deals in Detroit re residential real estate are truely amazing. Detroit, especially some of the more urban neighbourhoods are down right scary in my opinion. Without a local partner on the ground being a landlord in Detroit would be a night mare. Better to buy an abandoned home knock it down and sell the lot at some future date. PS I am about to make an offer on a lot in Maui on a golf course for 25% of what it sold for 4 years ago. Link to comment Share on other sites More sharing options...
dcollon Posted June 12, 2009 Share Posted June 12, 2009 Sanjeev, I don't live in Detroit (nobody really lives in Detroit anymore), but I do live about 30 minutes north of the city. There are certainly opportunities. Cash on cash returns are very high if you are in the right area. Most of the transactions are being done with cash, since the banks will not allow financing. It's pretty depressing around here, but it has been for close to 9 years now. We never experienced the boom that the rest of country did, but we certainly have led on the way down. Forunately in the investment business you can live in an area like this and not worry too much. Although from where we sit it's tough to understand how this part of the country recovers within the next 5-10 years. Link to comment Share on other sites More sharing options...
Parsad Posted June 12, 2009 Author Share Posted June 12, 2009 Hi Dcollon, Yes, I really don't see the recovery that many other optimists see at this point. Especially in areas that have gotten hit once from real estate and economic woes, and then a second time from core industries getting hammered. Capital has to be deployed into Detroit and industry retooled, with extensive retraining available for those workers laid off. How does Detroit's retail and consumer-related environment get through this without laying off more people? For the people going through this, it is God-awful. It will definitely take time. Cheers! Link to comment Share on other sites More sharing options...
dcollon Posted June 12, 2009 Share Posted June 12, 2009 Sanjeev, I completely agree. Our state remains very anti-business, which is clearly not good for driving traffic to the state. The pro-union vs. right to work aspect is the largest hurdle. Most people are amazed with some of the home prices here relative to the rest of the country and I'm speaking of ones that you and I would want to live in. Nicely renovated homes for $100-125 per square foot are not uncommon at all. That's one of the toughest parts about managing money here, because we constantly have to remind ourselves that there are areas of the country/world that are attracting new business and spending. Just not here. Have a nice weekend, David Link to comment Share on other sites More sharing options...
Parsad Posted June 12, 2009 Author Share Posted June 12, 2009 $100-125 per square foot? Good Lord! I'm thinking of moving to Detroit next week! ;D In Vancouver suburbs, you would be lucky to find something for $350-400 per square foot. Right in the city, you would be fortunate to find something for $550-600 per square foot! It takes almost 65% of the average family's disposable income to support housing costs in Vancouver...crazy! I don't expect things to get much better as the winter Olympics draw closer. A buddy of mine has been offered $15,000 for two weeks to rent his 500 square foot studio in downtown Vancouver during the Olympics. Some homeowners have already booked their homes for upwards of $40K for two weeks. Nuts! Cheers! Link to comment Share on other sites More sharing options...
cayale Posted June 12, 2009 Share Posted June 12, 2009 For what its worth, one can buy nice houses in Omaha for $100-150/ft. And the area economy is in great shape. Link to comment Share on other sites More sharing options...
cayale Posted June 12, 2009 Share Posted June 12, 2009 Vancouver is considerably more fun! Link to comment Share on other sites More sharing options...
Parsad Posted June 12, 2009 Author Share Posted June 12, 2009 Vancouver is considerably more fun! Not necessarily so. I've lived in Vancouver all my life, but I have just as much fun when I go to any other city. Of course some things may be more plentiful here (restaurants), but there are other things we have less of as well (frickin' housing). It's who you're with, what you are doing, and how you view things that decides if you are having fun. I think I could live in most cities, as long as I had family and friends around. I've always admired Omaha, and I think it offers as much as any other city...in particular the people there are very nice! Cheers! Link to comment Share on other sites More sharing options...
ragnarisapirate Posted June 12, 2009 Share Posted June 12, 2009 Sanjeev, I actually spent close to an entire day looking into buying a bunch of houses in Detroit. There are a bunch of problems that I found: 1) Insurance is a bunch. If a house on either side of yours turns into a crack house or burns down, you are gonna be getting dropped. You can't insure your house for the reconstruct cost either (it has to be done at the sale price)... so if it does get torched, you are sitting on a vacant lot and will have to get the place cleared out. 2) Land contracts are illegal if you already have the house financed with someone else (making virtually impossible to use any sort of leverage, once the place is fixed up/prices have stabilized). Land contracts are also a good way to get steady cash flows and get cash out of the place. 3) If the house is vacant, you must have it boarded up (for your ins. co). 4) There are a bunch of houses with liens on them. 5) Code enforcement seem to be Nazis up there. 6) Building inspections seem to be bad too... if you put on a new roof, you have to pay some fees, and have inspectors come out 2 separate times, just to be sure it was put on correctly. 7) Yearly property taxes are often as much as you can get some of the houses for and are not going down. Also, if there is one thing that I have learned about rental properties, you have to be able to do your own maintenance; if for nothing else, so that you can tell if you are getting screwed by your workforce. With that all said, the houses I was looking at buying were under 20K each, but still... Link to comment Share on other sites More sharing options...
Parsad Posted June 12, 2009 Author Share Posted June 12, 2009 Thanks very much Jeff! Great points. Cheers! Link to comment Share on other sites More sharing options...
Packer16 Posted June 12, 2009 Share Posted June 12, 2009 Sanj, You can live here in Rochester, NY and get a nice house in a middle class neighborhood for about $90/sq. ft. and a nice house in great neighborhood for $105/sq. ft. and you are only 3 hours from Toronto. What keeps the lid on housing here is the high taxes. But who knows with the "coup" in the state senate and Galisono supporting this group there may be hope. The point of maximum pessimism. Packer Link to comment Share on other sites More sharing options...
arbitragr Posted June 12, 2009 Share Posted June 12, 2009 Detroit has one of the highest crime rates and is one of the dangerous places to live. Link to comment Share on other sites More sharing options...
arbitragr Posted June 13, 2009 Share Posted June 13, 2009 "Detroit struggles as recession hits hard": Detroit - Industrial Ghosts: http://www.youtube.com/watch?v=pz_vDOrqOOQ http://www.youtube.com/watch?v=HuFBdjdhBVg Detroit crime: Detroit is certaintly not a place I would live in. Link to comment Share on other sites More sharing options...
Crip1 Posted June 13, 2009 Share Posted June 13, 2009 Sanjeev, I completely agree. Our state remains very anti-business, which is clearly not good for driving traffic to the state. The pro-union vs. right to work aspect is the largest hurdle. Most people are amazed with some of the home prices here relative to the rest of the country and I'm speaking of ones that you and I would want to live in. Nicely renovated homes for $100-125 per square foot are not uncommon at all. That's one of the toughest parts about managing money here, because we constantly have to remind ourselves that there are areas of the country/world that are attracting new business and spending. Just not here. Have a nice weekend, David $100-125 per square foot? Good Lord! I'm thinking of moving to Detroit next week! ;D In Vancouver suburbs, you would be lucky to find something for $350-400 per square foot. Right in the city, you would be fortunate to find something for $550-600 per square foot! It takes almost 65% of the average family's disposable income to support housing costs in Vancouver...crazy! I don't expect things to get much better as the winter Olympics draw closer. A buddy of mine has been offered $15,000 for two weeks to rent his 500 square foot studio in downtown Vancouver during the Olympics. Some homeowners have already booked their homes for upwards of $40K for two weeks. Nuts! Cheers! Guys, try Dallas. I relocated down here a few years back and US$100/foot is certainly not unheard of for a middle or slightly upper-middle class area with a 30-40 minute commute. I have seen close to $80 here and there for a relitively new home which need a little work. Foreclosures are less. Dallas has some crime and the occasional tornado issues (half a dozen folks within a block of my house lost some or all of their fences a couple of days back), not to mention some pretty significant AC bills in the summer time (it is 79F/26C as I type this at midnight). Not bad if you can deal with Dallas Cowboy fans...you can even catch Hockey Night in Canada on the NHL Network! -Crip Link to comment Share on other sites More sharing options...
Guest kawikaho Posted June 13, 2009 Share Posted June 13, 2009 I'm in Vancouver right now. Seattle/Vancouver is nice when it's sunny and warm, but we'll see how it is in Nov. ;-) Like they say, real estate is all about location, location, location! Detroit? Fugghedaboutit! Link to comment Share on other sites More sharing options...
Uccmal Posted June 13, 2009 Share Posted June 13, 2009 Sanj. et al, My wife works in Windsor, at the University. It is a 3.5 hour commute from Toronto. Since she only teaches 2-3 days a week she usually stays at a hotel in Windsor. We looked into locating there but after I spent some time there I realized what a sorry state both Windsor and Detroit are in. Detroit has been deteriotating in a more or less continous manner since the race riots in 1967 - re: Gordon Lightfoot "Black Day in July". 15 Minutes out of the former downtown area, on the Detroit River, is this vast burned out swathe, several square miles in size, that has never been reclaimed. It is visible from Windsor. The people fled to the outskirts and towns like Ann Arbour and never returned. Right out of the tunnel on the US side are some of the 5 and 6 bedroom mansions you are talking about. Many are unoccuppied and boarded up. The area is a ghost town. It is like something out of a Stephen King novel. Where towns like Toronto, Chicago, and Calgary invested heavily in keeping up their urban infrastructure Detroit somehow missed the boat. The auto industry in Ontario has left Windsor for dead and relocated North of Toronto. Today, this afternoon, we could buy a 4 bedroom house in Windsor for about 100,000 cash, and I could retire and go fishing in the Detroit River. Frankly, I'd rather work a few more years and live in Toronto. A. Link to comment Share on other sites More sharing options...
omagh Posted June 13, 2009 Share Posted June 13, 2009 NY Times had a piece (May 8th) on real estate in Grosse Pointe, MI where many auto execs live(d). I grew up 2 hours away from both Detroit and Toronto, been all over North America and Europe, but have only seen Detroit at night from the air. Grosse Pointe http://maps.google.com/maps?q=detroit+map&oe=utf-8&client=firefox-a&ie=UTF8&split=0&ei=H7EzStu-AtqMtge1jaS0CQ&ll=42.386951,-82.904205&spn=0.015278,0.038624&t=h&z=15 http://www.nytimes.com/2009/05/10/fashion/10michigan.html Bloomfield Hills—where nearly half the houses were valued at $1,000,000 or more in 2000—and Birmingham are a bit like a Midwestern and suburban version of the Hamptons. There are modern houses on out-of-sight estates. Grosse Pointe would be more like Nantucket but without scrimshaw. “There are so many houses for sale along Lake Shore Drive,” said Joe Warner, editor of The Grosse Pointe News (one of the last papers in the country to advertise “butlers” in its classifieds). “Even through all Detroit’s ups and downs, those houses just never came on the market. They stayed in families for generations.” Mr. Klimisch’s wife, Prudence Cole, a career counselor, described a “level of fear” even among her executive-level friends. One manager at G.M., she said, asked her advice recently about preparing to re-enter the job market. “Now a few years ago, an executive from G.M. would never have asked me that,” Ms. Cole said. “People came to equate the company with stability. You had a job for life. It had 100 years of prosperity and suddenly that’s all gone.” Link to comment Share on other sites More sharing options...
fuluvu Posted June 13, 2009 Share Posted June 13, 2009 Investors bet on Detroit housing market, http://money.cnn.com/2009/06/11/real_estate/investing_in_Detroit/?postversion=2009061113 Link to comment Share on other sites More sharing options...
ubuy2wron Posted June 13, 2009 Share Posted June 13, 2009 $100-125 per square foot? Good Lord! I'm thinking of moving to Detroit next week! ;D In Vancouver suburbs, you would be lucky to find something for $350-400 per square foot. Right in the city, you would be fortunate to find something for $550-600 per square foot! It takes almost 65% of the average family's disposable income to support housing costs in Vancouver...crazy! I don't expect things to get much better as the winter Olympics draw closer. A buddy of mine has been offered $15,000 for two weeks to rent his 500 square foot studio in downtown Vancouver during the Olympics. Some homeowners have already booked their homes for upwards of $40K for two weeks. Nuts! Cheers! [/quote I also live in Vancouver and yes it is a VERY liveable city that said IF there were anyway to sell short local real estate I woulddo so in a heart beat. Our real estate values are amongst the highest on the planet right now and after a brief down-turn in the mkt last fall prices and demand have actually started to tick up again. This is the only time in 50 years that Vancouver is more expensive than the best neighbourhoods of San Diego another VERY liveable place. Link to comment Share on other sites More sharing options...
Hoodlum Posted June 13, 2009 Share Posted June 13, 2009 I many ways Detroit reminds me of Buffalo where industries started leaving the city 50 years ago and it population dropped by half. Buffalo still hasn't recovered as it struggled with infrastructure upgrades with a smaller tax base. I also believe we will see more trade barriers and increased security at borders that will have an added impact on border towns as trading of goods and tourism slow down. I don't think we will see any bounce in Detroit housing over the next 20+ years as families gradually move from the area. Link to comment Share on other sites More sharing options...
arbitragr Posted June 14, 2009 Share Posted June 14, 2009 Investors bet on Detroit housing market, http://money.cnn.com/2009/06/11/real_estate/investing_in_Detroit/?postversion=2009061113 Buying to invest, is not the same as buying to live/occupy. On an investment level it might seem reasonable, a bit like buying REIT securities. But I would never live there, with all the firearms concentrated there, your chances of getting shot increase dramatically. Link to comment Share on other sites More sharing options...
arbitragr Posted June 16, 2009 Share Posted June 16, 2009 $100-125 per square foot? Good Lord! I'm thinking of moving to Detroit next week! ;D In Vancouver suburbs, you would be lucky to find something for $350-400 per square foot. Right in the city, you would be fortunate to find something for $550-600 per square foot! It takes almost 65% of the average family's disposable income to support housing costs in Vancouver...crazy! I don't expect things to get much better as the winter Olympics draw closer. A buddy of mine has been offered $15,000 for two weeks to rent his 500 square foot studio in downtown Vancouver during the Olympics. Some homeowners have already booked their homes for upwards of $40K for two weeks. Nuts! Cheers! Hi Sanj. Are you still thinking about moving? Are you a US citizen? Wouldn't you need a Visa if you were to move? Link to comment Share on other sites More sharing options...
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