Thursday, October 30, 2014

Developer buys scores of Detroit's worst houses in $3.2million 'blight bundle'

"Anywhere else, a property developer who buys a bundle of foreclosed houses, abandoned factories and disused churches for a mere $500 a piece would be hailed as a genius.
But this is Detroit. And Herb Strather's $3.2million purchase of 6,350 homes is being called foolhardy.  To be sure, there are plenty of gems in the city's 'blight bundle.' A 170,00-square-foot factory that's still in good shape, a three-story brick home built in 1915 that most recently sold for $185,000, a lovely Tudor-style house that's ready to move into and a five-bedroom that simply needs a new roof.  But city officials tell the Detroit News that 2,000 of the properties are vacant lots. More than 3,000 will need to be torn down immediately...The city put strenuous rules on the buys of the 'blight bundle' requiring the buyer to either demolish and clean up all 6,350 properties within the next six months or offer a development plan. 'Now what we have to do is find out if indeed this group is serious about taking on such a task. And if they're willing to do so, we're willing to listen,' Wayne County Chief Deputy Treasurer David Szymanski told the Huffington Post. 
And at an estimated cost of $10,000 for each demo, the development group could have to pay up to $30 million just to clear the ground--almost ten times their current investment. Is that how things will unfold, or is there a plan to cherry-pick the nicest properties and profit from them piecemeal?  The city is looking at major redevelopment, but private investors may well be thinking about making money off the good stuff.

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