Lafayette Towers To Be Sold At Foreclosure Auction

[jpbollma]

Sounds like HUD is being strict in order to avoid slum owners. Hopefully the towers can be turned around! Before, renting a loft at Broderick I had looked into buying a place in the 1300 building, however, the woman who showed us around told us there was no available financing at the time, everything must be paid cash [[yikes!). I then looked into the Pavilion, which is a great space, but no dogs allowed. Lafayette is a great neighborhood and one where I think anyone can feel safe. Hopefully these two towers are brought up to the standards of the rest of the area.

http://detroit.curbed.com/archives/2...ction.php#more

[Hypestyles]

what do the apartments look like.. what general amenities..

[DetroitPlanner]

Whammy whoa! $10 million in repairs?!? Looks like the former owner has some 'splaining to do!

[kahnman]

Ahhh Haa Haa Ha!!! Take a look at the "Property at a Glance" pdf link: http://portal.hud.gov/hudportal/HUD?...ng/mfh/pd/lafa
and look at their estimated income and expenses. No wonder it's for sale - with and estimated YEARLY O/M maintenance of a whopping $2000!!!

Umm, let's see. That's $3.43 per unit in maintenance per year. Better not break the toilet paper roll holder...

[ndavies]

The sale's been postponed.

http://www.detroitnews.com/article/2...xt|FRONTPAGE|p

I'm guessing they couldn't find any bidders.

[stasu1213]

The sale's been postponed.

http://www.detroitnews.com/article/2...xt|FRONTPAGE|p

I'm guessing they couldn't find any bidders.

I wonder if politics have a part to play in this postponing. Hud would had came out and said that there were no bidders for the auction of the buildings. This is a big dissapointment especially for those who live in the towers. Is the bidding price set too high? The Penobscot had only sold for $5,000,000. This worth of the towers should be half of that. The fact that the auction was postponed withouth explaination gives me that idea that something else is going on.

[ndavies]

If you look at the offering sheets, You'll find the buildings make very little money. The rents barely cover the operating costs. Add $10million in required repairs and this is a pure money loser. Don't forget that you're buying a business when you buy an apartment building. No one is going to buy a money losing business.

[Gannon]

No one is going to buy a money losing business.

If profit is their only motive.


People with money will buy losing businesses to offset huge gains in other holdings [[to minimize their overall tax liability), to preserve places of great historic value, or even merely to be philanthropic.

Don't be so myopic. Just because money is YOUR main motivator...heh. Gotta keep those street-level retail spaces clear of nasty unproven local startup businesses. [[I'll never forget that amazing illumination from an earlier conversation...)


Cheers!

[ndavies]

Okay John, so where are all those bidders who can afford to lose that kind of money. This isn't a minor money losing project it's a major money losing one.

A $10 million loan for the repairs is going to cost you $48,000 a month. Can each of those units absorb an $80 a month rent increase? Can anyone get a loan from a bank for that amount on a building that is currently barely paying for itself. Couldn't most investors find a place to make way more money for their $10 million investment?

THis isn't 2005, In a money losing real estate market the investment companies already have more than enough writeoffs. Most real estate investors are currently looking for money making properties.

[Gannon]

Okay John, so where are all those bidders who can afford to lose that kind of money. This isn't a minor money losing project it's a major money losing one.

A $10 million loan for the repairs is going to cost you $48,000 a month. Can each of those units absorb an $80 a month rent increase? Can anyone get a loan from a bank for that amount on a building that is currently barely paying for itself. Couldn't most investors find a place to make way more money for their $10 million investment?

THis isn't 2005, In a money losing real estate market the investment companies already have more than enough writeoffs. Most real estate investors are currently looking for money making properties.

No kidding. Why are you trying to pick a fight?

I was simply showing your myopia. Making money should not be the only reason for ANYTHING...an old book some revere quite fondly says the LOVE of it is the root of all evil.

So, perhaps the search for the 'right' buyer needs to be focussed on those FEW individuals who have more humane, ethical, and altruistic intent. Historic, too. Of course that likely won't happen, because the entire SYSTEM is diseased by folks who worship money. [[which is why it is doomed, if not already done)


This particular instance may indeed be simply another symptom...albeit big enough to be called a bellwether.

[Gannon]

And yes, in the current housing situation in town, given the number of young folk now employed in the CBD by Quicken and others moving here seriously tightening the quality housing market...they probably CAN transition into higher rents, but that then fuels the cycle of gentrification.

Without some way of ethically aiding those displaced by this, once again a profit motive creates unintended consequences.

But some may say that letting the property decline as it has was the true setup for this eventuality. Either that, or it declines further until we have a double-dose of a near-eastside hulk like the train station.


Quandary...

[Eric_c]

For one, the rents are too low. I get $1,250 for two bedroom flats in the Villages and at times I have to turn people away. A high rise within walking distance of downtown, if properly maintained and managed [[which LT simply has not been), could easily support $80 per month, per unit rent increases. More, actually.

[Bham1982]

For one, the rents are too low. I get $1,250 for two bedroom flats in the Villages and at times I have to turn people away. A high rise within walking distance of downtown, if properly maintained and managed [[which LT simply has not been), could easily support $80 per month, per unit rent increases. More, actually.

Then why is there no institutional interest in these properties? And why did the previous landlord default?

There is a huge glut of rental units metrowide. Downtown has some positive trends going for it, but multifamily is a very tough market in this region.

[ndavies]

John, You're the one who called me myopic. I'm just defending what I said.

Originally Posted by ndavies
No one is going to buy a money losing business.




If profit is their only motive.
People with money will buy losing businesses to offset huge gains in other holdings [[to minimize their overall tax liability), to preserve places of great historic value, or even merely to be philanthropic.

Don't be so myopic. Just because money is YOUR main motivator...heh. Gotta keep those street-level retail spaces clear of nasty unproven local startup businesses. [[I'll never forget that amazing illumination from an earlier conversation...)

And profit is the only motive for the kind of major real estate developer who would buy this type of property.

Sorry Eric_C, the facts don't back you statements. The building report states that lafayette towers are only 70% full. This means that they can't fill the buildings at the current rents. They have supply but no demand for the empty units. While your rental house may be able to charge that much, the towers obviously can't. [[I think the value of you rental is far higher than the units in the towers.)

[Gannon]

John, You're the one who called me out. I'm just defending what I said.


And profit is the only motive of a the kind of major real estate developer who would buy this type of property.

Sorry Eric_C, the facts don't back you statements. The building report states that lafayette towers are only 70% full. This means that they can't fill the buildings at the current rents. They have supply but no demand for the empty units. While your rental house may be able to charge that much, the towers obviously can't. [[I think the value of you rental is far higher than units in the towers.)

I didn't 'call you out', I showed there is more to it than what you were saying, and the fact that a view like yours is a large part of the overall problem with our system. Thinking about ONLY profit is a disease, making everyone sick. You defend the system, you are part of the problem!


As for the 'facts'...how about this...nobody in their right mind will live in a mismanaged high-rise...no matter HOW cheap the price! Once that word got around, or perhaps it is obvious to those who visit the property...it only creates a death spiral.

Perhaps IF the property were improved, and the bad neighbors removed...then they COULD command rent commensurate with the location and view. Location, location, location surely ISN'T the whole of this real estate equation.

We saw how the old Trolley Plaza was improved with proper investment with new owners, haven't heard of a shooting there or failed elevator in a long while. [[although there may be someone who can fill in direct experience to prove otherwise)

That is how they should be selling this...the numbers usually don't tell the whole story.


Cheers!

[Gannon]

I just saw you changed your post. You're right, myopic was used specifically to say you are near-sighted in your analysis...only looking at your wallet. I guess I DID call you out. But when you fight, you are only apologizing for a distorted and largely failed economic system.

[Gannon]

Plus, you have firsthand knowledge of how corruption destroys innocent investment...and since there is no proof of that being eliminated in this town yet...there is little hope for any reasonable investor to enter this market, no matter HOW altruistic their intent.

[ndavies]

Well, You can only afford to be screwed over so many times by trying to do the right thing. I'm way past my limit.

[Eric_c]

The properties have been slowly emptying for the last couple of years because of piss poor management. See Joe Posch for details. IIRC, the buildings had considerably higher occupancy just two or three years ago. This was squandered and now we have what we have.

And, Norm, while my properties are spectacular, LT are too. Jack that rent and start putting the money back into the place. Run it well and people will come.

[Gannon]

I know. Sorry to bring it up, but it was an aside making a germane point about how and why investors with a conscience have been filtered away from the equation in this town.

Someone, someday, will make an analysis of how much the Kwhymeister and his gang of thieves seriously fucked this town. They might be the last straw, while we remain trying to clutch the dirty air they left behind.

[GoGrixdale]

The properties have been slowly emptying for the last couple of years because of piss poor management.

I might still be renting my 2BR corner unit [[$988 / 2005-2009) if the place hadn't gone to shit[[ier). More than loved it for the first 2 years. I always thought the rent was cheap and would have paid $2-300 more if things worked like AC, elevators and doormen.

[Jason]

The building is at 70% because the management was horrible and everyone left.

Lafayette Towers charges 500-560 for a studio.

Across the park in a very very similar building is the Pavilion, which is charging 686-886 a month. Based on the number of available units on their site, they're 95% full.


If Lafayette Towers was managed better it should be able to get similar numbers. Maybe even higher, because Lafayette Towers has a parking garage while the Pavilion only has surface parking [[and a shortage of guest parking), the swimming pool is nicer, and I think the units might be a little nicer too.

Not only is it possible, I don't think it should be an uphill battle either. There's demand for rentals and a lot of the types of people moving there would pay extra to live in a Mies designed building. I think there are a lot of people who would like to move there but have heard the horror stories.

[canuck]

It seems to me that a landmark project like Lafayette would be perfect for a co-op apartment complex. Isnt there some movement on that front?

[Richard]

Downtown Orlando Star Tower sells after bankruptcy

18-story Star Tower condominium was sold this week to a Michigan-based group for $11.8 million, records show.This week, Redus Florida Condos LLC sold its 48 units in the 100-unit building to Alidade Star Tower LLC, which plans to stabilize the property, said Jay Ballard, who oversees multifamily properties for the Orlando office of Cushman & Wakefield.

http://articles.orlandosentinel.com/...hman-wakefield

So they can take the same amount of money and get something pretty much ready to go.

[Nee]

Management is terrible at the Towers and they are very unconcerned. A couple winters ago, it was below 0 and my apt had not heat, when I called to complain, I was told that it was cold outside. Duh, I didn't pay rent outside. I had to force management to even send workmen up to check. They didn't consider the lack of heat to be an emergency so we spent at least 14 days with no heat and many more with reduced heat. No heat coupled with non-working elevators, constant periods of no water and office workers with bad attitudes, I moved. The last straw was when the lady in the management office tried to yell at me because she made a mistake and wanted me to take the blunt of it.