Finally, A Sensible Financial Emergency Bill Out of Lansing...

[313WX]

Important note to investors: invest for income...investing for capital growth is an iffy proposition.

FWIW, I think most investors are aware of that.

As far as investing for income in anticipation of this new Detroit, one will still have to come to terms that they're going to be losing money for a while, whether they're renting out property or running a small business.

[corktownyuppie]

FWIW, I think most investors are aware of that.

As far as investing for income in anticipation of this new Detroit, one will still have to come to terms that they're going to be losing money for a while, whether they're renting out property or running a small business.

Really? I don't disagree that you're seeing that in some parts of the city, but I'm curious if that's true everywhere that I haven't been looking. In Corktown, you can buy a place for 8x annual gross rent, and with interest rates where they are right now, you can get a 20+% cash-on-cash return. And that's even with a 15-year mortgage and a 20% down payment. Numbers get even better with a 30-year mortgage. I'm not trying to be a slappy to inflate property values, but I'm just saying that at prices I'm seeing around here, you're definitely in the ballpark of nice bargains.

[313WX]

Really? I don't disagree that you're seeing that in some parts of the city, but I'm curious if that's true everywhere that I haven't been looking. In Corktown, you can buy a place for 8x annual gross rent, and with interest rates where they are right now, you can get a 20+% cash-on-cash return. And that's even with a 15-year mortgage and a 20% down payment. Numbers get even better with a 30-year mortgage. I'm not trying to be a slappy to inflate property values, but I'm just saying that at prices I'm seeing around here, you're definitely in the ballpark of nice bargains.

But outside designated renaissance zones [[Corktown may be one), there comes the factors of taxes and insurance [[not to mention scrappers).

I'm sure you're far more knowledgeable than me about the finances, but I know there's a reason much of the property in Detroit still remains unsold, even with the low prices and interest rates.

[mwilbert]

Nothing's going to change for a LONG time, other then lawyers involved with this are going to get richer from the drawn out court battles..

Well, betting that legal processes will take a while and that lawyers will make money from them is safe. But you should see changes in the city's cash flow position rather quickly--if nothing else the city would probably immediately stop paying interest and principal on its billion dollars of GO debt.

[corktownyuppie]

But outside designated renaissance zones [[Corktown may be one), there comes the factors of taxes and insurance [[not to mention scrappers).

I'm sure you're far more knowledgeable than me about the finances, but I know there's a reason much of the property in Detroit still remains unsold, even with the low prices and interest rates.

Well I agree. There's a reason you can't give much of the property away. At this point, I'd say 70-80% of the property is only a bargain if you have the kind of money where you can develop an entire block at a time [[eliminating blight) and provide your own private security [[eliminating crime). The odd thing is that reality is becoming more and more possible as property devalues.

The other 20-30% of the property is truly bargain basement for those familiar with the neighborhoods. Could be that I'm living in the ivory tower, but I don't know of a single vacant or abandoned home in the historic part of Corktown. Nor am I aware of any incident of scrappers stealing copper, though, again...could be that I'm just unaware. There's no question that there's a difference between driving around 7 and State Fair vs. Michigan and Trumbull, though.

Detroit is such a bizarre city to analyze real estate. You could write a whole book on it for a college course.