Armchair developers, Here's your chance.

[ndavies]

Here's a chance for all you armchair developers to step up and quit talking and start doing.

The Detroit land bank has put some more North Corktown lots up for sale.

You could buy a lot and build a house there.

https://www.realtor.com/realestatean...-09257?view=qv

https://www.realtor.com/realestatean...-12334?view=qv

https://www.realtor.com/realestatean...-40359?view=qv

https://www.realtor.com/realestatean...-61398?view=qv

The DLBA has plenty more lots to sell there. They own over 300 lots in North Corktown

[dtowncitylover]

Yeah, let me get that $1 million from dad...

[ndavies]

It doesn't take a million about $40K in cash will do, That and the ability to get a mortgage.

[DeLemur]

Yup, put up a pre-fabricated home. There are new ccompanies that do it. Was going to point to this one in Detroit https://www.phoenixhaus.com/ but I guess they've moved to Colorado. That's a pity.

[Honky Tonk]

Yeah, let me get that $1 million from dad...

There you go again...

[Richard]

Armchair does not really play into it,it is real estate and If it was that profitable somebody would be already doing it.

Raw land is hard to get Finianced even more so on speculation,there are still plenty of fix and flip out there,you could do two and make more of a return then in the year it would take to build a house on it.

Let alone the amount of tequila needed to deal with the city permitting process and countless inspections.


So on the 25k one out of your $40k,cash for the land leaves $15k,highly unlikely you will pull a mortgage on something that does not exist with $15k out of pocket on a 200k build.

They will have value when they are the only thing left and demand calls for it when the easy pickings are gone.

One could buy it and sit on it for years until that takes place,but that is cash and speculation that it will happen.

If the city does not allow prefab on that lot then it dies not apply,who wants to buy a prefab unless it is really cheap.

I am no real estate expert investor but I did stay at a holiday inn express and thought about taking the course of how to make millions in real estate useing no money out of your pocket,because it is that easy.

[DetroiterOnTheWestCoast]

These listings do require a development plan so it will be difficult to buy and hold for speculation. It will be interesting to follow these listings and see what happens.

[iheartthed]

It doesn't take a million about $40K in cash will do, That and the ability to get a mortgage.

What bank is going to give someone a mortgage for that?

[ndavies]

Richard, You better spend some more nights at that holiday in express. Because it's happening.

There are currently 4 new stick built homes being built in north Corktown. One of them is mine. They will all be complete this summer. They all received market rate conventional mortgages with typical new construction down payments. They are all passing inspection with few issues. The only incentive they are receiving is NEZ.

There are 19 more properties that just went before the land banks commission to be approved for sales. That's another 19 residences being built.

And lots of companies are trying to do it. An article from todays paper.

https://www.detroitnews.com/story/ne...th/3472196002/

[ndavies]

What bank is going to give someone a mortgage for that?

I received approval from both Flagstar and Independent bank to build my new home there. I went with independent bank.

[ndavies]

These listings do require a development plan so it will be difficult to buy and hold for speculation. It will be interesting to follow these listings and see what happens.

There is no way to hold these for speculation. The land bank requires you to build and occupy within a fixed period of time otherwise they will do a claw back.

[dtowncitylover]

There you go again...

There I go again with what? Wishing I had capital with which to build?

[iheartthed]

I received approval from both Flagstar and Independent bank to build my new home there. I went with independent bank.

On a vacant lot in an abandoned part of Detroit? Interesting.

[Richard]

I received approval from both Flagstar and Independent bank to build my new home there. I went with independent bank.

Did you apply solely on your behalf or did the builder arrange it.

Just because you are currently doing it does not automatically determine that it is feasible for everybody,saying one is building a house is also vague,it could be a tiny house of 200 sqft.

How much per sqft are your building cost estimates?

Including site prep,utilities etc.?

During the boom it was easy money and everybody was doing it,until ......

There have already been posters questioning what happens when the NEZ runs out,how many of those homes will be back on the market?

[ndavies]

My house is not tiny. It's 1500 SqFt, 2 story house with a basement and 400 sqft garage. The garage will be 12 foot high and have a deck on the roof. You can go 3 stories and multifamily on these lots. Zoning allows it.

All 4 houses had to get their own financing. The builder had no say in it.

Both Flagstar and Independent have special programs for the city of Detroit. They are available to anyone with a decent credit rating.

These are market rate homes with Market rate construction costs.

You can get up to a $450,000 appraisal right now in North Corktown.

[ndavies]

The NEZ is transferable to a new owner. If they wait until the NEZ expires it will be hard to sell. The NEZ lasts at least 12 years. I will be evaluating wether or not to sell in about 7 years.

[O3H]

No one wants to build a skyscraper ?

[iheartthed]

My house is not tiny. It's 1500 SqFt, 2 story house with a basement and 400 sqft garage. The garage will be 12 foot high and have a deck on the roof. You can go 3 stories and multifamily on these lots. Zoning allows it.

All 4 houses had to get their own financing. The builder had no say in it.

Both Flagstar and Independent have special programs for the city of Detroit. They are available to anyone with a decent credit rating.

These are market rate homes with Market rate construction costs.

You can get up to a $450,000 appraisal right now in North Corktown.

Does it have to be your primary residence? Also, is it only available for SFH construction?

[ndavies]

Does it have to be your primary residence? Also, is it only available for SFH construction?

Sorry, I don't know the answers to those questions.

[Richard]

My house is not tiny. It's 1500 SqFt, 2 story house with a basement and 400 sqft garage. The garage will be 12 foot high and have a deck on the roof. You can go 3 stories and multifamily on these lots. Zoning allows it.

All 4 houses had to get their own financing. The builder had no say in it.

Both Flagstar and Independent have special programs for the city of Detroit. They are available to anyone with a decent credit rating.

These are market rate homes with Market rate construction costs.

You can get up to a $450,000 appraisal right now in North Corktown.

What are you paying to construct per sqft?

Armchair costs show Detroit new build costs $136 per sq ft @ 1500 sqft that would be $204,000 plus land costs.

As of February, residential real estate prices in the 48216 ZIP code had risen 14 percent to a median sale price of $137,250, compared to $119,500 in March 2018, according to Realcomp II Ltd., which is Michigan's largest real-estate listing service. By comparison, home and condominium prices increased less than 1 percent annually from 2016 to the start of 2018, Realcomp II data shows.

https://www.detroitnews.com/story/bu...up/3052225002/


The link also lists a $433k old house that was purchased for $133k in December 2017.

It shows that it is more cheaper,more profitable to buy the $133,000 house and renovatite it then sell it for $433k then it is to build a new one for $250k and list it at the medium sales price of $137k.

Cheap/easy money does not work.

But then again an individual buying or building a house to live in would not be considered an investor or developer,it is just useing cheap incentives money to build upside down in the hopes that the market will increase to the point where it becomes feasible in the future.

Which is okay if one lives in it long term and can cover the note without looking to be not underwater if they are forced to sell in the future.

The bank does not care,thier losses are being offset by the city they will not lose,and if the next cycle hits and defaults occur it will be the city eating it,but they work with free money anyways.

I think maybe you are confuseing because it is happening it then becomes the thing to do,which is not always the case.

The city says,we want to encourage development here,the armchair developers said,there’s no profit in it.

So the city says okay we will offset the loss with incentives with a hopeful return to the community long term when it is filled up with new houses.

300 plus lots is a lot of infill and a chunk of change in incentives.

So the question would be,without the incentives and based solely on market values would one find it feasible to build new in that zip code,based on 300 vacant advailable lots,you are right,I need to stay another night at a holiday inn express.

[Hermod]

"Armchair developer"??? DYes are only experts in spending other people's money!

[Richard]

Its a gamble in the hopes that the market in that zip code will increase by at least 50% in the next ten years,or 7 as the OP is hoping,because if it does not and the NEZ expires it is going to be a hard sell.

Is it the best use of taxpayers funds?

I would be more inclined and using dtcitylover as an example,with no offense,to say,okay,you have been paying X amount in rent for the last 5 years but you do not have the monies for the down payment or maybe some qualifications in order to be approved.

Figure the $800 a month plus property taxes and that determines how much of a house you can afford.

So then take a fixer-upper land bank house,add the renovation costs and that's what you qualify for.

So that includes the cost of the house and renovation costs as the total mortgage.

The catch is because you do not have the down payment you get to put some sweat into helping with the renovations,which is actually kinda good because then you know your house board by board and when something breaks you have the basic knowledge and confidence in order to fix it yourself,it is one thing to buy a house,it is another to maintain it.

To me that is low taxpayer risk,you are not going to dump money into something that exceeds current market value,you are using taxpayer monies for the renovation costs and the cost of the house but that is added to the total cost of the mortgage which carries an interest rate.

The difference is,instead of using a ten year tax abatement and the city is taking that same money and receiving an immediate return in property taxes.

The buyer is only able to acquire based on what they currently can afford and have proven that they were paying into the rental market,so in theory the loss or default is minimized.

They may only qualify for a smaller starter house and not actually what they want at the moment but they can reserve the option to move up in the future providing they have a income increase and it is what they can afford based on market increases.

Cities incentivizing neighborhood development is pretty common,but the problem is cities operate on a long term 10 20 years down the road in increased property tax base as a return.

But that puts a burden of sorts of the residents in the here and now,they want improved services now.

The city is doing good in planning for the future but I think there needs to be a balance so the current residents do not have to pay the price now and then wait 10-20 years to see the results if there is a way to lessen that.

[Richard]

The NEZ is transferable to a new owner. If they wait until the NEZ expires it will be hard to sell. The NEZ lasts at least 12 years. I will be evaluating wether or not to sell in about 7 years.

So you already know going in that it will be a hard sell when the NEZ expires.

That does not sound like you have much confidence in what you are doing.

You also told ihearthed that you did not have the answers to if it has to be your primary residence or if one can build multi family.

So you have signed up for the program,received a 200k plus custom home construction loan for a 1500 sqft house all without knowing about a primary residence requirement?

Or maybe trying to pump up neighborhood values by creating a bandwagon for others to jump on.

From an armchair developer standpoint I would figure that there would be not only a primary residence requirement and no multi family and throw in a you have to live in it for X amount of years before selling because otherwise speculators would be all over using taxpayer incentives in order to build their portfolio.

If you actually did it you would know those little pertinent details or would want to anyways.

[Corktown Mark]

How is it possible to put a house on a 30 * 115 foot lot while following code for set backs?

[O3H]

Zoning is written playdough, and ordinances are easily walked around.
If the tax revenue is substantial, all is forgiven and new development starts