Author Topic: Krazy Kommercial real estate around DETROIT!  (Read 16441 times)

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #20 on: February 16, 2017, 11:33:40 AM »
Hey all:

Sorry for the lack of updates & promised pictures.  I will be adding some this weekend.

In the spirit of the topic of the thread, I am also going to expand it to show other "odd" things that have happened in Detroit.

A few examples....

A). There are abandoned sky scrapers in Detroit.  Not just 1 or 2 either!  In the past few years though a few of them have been torn down, and a few have been rehabbed.  HOWEVER, there are still several still standing.  Some of them are also not 100 years old.  There is one near where I sometimes play poker that I think was built in the 60's.  A relatively modern looking 20 story building.  Totally vacant except for cell phone antennae on the roof.

B). There have been PRIME lots of land along the Detroit river that have been for sale as long as I've been alive.  I can remember walking past them and seeing "FOR SALE" signs as a very small child.  35+ years later they are still "FOR SALE".  Assuming there was 1 owner, there is no WAY they can make their money back after paying property taxes for 35+ years.

C). I and my father used to live in a CO-OP on the Detroit River.  A very nice luxury building...After the great recession, many units were simply given back to the CO-OP board as there was simply no resale market for them.  If these were in NYC, they would be million dollar units.  Property has come back to life in Detroit, and the vacancy rate has gone from 35% to now maybe 5%.  Value of the units has also come back, but still a crazy situation.

Dad bought his unit(s) around 1985.  He sold in 2007.  He got about what he paid.  There was almost no price appreciation in 20 years.  This was also before the great recession hit.

I am sure I will have some other examples too.  This weekend I am going to try and take some photos of stuff so readers will have examples of what I'm talking about....



InvestingOnSale

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #21 on: February 16, 2017, 11:44:25 AM »
Thanks for sharing DTEJD1997. Really interesting anecdotes and a reminder to be looking for value anywhere, not just in equities. Looking forward to hearing more.

Parsad

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #22 on: February 16, 2017, 11:47:03 AM »
Thanks for sharing DTEJD1997. Really interesting anecdotes and a reminder to be looking for value anywhere, not just in equities. Looking forward to hearing more.

+1!  Keep sharing...very interesting!  Cheers!
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DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #23 on: March 22, 2017, 12:10:07 AM »
Hey all:

I am sorry for the lack of postings & updates in this thread.  I've had numerous small things and small problems keep cropping up.  It always takes me more energy & time to complete things than I initially think.

Also, organization is not my strong suit...

With that being said, I do have some interesting information to report:

I had the tax hearing the other day.  I think it went relatively well, and I should get the results back very soon. 

Here is ONE of the unusual things that happened...

The counter clerk almost jumped when I came in.  He said he was shocked that I showed up on time.  I queried as to why that is odd.  He told me that just over half of the people that schedule a tax protest hearing simply don't show up.

OK, I sign in, and fill out the initial forms and then up in front of the board I go...

They repeat the same thing.  I go into my presentation about how "out of whack the taxes are", and then hand out my paper & research.  The board acts confused and what am I doing?  I then get confused, and state that the handouts have more details and specifics than what I am talking about.  WTF did they think it was?

The board members tell me that MOST of the people who show up simply start yelling about "the taxes are too high!" and want to "throw down" with the board members....I did not get the impression that the board members wanted to settle disputes with their fists...

I was the only one who looked up comparable sales, used a cash flow analysis, and a repair schedule for the property to show why it was not properly assessed.  They said I was by far the best prepared and the only person who had any significant documentation to back up what I asserted.

The board wanted to know how I knew what other properties sold for, and how did I get that information???  Simple, I filed the FOI request & got the last 2 years of commercial sales for the city.  The board wanted to have a copy of that.    I didn't print that up as I figured I was pushing it with 3 pages, and I figured they would have that information in front of them.  They weren't aware that this information could be easily pulled...

I was also given 30 minutes instead of the usual 10 minutes, as the next scheduled person did not show up.

So I think I made my case reasonably well, and I anticipate a good outcome.   The board stated that I was easily the most prepared person who came in front of them.

I was just surprised at how the actual process went, that so many people don't show up, that those who do simply complain and have little/no facts to back themselves up with...

I'll let the board know the result when I get it.

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #24 on: March 22, 2017, 12:20:48 AM »
Hey all:

Here is another interesting bit of information that I learned in preparing for my tax hearing.

While I think I got a reasonable deal on the property...I am not the only one who got a deal!  A commercial building about 1/2 mile from mine sold within the last year.

This building is an office building with a small parking lot. 


I have walked past it numerous times when i go out exercising.  It is on the infamous "8 Mile" road!  Do not fret though...Mad Max time starts about 1 mile further down 8 Mile.  This building is in a relatively safe area.  It is at an odd spot, three cities converge at that point...Eastpointe, St. Clair Shores and Harper Woods all come to together at that spot.  If you walk about mile to the west, you will hit Detroit proper.

Anyways, I estimate the building to be about 10K square feet.  It is a two story building.  It is currently being rented out to small businesses, offices are $199 a month with all utilities included.  I do not know if that includes internet/phone though...

One problem with the building though is that you have to climb some stairs to get into it.  I don't think it is ADA compliant.  Perhaps it is grandfathered in?

So how much would you pay for a building like this?

Tax assessment puts market value of the building at just under $450k!
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THE BUILDING SOLD FOR $110K.

So that is about what I paid, about $11/square foot.

Green King

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #25 on: March 22, 2017, 12:24:22 AM »
LOL, you got me at.
Quote
The board wanted to know how I knew what other properties sold for, and how did I get that information?

Cheers

Thanks for the information from the Streetz
GK

frank87

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #26 on: March 22, 2017, 01:00:27 PM »
I remember that there are similar problems with property taxes in lower-tier retail properties in Middle America. The taxes are assessed on property values that were based on values from years ago and were no longer current. I think that many of the property owners were also trying to renegotiate their property taxes.

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #27 on: March 22, 2017, 01:13:02 PM »
I remember that there are similar problems with property taxes in lower-tier retail properties in Middle America. The taxes are assessed on property values that were based on values from years ago and were no longer current. I think that many of the property owners were also trying to renegotiate their property taxes.
Yes, you are 100% correct.  I forgot to mention that I got my new tax assessment for the current year and the value went up like $600.  I think the assessor's office simply has a simple formula that every property is upped a certain amount EVERY YEAR.  If nobody contests over a 20+ year time frame, the assessed and ACTUAL value can be very different...

Pelagic

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #28 on: March 22, 2017, 01:58:25 PM »
I'm trying to get a handle on the incentive structure for the tax assessment board, perhaps you can shed a little more light on how they work.

I assume they're either elected or appointed by elected officials so ostensibly they work for the residents? What prevents them from just lowering everyone who petitions taxes, save perhaps those outwardly hostile to them in their hearings? Do they work under a quota where they can only reduce property taxes in a year by $X and you have to argue for a portion of that quota to be applied to your property? Other than people who piss them off, why wouldn't they reduce most petitioners taxes if they have a somewhat valid claim to it? I can't imagine they're being rewarded for keeping taxes high.

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #29 on: March 22, 2017, 08:11:02 PM »
Hey all:

Well, the bad news came in today...

The valuation of the one building was only lowered 38% and the other was lowered 40%.

I am a little distressed at how unprofessional the whole situation is.  When I got the decision, it is just a standardized, computerized form.  No comment as to how the board reached their decision, nothing...just the new valuation.

When I went in to contest it, there were standardized forms that you had to fill out, name, address, etc.  Towards the end, there is a spot for you to write the reason why you think the valuation is incorrect.  You would have a difficult time writing a complete sentence in the space provided. 

I put together a 3 page argument that used comparable sales, the buildings condition and costs needed to bring it up to a "rentable" condition...and finally a cash flow analysis.  What did the valuation board do?  Any analysis at all?  Even a single sentence?  NO.

This is just so silly.  The NEW TAX VALUATION is only 4X what I paid for the buildings, not the 6X what it formerly was.

I wonder if the board members would be willing to buy the buildings for HALF of the tax valuation?  I doubt it....

If these buildings are so @#$#%^ valuable, why didn't some other aspiring business man buy them?  They were for sale for MONTHS, almost a year.

Looks like I'm to the state level next...

I guess if it were easy, everybody would be doing it, and everybody would be rich...

 >:(