Author Topic: Krazy Kommercial real estate around DETROIT!  (Read 16406 times)

Spekulatius

  • Hero Member
  • *****
  • Posts: 1949
Re: Krazy Kommercial real estate around DETROIT!
« Reply #40 on: March 23, 2017, 10:33:06 AM »
Ok, my 2 cents as a transplant from Germany, then to California and now in Long Island (New York). The reaal estate taxes  become less logical on every step of my journey.

In Germany, RE taxes are so low that they are not worth fighting over. Probably about $200/year. in CA, taxes were about 1.25% of the value at the time of your purchase, adjusted for inflation. After the financial crisis, I was able to reduce my taxes simply by sending in a form letter with property value estimates that I got from refinancing my home. sInce property values had dropped momentarily below my purchase price, I was able to get it adjusted very simple.

In Long Island, taxes vary significantly from town to town and even from property to property and no one can tell you exactly why.You can fight your taxes, but need to hire a specialized lawyer firm that takes half the tax savings for the first year as pay. It seems to work most of the time, but even after that, taxes are absurdly high at about 2.25-3% of your property value.
The reason for this is as oddballstocks stated is that taxes are a patchwork of federal, state, county, city and township legislation which has been developed over the years and is incoherent.
To be a realist, one has to believe in miracles.


DTEJD1997

  • Hero Member
  • *****
  • Posts: 1463
Re: Krazy Kommercial real estate around DETROIT!
« Reply #41 on: March 23, 2017, 11:27:48 PM »
Hey all:

Thanks for all the interest and comments, I appreciate it.

I don't think the specialized law firms would work too well....they take 1/2 of the savings.  They would therefore have to get an 80%+ reduction to equal what I got on the first round.  I just don't think they would have been able to do that, no matter how "juiced in" they are.

I did a little checking around and here in Michigan, property tax work does not really seem to be that big a business...as compared to Texas, where it well developed.  From the little bit of research that I did, I got the very distinct impression that the firms involved with it would probably not be interested in "small potatoes" like me.  They appear to be dealing with large commercial developments (malls, factories, etc.).

That leads me to think that this might actually be a good business to go into.  It certainly is not "rocket surgery".  Heck, I can do it myself!

I also want to apologize for not getting pictures of some other interesting real estate situations in the Detroit area.  Detroit is kind of like a weird alternate reality.  Normal rules of society & economics simply do not always apply here...

I exaggerate a little of course, but the stories I could tell about the things I've seen/experienced ONLY in Detroit...

rkbabang

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 3914
Re: Krazy Kommercial real estate around DETROIT!
« Reply #42 on: March 24, 2017, 06:04:01 AM »
Hang in there. There is an innate conflict of interest built in the process since your taxes pays their salary. With budgetary problems they are facing dragging their feet is perfectly normal.

Exactly.  I can picture themselves asking "Holy hell! What if everyone only paid taxes on what their property was worth?"


crastogi

  • Full Member
  • ***
  • Posts: 142
Re: Krazy Kommercial real estate around DETROIT!
« Reply #43 on: March 24, 2017, 07:02:11 AM »
Hey all:

Thanks for all the interest and comments, I appreciate it.

I don't think the specialized law firms would work too well....they take 1/2 of the savings.  They would therefore have to get an 80%+ reduction to equal what I got on the first round.  I just don't think they would have been able to do that, no matter how "juiced in" they are.

I did a little checking around and here in Michigan, property tax work does not really seem to be that big a business...as compared to Texas, where it well developed.  From the little bit of research that I did, I got the very distinct impression that the firms involved with it would probably not be interested in "small potatoes" like me.  They appear to be dealing with large commercial developments (malls, factories, etc.).

That leads me to think that this might actually be a good business to go into.  It certainly is not "rocket surgery".  Heck, I can do it myself!

I also want to apologize for not getting pictures of some other interesting real estate situations in the Detroit area.  Detroit is kind of like a weird alternate reality.  Normal rules of society & economics simply do not always apply here...

I exaggerate a little of course, but the stories I could tell about the things I've seen/experienced ONLY in Detroit...

I did use a firm for my detroit rentals, and they did bring it down significantly.  Keep in mind savings accrue every year, while the fees are due only the first year,  so the savings do add up.   

SmallCap

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 346
  • Nothing at Tesla
    • Business Mastery
Re: Krazy Kommercial real estate around DETROIT!
« Reply #44 on: March 24, 2017, 01:18:44 PM »
I live over on the other side of the state of Michigan in the town of Holland on the shores of lake Michigan.

I have had some simple success with walking into the assessors office and asking him to take a look at the value of a property.
I bought a house for 34K and it had a taxable value of 58K so I walked in and asked him to look at it and he came back with a taxable value of 29K :)
One cool thing about Michigan is that as long as I hold it the taxable value can only go up by the rate of inflation.
So even thought I put 12K into the house and it's now worth 140K-160K, the taxable value is only 31K.

Also if anyone is curious I am currently renting this house out for 1200.
My tax bill is $1853 and insurance is 650.
Love watching what people can accomplish through business.
www.sethgetz.com @sethgetz

DTEJD1997

  • Hero Member
  • *****
  • Posts: 1463
Re: Krazy Kommercial real estate around DETROIT!
« Reply #45 on: March 31, 2017, 11:56:32 PM »
I live over on the other side of the state of Michigan in the town of Holland on the shores of lake Michigan.

I have had some simple success with walking into the assessors office and asking him to take a look at the value of a property.
I bought a house for 34K and it had a taxable value of 58K so I walked in and asked him to look at it and he came back with a taxable value of 29K :)
One cool thing about Michigan is that as long as I hold it the taxable value can only go up by the rate of inflation.
So even thought I put 12K into the house and it's now worth 140K-160K, the taxable value is only 31K.

Also if anyone is curious I am currently renting this house out for 1200.
My tax bill is $1853 and insurance is 650.

Smallcap:

I did my undergraduate work in Grand Rapids.  A wonderful place to be, and some of the best times of my life were there...I often think of going back there...I love West Michigan!

Your houses tax value is $31k, and the tax bill is $1,853?  Residential property tax is 6% in Holland?  That seems a bit high! 

******************
On a different note....

I went through an old neighborhood.  My Dad used to have his law office there, and I spent many, many, many hours there.  It is improving!!!!  Some of the liquor stores have even reopened!  Of course, not everything is perfect and it is still a VERY rough neighborhood.  I am not kidding when I say it is "rough". 

Things got so bad in that area, that even a bunch of the liquor/party stores shut down.  Besides gambling and fighting, Detroiters LOVE TO DRINK BEER/WINE/LIQUOR.  So you know when even the liquor stores are shutting down, THINGS ARE BAD.

Another further sign of improvement is the house that I lived in high school, now is no longer boarded up!  It is still vacant, but maybe somebody is going to start to improve it?  Maybe even make it habitable to live in?

Sadly, this neighborhood is literally MAD/MAX, warzone type of area.  Heroin & other drugs have really been bad for this area (when is heroine ever good?)...many houses have been leveled, many are burned out (looking like a war zone) and many are boarded up, and many are vacant.

I've often thought about maybe doing a photography experiment....take photos of the buildings, photo shop out any cars, and make the photos black & white.  Maybe artificially age them and make them scratchy looking.  A casual observer might think it from WWII inside of Germany maybe?

Maybe if Saturday is bright and sunny, and I'm feeling particularly adventurous, I'll take some photos.

it is one thing to read me babbling on about the weird goings on in Detroit, yet another thing to see it...

Cigarbutt

  • Hero Member
  • *****
  • Posts: 1270
Re: Krazy Kommercial real estate around DETROIT!
« Reply #46 on: April 08, 2017, 07:48:43 AM »
Interesting link perhaps about property taxes in the US.
http://www.marketwatch.com/story/want-to-see-how-america-is-changing-property-taxes-hold-the-answer-2017-04-07?mod=MW_story_top_stories
Interesting comment about the property tax Laffer curve.
Relevant for Detroit? Cyclical or vicious circle?

Spekulatius

  • Hero Member
  • *****
  • Posts: 1949
Re: Krazy Kommercial real estate around DETROIT!
« Reply #47 on: April 08, 2017, 08:42:52 AM »
Well, can the taxes realy go to zero, if the property value goes to zero? A house may cost 30k, so if you keep the property tax at 1.2%, like it is in other parts of the US, this is $360 per year, can this really pay for firefighters, schools etc?
I agree that property taxes are too high in some areas, but at some point, you need to look at the tax as the price for services provided, not a percentage of the value of the house.
To be a realist, one has to believe in miracles.

DTEJD1997

  • Hero Member
  • *****
  • Posts: 1463
Re: Krazy Kommercial real estate around DETROIT!
« Reply #48 on: April 08, 2017, 09:26:45 AM »
Well, can the taxes realy go to zero, if the property value goes to zero? A house may cost 30k, so if you keep the property tax at 1.2%, like it is in other parts of the US, this is $360 per year, can this really pay for firefighters, schools etc?
I agree that property taxes are too high in some areas, but at some point, you need to look at the tax as the price for services provided, not a percentage of the value of the house.
An interesting question!  I would counter that it is MUCH better for a city to $300 or $400 a year in taxes than nothing...

Also, a property that is having it's tax paid is more likely to have somebody living in it and making repairs, picking up trash, keeping the crackheads & urban miners at bay, etc.

There is a massive, Massive, MASSIVE problem with properties being behind in taxes, and properties simply abandoned.  Large areas of the city are vacant...block after block after block.  There was a report saying that something like 65,000 structures need to be demolished in the city of Detroit...I am going to guess that 99% of those properties are not paying taxes.

I also have heard of property owners simply REFUSING to pay property taxes...Why should they?  They will probably not be evicted from the property for back taxes.  A lien is simply placed on the title...The property owners are not worried about that, because the market value is zero, or very close to it.  In that case, a lien is ineffectual.

The city of Detroit, they also have alternate revenue generating schemes besides property tax.  For example, there is a LOCAL income tax.

I also think the city gets a cut of sales tax.

There is also a "personal property tax" for businesses that have more than a certain amount of inventory and fixtures....is it $75k? 

Detroit also gets a taste of the taxes paid by the 3 MEGA casinos.  If it were not for the casinos, the city would have been bankrupted many years ago.

They also get money from writing tickets & civil asset forfeiture.

I am also sure there are ways that I don't know about or simply forgot to list...

Cigarbutt

  • Hero Member
  • *****
  • Posts: 1270
Re: Krazy Kommercial real estate around DETROIT!
« Reply #49 on: April 08, 2017, 05:12:12 PM »
Fair enough. So a new equilibrium has to be established.
Maybe then costs related to public services (and pension liabilities) may need to be lowered also. Not easy. Kind of sticky.
Time for price discovery?
Restructuring is by definition painful.
Sharing the pain makes sense.