Author Topic: Krazy Kommercial real estate around DETROIT!  (Read 16434 times)

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #50 on: August 06, 2017, 12:12:28 PM »
Hey all:

My apologies for not updating this thread like I said  I would.  I fully plan to make some very interesting updates in the days to come.

I have learned some SHOCKING things since the last update that I made.  Some things that have shaken me to the core.  I will share a couple of them today, and perhaps the 3rd one at a future date.

A). When I was in high school & undergraduate, I lived in a co-op along the Detroit River.  This is a high rise building that is just under 20 stories high.  It is a very nice building, with a manned desk 24 hrs. a day, access to the property is controlled through a manned guard shack.  The building is a "luxury" building with a heated pool, restaurant, grocery, gift shop, beauty salon, work out room in the base of the building.  There is heated parking (important in Detroit) with a valet along with "regular" parking in a parking structure or lot.  The building is on right on the Detroit River with spectacular views of it, Belle Isle, Canada, and downtown Detroit.  My Dad lived there and owned a few units for about 20 years.  He might have lost a small amount when he sold & moved back around 2006 or so...in 2008, the market collapsed and the co-op had trouble.  A few years ago, the vacancy rate went to around 35% or so.  This would have been 2015?  It got to the point where a few units were given back to the board.  The owners simply had moved on/passed away, and no longer wished to pay the monthly association fees.  So they simply gave the unit(s) back and received a release from future payments.  THAT IS IT!  Units were worth almost nothing...

Keep in mind, that if this were in NYC or LA, or other major cities, the units might be million dollar places.  The location is A+...the building is solid with luxury amenities...

Fast forward to today and the occupancy rate is close to 100%, about 98% to be exact.  Units are now being resold for actual money.  Prices are not high...but have come back substantially.  When I heard that units were being given away in 2015, I figured there a real possibility of a death spiral in the building.  With a vacancy rate of 35%+ the remaining owners monthly association fees went up SUBSTANTIALLY.  It would be very unappealing to potential buyers...

HOWEVER, the market has turned, I thought there was a good chance it never would.  There are vacant buildings very close to this building.  It is very KRAZY that this situation even exists, as it is right on the river and about 5 minutes from downtown.

So that situation has turned around completely!!!!!!!

Situation number two is that there is now a commercial tenant in my Dad's old office building!  It was sold in 2006 to a "developer" that never really managed to develop it until a couple of weeks ago.  It sat vacant for 10+ years...the neighborhood has gone down TREMENDOUSLY.  Many of the liquor stores have shut down.  You KNOW things are bad in Detroit when even the liquor stores are shutting down!  There are many burned out houses in the area. Further down the street there have been some marijuana stores opening/attempting to open.  THIS IS A VERY ROUGH AREA, even for Detroit.

The tenant is a hair salon, and there are TONS of those in the area, and it is probably a low quality tenant...but they are in there and have a chance.  The first tenant in 10+ years.  There are still lots of vacancies and failed businesses, but there a few NEW businesses.  Perhaps that neighborhood is having green shoots and starting to turn around?  I never thought it would.

Finally, I saw a deal that was probably even better than the one I got...but that story is for another time.


DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #51 on: March 12, 2018, 10:59:25 PM »
Hey all:

Once again, I apologize for not updating this thread like I said I would...

It is now time to do battle with the tax assessor's office again.  I have been helping one of my neighbors contest his taxes. 

I have done a little bit of research and Detroit has BY FAR, the highest commercial property tax rates in the country.  Please see:

http://www.nreionline.com/finance-investment/top-10-cities-highest-commercial-property-taxes


Commerical property taxes are suppoesed to be about 4.1% in the city proper.  Rates can be higher than that in the suburbs.

Many people who do not live here think that Detroit is an inexpensive place to live, as they here stories on the news about $500 houses. . While the Detroit area certainly can be inexpensive IF YOU KNOW EXACTLY WHAT YOU ARE DOING...there are many "traps" for the inexperienced.

In addition to the high commercial property tax rates, another example is auto insurance, which is most certainly the highest in the country. 

While that is very high, there is a "hidden" tax in that the roads and highways are in TERRIBLE shape.  Every winter most people get blown out tires & or damaged suspensions on their vehicles.  This happened to me last year and my father TWICE this winter.  He has footed repair bills of close to $800 this season.

I also have an associate who used to have a Cadillac CTS-V.  He eventually gave up on it and sold it, as the tires & rims would get repeatedly blown out in potholes.  I have had high performance sports cars in the past, but would not drive one in the Detroit area.  The roads are just too bad.

Water & sewage is incredibly expensive also.  A few months ago my father had a $3,000 monthly water bill as one of his toilets was running.  I don't know if Detroit is the highest in the country, but I bet it is close.

Gasoline is also expensive, but it is not the highest in the country.

We've also got state/local income taxes.

So you've got problems, but you've also go opportunity if you can do it right.  With all those problems...where else can you BUY commercial office space for $12/square foot in the suburbs that is not bombed/burned out?

SlowAppreciation

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #52 on: March 13, 2018, 05:19:27 AM »
Hey all:

My apologies for not updating this thread like I said  I would.  I fully plan to make some very interesting updates in the days to come.

I have learned some SHOCKING things since the last update that I made.  Some things that have shaken me to the core.  I will share a couple of them today, and perhaps the 3rd one at a future date.

A). When I was in high school & undergraduate, I lived in a co-op along the Detroit River.  This is a high rise building that is just under 20 stories high.  It is a very nice building, with a manned desk 24 hrs. a day, access to the property is controlled through a manned guard shack.  The building is a "luxury" building with a heated pool, restaurant, grocery, gift shop, beauty salon, work out room in the base of the building.  There is heated parking (important in Detroit) with a valet along with "regular" parking in a parking structure or lot.  The building is on right on the Detroit River with spectacular views of it, Belle Isle, Canada, and downtown Detroit.  My Dad lived there and owned a few units for about 20 years.  He might have lost a small amount when he sold & moved back around 2006 or so...in 2008, the market collapsed and the co-op had trouble.  A few years ago, the vacancy rate went to around 35% or so.  This would have been 2015?  It got to the point where a few units were given back to the board.  The owners simply had moved on/passed away, and no longer wished to pay the monthly association fees.  So they simply gave the unit(s) back and received a release from future payments.  THAT IS IT!  Units were worth almost nothing...

Keep in mind, that if this were in NYC or LA, or other major cities, the units might be million dollar places.  The location is A+...the building is solid with luxury amenities...

Fast forward to today and the occupancy rate is close to 100%, about 98% to be exact.  Units are now being resold for actual money.  Prices are not high...but have come back substantially.  When I heard that units were being given away in 2015, I figured there a real possibility of a death spiral in the building.  With a vacancy rate of 35%+ the remaining owners monthly association fees went up SUBSTANTIALLY.  It would be very unappealing to potential buyers...

HOWEVER, the market has turned, I thought there was a good chance it never would.  There are vacant buildings very close to this building.  It is very KRAZY that this situation even exists, as it is right on the river and about 5 minutes from downtown.

So that situation has turned around completely!!!!!!!

Situation number two is that there is now a commercial tenant in my Dad's old office building!  It was sold in 2006 to a "developer" that never really managed to develop it until a couple of weeks ago.  It sat vacant for 10+ years...the neighborhood has gone down TREMENDOUSLY.  Many of the liquor stores have shut down.  You KNOW things are bad in Detroit when even the liquor stores are shutting down!  There are many burned out houses in the area. Further down the street there have been some marijuana stores opening/attempting to open.  THIS IS A VERY ROUGH AREA, even for Detroit.

The tenant is a hair salon, and there are TONS of those in the area, and it is probably a low quality tenant...but they are in there and have a chance.  The first tenant in 10+ years.  There are still lots of vacancies and failed businesses, but there a few NEW businesses.  Perhaps that neighborhood is having green shoots and starting to turn around?  I never thought it would.

Finally, I saw a deal that was probably even better than the one I got...but that story is for another time.

1300 E Lafayette by chance?

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #53 on: March 13, 2018, 08:34:56 AM »
Hey all:

My apologies for not updating this thread like I said  I would.  I fully plan to make some very interesting updates in the days to come.

I have learned some SHOCKING things since the last update that I made.  Some things that have shaken me to the core.  I will share a couple of them today, and perhaps the 3rd one at a future date.

A). When I was in high school & undergraduate, I lived in a co-op along the Detroit River.  This is a high rise building that is just under 20 stories high.  It is a very nice building, with a manned desk 24 hrs. a day, access to the property is controlled through a manned guard shack.  The building is a "luxury" building with a heated pool, restaurant, grocery, gift shop, beauty salon, work out room in the base of the building.  There is heated parking (important in Detroit) with a valet along with "regular" parking in a parking structure or lot.  The building is on right on the Detroit River with spectacular views of it, Belle Isle, Canada, and downtown Detroit.  My Dad lived there and owned a few units for about 20 years.  He might have lost a small amount when he sold & moved back around 2006 or so...in 2008, the market collapsed and the co-op had trouble.  A few years ago, the vacancy rate went to around 35% or so.  This would have been 2015?  It got to the point where a few units were given back to the board.  The owners simply had moved on/passed away, and no longer wished to pay the monthly association fees.  So they simply gave the unit(s) back and received a release from future payments.  THAT IS IT!  Units were worth almost nothing...

Keep in mind, that if this were in NYC or LA, or other major cities, the units might be million dollar places.  The location is A+...the building is solid with luxury amenities...

Fast forward to today and the occupancy rate is close to 100%, about 98% to be exact.  Units are now being resold for actual money.  Prices are not high...but have come back substantially.  When I heard that units were being given away in 2015, I figured there a real possibility of a death spiral in the building.  With a vacancy rate of 35%+ the remaining owners monthly association fees went up SUBSTANTIALLY.  It would be very unappealing to potential buyers...

HOWEVER, the market has turned, I thought there was a good chance it never would.  There are vacant buildings very close to this building.  It is very KRAZY that this situation even exists, as it is right on the river and about 5 minutes from downtown.

So that situation has turned around completely!!!!!!!

Situation number two is that there is now a commercial tenant in my Dad's old office building!  It was sold in 2006 to a "developer" that never really managed to develop it until a couple of weeks ago.  It sat vacant for 10+ years...the neighborhood has gone down TREMENDOUSLY.  Many of the liquor stores have shut down.  You KNOW things are bad in Detroit when even the liquor stores are shutting down!  There are many burned out houses in the area. Further down the street there have been some marijuana stores opening/attempting to open.  THIS IS A VERY ROUGH AREA, even for Detroit.

The tenant is a hair salon, and there are TONS of those in the area, and it is probably a low quality tenant...but they are in there and have a chance.  The first tenant in 10+ years.  There are still lots of vacancies and failed businesses, but there a few NEW businesses.  Perhaps that neighborhood is having green shoots and starting to turn around?  I never thought it would.

Finally, I saw a deal that was probably even better than the one I got...but that story is for another time.

1300 E Lafayette by chance?

SlowAppreciation:

No, it is not 1300 E Lafayette.  A long, long, long time ago, I had relatives that lived in that building.  My best childhood friend lived maybe 1/4 mile from there.  I've walked/driven past 1300 E Lafayette more times than I can even begin to count...

I do not specifically know if things in 1300 E. Lafayette got as bad as the other co-op...I am sure that in 2008-2009 they got hit pretty hard.  Now, they are probably doing much better.  1300 E. Lafayette is close to Greektown/Downtown.

The co-op I lived in was a few miles further down along Jefferson, past the Belle Isle Bridge.


DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #54 on: March 13, 2018, 09:13:46 AM »
Hey all:

Attached is a photo that I believe was taken in 1930.

This is of a neighborhood that I grew up in as a child.  The building that I grew up in is "Indian Village Manor" and it is the second large building, going from left to right.  The 1st large building is Alden Park Manor.

I had mentioned this area in one of the early posts on this thread.  Specifically, that there were properties along the Detroit River that had been vacant as long (longer actually) than I had been alive.  Some of these pieces of land in question are the two houses near the top of the photo, circled in green.  Those mansions were torn down before I was born.

Looking at this photo is fascinating for me.  The first time I saw it, I probably looked at it for 15 minutes....There is so much detail in it.  It is instantly recognizable to me, but many, many things have changed, and many things I've never seen.

For example, there appear to be 4 HOUSES on top of Alden Park Manor!  Maybe these are "penthouses"?  I do not believe they are there today.  The estate to the LEFT of Alden Park manor belonged to one of the Ford family members.  It was eventually sold & torn down...the UAW Solidarity/house headquarters is now there.

The large park in back of Indian Village Manor is now largely gone, given way to parking lot.

The large dock in the river near Alden Park Manor is gone...

The building next to The Detroit Towers (being built in 1930) has been leveled and was replaced by Shoreline East.  I would guess that Shoreline East was built in the very late 50's or early 60's.

Lastly, that photo/area looks WAY more prosperous in 1930 (Great Depression) than what that area currently is...


SlowAppreciation

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #55 on: March 13, 2018, 12:09:28 PM »
Very interesting. I asked because I know some people who bought there in the last few years, and the story was similar to yours.

It's been a couple years since I was in Detroit, but I was going there about once a month for a few years there. Every time I came back, new things were opening and development was occurring. But there was still A LONG way to go... How are things coming along these days?

DTEJD1997

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Re: Krazy Kommercial real estate around DETROIT!
« Reply #56 on: March 22, 2018, 03:48:31 PM »
Hey all:

Well, the property tax board appeals decisions came out today....

I didn't get what I was asking/arguing for, but I got a 35% reduction on one property, and a 37% reduction on the other property's assessed value.

I am not 100% sure, but I think this is probably "close enough" and not worth going to Lansing to appeal...I will have to check some records and make sure my figures are correct though.

So finally, after two years of arguing & going in front of the board, I finally think I've come close to what things should be.

So that is a bit of good news!