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larrywww

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Reply with quote  #1 
They have a TED talk on the subject.

https://en.tiny.ted.com/talks/drew_philp_my_500_house_in_detroit_and_the_neighbors_who_helped_me_rebuild_it

The author bought a house in Poletown without plumbing, electricity and over 10,000 pounds of trash.  (It doesn't sound like he invested much in due diligence---were there no better houses to buy?)

I must say that the statistics he quotes don't exactly inspire confidence this was a good idea (even if turned out, in his opinion, OK in many respects):

1. Over 40 square miles of abandoned neighborhoods in the 139 square miles within the city limits of Detroit
2. In 2016 (and this AFTER an up market since 2006) over 1/6 of the houses had their water cut off (which in a place with a serious winter means you may lose your plumbing, if they haven't already carted it off for scrap).  Also, what does this say about the tax base?  Who's paying for the defaulting water accounts ultimately?  
3. Since 2005, 1 out of 3 houses in the city have been foreclosed upon.  (This doesn't include those who didn't even bother to foreclose---write it off as a total loss, etc).   What exactly does this say about the tax base?

The gist of the talk is that he met someone who figured out how to gentrify the neighborhoods block by block----and the importance of not just restoring a house, but the neighborhood around it. (In fact, the inability in most instances to control the neighborhood may be the single best reason why this generally is NOT a good idea.)

I have heard that given the low inventory market Detroit is hot (at least in some areas).

Given you can't control your neighborhood, the schools, having jobs nearby, crime and homeless problems, the infrastructure and the city has budget problems---not sure this is the solution for most investors (unless they stick to the better neighborhoods with better schools and good infrastructure, etc).

Actually, since he quotes a statistic that half of all Michigan graduates leave the state, doesn't sound like this state is doing that great (forget about Detroit area in particular).

rickencin

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Reply with quote  #2 
Quote:
Originally Posted by larrywww


The gist of the talk is that he met someone who figured out how to gentrify the neighborhoods block by block----and the importance of not just restoring a house, but the neighborhood around it. (In fact, the inability in most instances to control the neighborhood may be the single best reason why this generally is NOT a good idea.)



There is no investment opportunity here.  All this proves is that people who work for a living will work to live in a nice place.

He's trying to sell some fantasy that poor, virtuous, ethical people can have a cashless society where they all help each other out.  The reality is that the poor, non-virtuous people are exploiting the 1,001 government handouts (SNAP, AFDC) to the "needy".  He jokes about being woken up by gunfire and doesn't mention drug abuse at all. 

The difference between China and America?  China has millions of poor people who will take low paying jobs and work very hard.  America has millions of poor people gaming the system.  The number will grow until the system breaks down and fails.  I am so old that I can remember when poor people were forced to take jobs as maids and gardeners.  Then along came the Great Society.  Nobody who qualifies for government handouts is going to do that these days.  

An interesting experiment is going on right here in Southern California.  Orange County Supervisor Todd Spitzer is chasing the poor squatters out of the Santa Ana river bed.  OF course, some Federal Judge demanded that they be give a place to live for 30 days.  Which he did.  We are about to see what happens when the 30 day clock runs out.  We will see how long the "extension" of benefits go on.  Outside homeless people snuck into the river bed trying to get the free housing.  It was mostly expected and stopped.  There is great interest across the country to see if anything can be done about homeless encampments.  The big mess this creates should be somewhat interesting.

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Rick
niravmd

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Reply with quote  #3 
Very interesting read. Thanks for sharing!
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