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| Foreclosed homes may seem cheap in Detroit — sometimes as low as $500. But experts warn that they come with hidden costs, including the payment of back taxes, and maybe even a few surprises for buyers.
According to mapping company Loveland Technologies, which has surveyed every property in Detroit, there are approximately 100,000 Detroit residents living in foreclosed homes. Some of these individuals are the former owners of the property, many of whom were unable to pay Detroit’s property taxes for the few services the city does offer. Detroit has the highest property taxes of any city in the United States, set by now-outdated assessed home values. Others may have been longtime tenants, and some, the company said, may even be squatters. Mary Wilbur, a 46-year-old homemaker, is one of those squatters. Wilbur and her 17-year-old daughter, Claire, live in a 1920s-era house in an area now called Fireweed Universe City, a so-called self-sustaining community filled with artists and activists. The house is part of the Grixdale Farms neighborhood, which was once known for drug crime and now is home to more than 500 vacant buildings. Wilbur and her daughter moved into the home two years ago after going through a divorce and losing her home to foreclosure; Claire had chosen to stay with her mother rather than live with her father instead. In the U.S., where around 40 to 50% of marriages end in divorce, the child custody arrangement isn’t unusual, but the living situation is. The City of Detroit used to give legal protections to squatters, insisting that the home’s owners were responsible for evicting residents. But in September 2014, the law changed, and now police are able to force squatters from the homes and arrest them on the spot. A few Detroit residents have gotten creative with repossessing or revitalizing homes. Darin McLeskey, who buys, sells and develops real estate in the city, took a “cheaper, easier and more amicable” route with a squatter rather than evicting the man. He and the squatter of an uninhabited home made a “cash for keys” deal, and McLeskey got the house from the man for $300. Back in October, an Austrian man named Nik Gindelhuber made a deal to buy a house in Detroit as an investment property in exchange for an iPhone 6. |
Category: Uncategorized
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Buyer Beware: Despite Low Prices for Detroit’s Foreclosed Homes, the Houses Might Already Be Occupied
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Denver City Council Imposes Stricter Rules on Non-Licensed Pot Growers
The City and County of Denver’s Department of Safety and Well-Being’s recent unanimous approval of an amendment to its municipal code will bring major changes to non-licensed marijuana growers.
According to a March 4 Denver Westword article, the amendment places a 36-plant maximum limit per 3,000 square feet on any non-residential, non-licensed marijuana growing zone within the city. Licensed marijuana cultivation facilities are exempt from the limit.
Because Colorado law allows all adults over 21 to grow up to six marijuana plants for recreation, many people choose to grow their six plants cooperatively in large, warehouse-like spaces. The 36-plant limit on these non-licensed warehouses was put in place to prevent health and safety hazards like overloaded electrical systems, blocked emergency exits and mold growth, among others.
The amendment, bill request 15-0109, received co-sponsorship from the Denver Fire Department. Along with forklift truck-related hazards, which are responsible for about one in four warehouse accidents, fire also poses a major safety risk, especially in a warehouse filled over its capacity with marijuana plants and electrical systems.
Currently, Colorado’s fire codes for its marijuana industry are largely based on the International Fire Code; none of the Denver Fire Code’s chapters offer any specific provisions for the industry. Fire codes vary by type of marijuana business, as well, between labs, dispensaries, grow facilities and manufacturers of infused product, FireEngineering.com reports.
The Department of Safety also drafted the amendment in an attempt to crack down on the black market and support licensed growers; currently, as much as 40% of Colorado’s cannabis supply comes from non-licensed growers.
Luke Ramirez, who owns a marijuana dispensary in Denver, said non-licensed growers are able to profit by selling their product on the black market, avoiding taxes and compliance requirements, the Westword reports.
If found to be violating the amendment’s terms, penalties up to one year in prison and a $999 fine would be given.
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Detroit Water and Sewer Services Will Soon Get Another Price Hike
Last summer, tens of thousands of Detroit residents had to deal with a disruption to their water service — and while this service has since been restored, it’s about to get a lot more expensive. According to CBS Detroit, officials from the Detroit Water and Sewerage Department recently approved an average rate increase of 9.3% for water customers living in the city and its suburbs.
The Board of Water Commissioners unanimously approved the rate change, which will go into effect for the 2015-16 fiscal year starting in July. These price changes will help fund a proposed $1 billion plan for capital improvements and long-needed repairs over the next five years, such as unclogging older sewer lines primarily obstructed by tree roots.
The rate increase varies depending on where one lives. Those living within Detroit’s city limits will pay 3.4% more for water and 16.7% more for sewer services. For suburban residents, there will be an 11.3% increase for water and 1.1% for sewer services.
These are significant rate increases — especially considering the fact that water rates have gone up by 119% over the last decade. It’s easy to see why many residents can’t afford these costs for such a basic staple of life. Currently, Detroit’s residents pay $75 per month for their water, compared to the national average of $40 per month, according toNext City.
Detroit’s water problem, in which the city cuts off water service to homes that have outstanding balances regardless of whether they have the means to pay them or not, has even captured the attention of the United Nations for its draconian nature.
“Disconnection (of water service) due to non-payment is only permissible if it can be shown that the householder is able to pay but is not paying — in other words, that the tariff is affordable,” a UN representative said.
Activists are currently calling for the establishment of a water affordability program that would give low-income houses in Detroit a way to have access to water without going through financial hardship, Next City reports.
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Michigan Passes Bills Allowing Adoption Agencies to Refuse Services
Three new bills passed by Michigan’s House Families, Children and Seniors committee could allow faith-based adoption agencies to refuse service to anyone who violates their religious beliefs. Specifically, the new legislation would allow agencies that take money from the state for placing children with families to deny service to same-sex couples so long as the agencies have a “sincere religious objection” and make a good faith effort to refer the couples to other adoption services.
The bills passed the committee as-is, without Democrats’ proposed amendments, which would have made the best interest of the child the overriding goal; required agencies to reveal their policies if asked; and required adherence to the Elliott Larsen Civil Rights Act and the federal Civil Rights Act.
The vote comes at a time when the U.S. Supreme Court is preparing to hear arguments regarding same-sex marriage in the near future, making the issue more urgent. On top of that, other states have passed legislation that prohibit the religious objections the new bills would allow.
“There is a movement to try and force them out of business. Other states have passed legislation that they have to accept anyone,” said republican State Rep. Tom Hooker. “The more kids we can get adopted, the less we have in foster care.”
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New Report Reveals House Flipping Activity Flopped to 4-Year Low, Detroit Among Cities With Highest Q4 Flips
House flipping, also known as doing the “fix and flip,” involves purchasing a home in need of repair and restoring it before selling in order to turn a profit. House flippers often put lot of love — or at least a lot of time, money, and labor — into fixing these homes from the inside out, which often includes landscaping. Money magazine wrote that landscaping can bring a recovery value of 100 to up to 200% come selling time. Now that’s curb appeal.
While housing flipping was once considered the next big thing in real estate — as illustrated by the number of reality TV shows focused on flipping — a new report revealed a steady drop in the practice over the course of the last four years.
RealtyTrac’s Q4 and Year-End 2014 U.S. Home Flipping Report revealed that 136,269 U.S. single family homes were flipped last year, which equates to 5.4% of all single family home sales. While that may seem like a high number of flipped homes, in reality, it’s the lowest share of flips since 2011.
A grand total of 32,578 U.S. single family homes were flipped in the fourth quarter alone, representing just 5.3% of all single family home sales during that quarter. The 5.3% share of flipped homes in the fourth quarter had increased by 11% from the previous quarter, but was still down 12% from only a year ago.
The average gross profit, or the difference between the original purchase price and the final flipped price, for completed flips of single family homes in the fourth quarter came in at $65,993, which represents 37.1% gross return. This was an increase from the average gross profit of $65,285, or a 36.5% gross return, in the third quarter, and an average gross profit of just $63,017, representing a 36.4% gross return, in the fourth quarter of 2013.
So, why the sudden drop?
“Investors have picked much of the low-hanging fruit when it comes to home flipping over the past three years since home prices bottomed out in the first quarter of 2012,” explained Daren Blomquist, vice president at RealtyTrac. “As home price appreciation slows to single digits in most markets, flippers need to be more selective and creative about the properties and neighborhoods they target.”
Zip codes with the highest share of Q4 house flips in the report include Detroit, Los Angeles, Memphis, and Miami. Among those zip codes with at last 10 single family home flips that were competed in the fourth quarter of 2014, there were 10 in which flip made up 25% of all single family home sales during that quarter. Metropolitan areas with top 10 zip codes for share of flips in the fourth quarter were Detroit, Los Angeles, Memphis, Miami, Jacksonville, Florida, Tampa and San Diego.