This week in bizarre Detroit real estate news, a group called Home Team Detroit has been in the spotlight. To recap, on Monday, the Detroit News reported that the group had big plans for buying up all the auction properties headed to the foreclosure auction this fall. Then they decided to settle on 2,000-4,000 homes in the northwest side. According to the Detroit News, “The homes are in an area that is south of Eight Mile, west of Woodward and just east of Telegraph. Its jagged southern border reaches Fenkell and, in some cases, beyond that.”
The article stated that their approach would be a land contract deal, specifically:
“The development group says it has the resources and expertise to buy the properties, fix them up and find new residents. Prentice says the group has a plan that allows it to work with people traditional lenders won’t touch because of credit ratings or because of the locations of the properties.
The group’s financing plans are centered around the controversial land contract system. Also known as contracts for deeds, land contracts are alternatives to mortgages. Tenants make payments directly to the property owner and often have no ownership stake until the entire debt is paid.”
On Tuesday, the city refused the proposal, saying the group needed to prove itself on a smaller scale first. Melvin “Butch” Hollowell, the city Corporation Counsel, said maybe start with nine properties and see what happens.
“The city does not support this proposal,” the statement said of the proposal by the Home Team Detroit development group. “We have a number of serious concerns, especially Home Team Detroit’s ability to deliver on such a massive scale with no particular track record to suggest they would be successful.”
In the Free Press, Nancy Kaffer offered a critical look at the plan, saying,
“Leaving the costs of property acquisition aside, to make or keep 4,000 tax-foreclosed homes inhabitable would require, at minimum -- based on a back-of-the-envelope calculation using numbers that vastly underestimate the real costs of such an enterprise -- $20 million.
And let's be clear -- there is no development company out there with a track record that suggests it could handle acquiring and rehabbing up to 4,000 properties in one fell swoop. This is not a thing. It wasn't a thing the last time someone made noise about buying and rehabbing thousands of homes, and it's not a thing now.”
So Curbed readers, we’d love to hear your take on the whole deal, or non-deal. As always, the comments are open.