Early again? Despite the big drops, I am now interested...
... in looking at R.E. investments in Cleveland, Detroit ...
=====================================
... Chicago, and other cities in the Great Lakes region
=======

Despite never having risen much since 2000, like another Midwest City (Detroit),
Cleveland Real Estate values have fallen sharply in the last 7 months, and it looks like
they may wipe out ALL THE GAINS since 2000 before long.

FALLS SINCE JUNE 2007 - various Cities:

mo.: +CSXR. / +S20R / Miami , SanFran. -NYC-, Boston, Chicago, Denver Detroit, Cleve.
jun. : 217.33 / 199.43 / 264.89, 209.48, 209.34, 171.29, 165.94, 138.09, 110.70, 118.33
dec : 200.73 / 185.01 / 231.71, 189.23, 202.32, 164.59, 160.03, 130.98, 103.30, 112.07
J.08: 196.06 / 180.65 / 225.40, 183.81, 200.49, 162.59, 156.47, 128.98, 100.17, 108.49
Chg.: - 9.8%/ - 9.4%/ - 14.9%, - 12.3%, -4 .2%, - 5.1%, - 5.7%, - 6.6%, - 9.5%, - 8.3%

The biggest monthly falls were in January, so it looks like 2008 may be the worst year yet.

CLEVELAND has been added to the Cities tracked on the Schiller index thread:
http://www.greenenergyinvestors.com/index.php?showtopic=2362

The Great Lakes - Another advantage shared with Detroit and Chicago.
It is not only the world's largest fresh water resource (I believe), but it is also liked to the global
markets by water through the St.Lawrence seaway- a huge advantage for exports traveling by sea.

Foreclosed properties held by banks - plenty around the Great Lakes

- note: That red spot below the D in "Detroit" is Cleveland.

Big Picture, the city can be rebuilt around its rail links, its downtown, its universities, and its renewed
ability to compete in a global market as the US dollar falls - That's my thesis, but is it correct?

You could buy shares in repo companies too and really make a killing

I have been considering this myself. Could be some good opportunities in Cleveland but lots of homework would have to be done first. Best time to buy something could still be a couple of years away yet.

Now is the time to start "the homework", since if you wait for the bottom,
you will wind up grabbing the first "bargains" you see, and may not have zeroed in on the
most strategic areas.

I started thinking seriously about Hong Kong many months before I bought my first property.
Now I own nine. So starting now may be wise even if the bottom comes next winter, like I expect

(Want to know more about opportunties in Cleveland? I have collected some info : here )

The rust-belt? Hmm, you really need to do some research into those cities, the demographics, the income figures, numerous social issues, the whole thing.

I personally would never even consider going near the place yet alone investing in it.

Are you talking about the very bottom end of the market?



There are properties in these areas that are selling for $1 to $100, some say these properties are worthless. Personally I think they are worth significantly less than zero, what you’ve got to take into account is that there is no demand to live there what so ever, most of these areas are just too dangerous. The houses get vandalised, burnt out or taken over by junkies.

These areas may recover, but how long will it take, 10 or 20 years?. In the meantime you’ll be responsible for paying local taxes, rates ect. I remember areas like this in the UK, in the mid 90’s. the police viewed vandalised houses as a risk to public safety and would force owners to keep the property secure (to stop little kids getting in and hurting themselves). I’d check that out with the US authorities, it could cost you thousands.

Also, the cost to renovate these houses (which you may have to do more than once, due to repeat theft and vandalism) would far exceed the potential re-sale value.

It’s not just a case of buying something cheap and waiting for it to go up in value IMHO.

Bubb, off to the states for 2 months in May, Oklahoma, I will be looking for bargains whilst over there. Whats the crack over owning a property abroad where you are non-resident? What happens if, for example, squatters move in and you are told to move them on, but are living abroad?

Probably best off with Northern California or Oregan.

At least it's nice up there.

Thanks doc for sharing your thoughts. I'll be checking GEI & elsewhwere to keep my eye on this one.

If the world continues to warm, the Arctic ice will disappear, and then the northern coasts of Canada/US and Russia will be in a rim surrounding a new open seaway. Think what happend to the Pacific Rim and the states surrounding the Baltic Sea (and the Atlantic before that, and the Med before that). Trade explosion.

I remember reading a big article on a massive future polar shipping boom in 'The Business' a few years ago.

Fun to think about, but a lot of 'ifs' there.

I had quite a few props in US the majority in Rochester and Buffalo on the lakes. They were foreclosures and it was pretty tough going all the way. Had a bad run with locals and ended up with an ex cop who turned out to be crooked as well. The locals did well but of all the overseas investors and out of towners I knew off they found it pretty tough.

Absolutely stunning properties built when the Eyre Canal was starting up. Great cities, very big, lots of infrastructure largely underused. If I was going to do it again which is unlikely I would reccomend working the high end of the market in these cities as the low end is pretty tough even for seasoned investors. Investing in US as foreigneir can be tricky at time with repsect to financing, structures, taxtion etc but possible of course. With the US $ being weak could also be a good punt ie if the house price doesn't go up but the dollar strengthens you are in front.

Texas, Nashville and some other southern states markets have been very steady achieving good yield and growth and still are as far as I can see as they havent had a boom.

My cousin who lives in NYC has just bought two waterside in FLA for about 50% of last year prices and he thinks that has got to be a good buy, time will tell no doubt. He cant understand why I wont buy any of them as he thought that I had rocks for brains buying in Rochester.

Bardon

Any knowledge of Canandaigua and towns round the Finger Lakes? Desk research suggests it could be attractive.

Finger Lakes has a good name and I have heard good stories with respect to investing success mostly larger type devlopments and by locals. I have never been there either and i wouldn't bet my house on it though. My relatives who live in NYC have went there on holiday there is wine making and things like that. My understanding is that those areas are a completely different ball game to the cities. Just as inner city is a completely different ball game to suburbs within the city metro areas.

Population is going to increase in the longer term in the US well after it has started to decline in Europe I think this is significant. I also think that there are a lot of vacant properties in the smoke stack cities and they are depressed areas so there is a significant time period from whne populqtion growth actually starts to take up supply. I hvent done the research recently but Bufflo nd Rochester population was declining when I last looked and I think it still is. I also think that it will change one day and start to increase dont know when though. The country once again is different.

This is a good resource for investment research for US Metro areas it didn't have finger lakes but it has Canandaigua shows median price growth last year of 5% and steady mostly white population as opposed to say Rochester which is -5% which demonstrates that the regional towns are different and probably better from a social and econcomic point of view.



http://www.bestplaces.net/city/Canandaigua-New_York.aspx


City Overview
As of 2007, Canandaigua's population is 11,317 people. Since 2000, it has had a population growth of 0.47 percent.

The median home cost in Canandaigua is $226,500. Home appreciation the last year has been 5.35 percent.

Compared to the rest of the country, Canandaigua's cost of living is 6.58% Lower than the U.S. average.

Canandaigua public schools spend $7,931 per student. The average school expenditure in the U.S. is $6,058. There are about 14 students per teacher in Canandaigua.

The unemployment rate in Canandaigua is 3.70 percent(U.S. avg. is 4.60%). Recent job growth is Negative. Canandaigua jobs have Decreased by 0.91 percent.

Canandaigua General SperlingViews


People
The 2007 Canandaigua, NY, population is 11,317. There are 2,461 people per square mile (population density).

Family in Canandaigua, NY
The median age is 40.1. The US median is 37.6. 50.21% of people in Canandaigua, NY, are married. 13.08% are divorced.

The average household size is 2.22 people. 17.89% of people are married, with children. 8.99% have children, but are single.

Race in Canandaigua, NY
94.21% of people are white, 2.07% are black, 1.00% are asian, 0.29% are native american, and 1.56% claim 'Other'.

1.41% of the people in Canandaigua, NY, claim hispanic ethnicity (meaning 98.59% are non-hispanic).

Economy
The unemployment rate in Canandaigua, NY, is 3.70%, with job growth of -0.91%. Future job growth over the next ten years is predicted to be 11.95%.

Canandaigua, NY Taxes

Canandaigua, NY,sales tax rate is 7.25%. Income tax is 7.13%.

BArdon

Very many thanks for that.

Planning to take an exploratory trip later this year. I'll report back.

You could always go up to Rochester and collect a few bad debts for me.

When you are out there open up a bank account, put some money in and get a debit card. This will give you a track record for your FICO score which will help you with finance if you want to go ahead later.

Good luck I will be very interested to hear how you go. Its all quite exciting stuff.

when you say "early again" are you suggesting you've been early in successful property investment? I must be a genius I started in 1983; buying first house When you take in the vastness of the States and the disparity of rich/poor and the social divisions causing such slum areas that you can buy a house in Flint for dollars on E-bay I'm not sure you have created a thread worthy of much discussion. Throwing $10k on a wreck to forget about it to then realise the rewards in 30 years is one thing, but...

problem with these $100 properties is no-one wants to spend the $12K to knock them down

gutted shells in a hell-hole.

I had forgotten that.
Global warming could push people back into the middle of Continents,
increasing the attractiveness of a "protected" place with fresh water, like the Great lakes area

Good post, Bardon. (You ought to look at the GEI thread about Cleveland.)
I think an apartment building, located near transport might be a smarter move than individual houses

I am not talking about $5k or $10k homes. You need to think bigger picture, about:
+ Places of employment for tenants
+ Tranport ofr them to get there
+ How cities will be rebuild around mass transit
+ Catalysts that will bring in big investment from others

If you saw my threads on HK, how I selected areas for investment, and the results (50% pa ungeared),
then you might get a sense for what is possible. My interest has existed in this topic for years,
but I didnt dare o unleash it in a Bubble market like the UK. But I learned plenty from the brownfield
development, and regeneration that I saw in the UK. The time to apply those principles to the USA
is fast approaching. Cheapness will create vast opportunity, since it si cheaper to redevelop an abandoned
area than one full of expensive homes.

Help yourself, Dr Bubb. If you are out to make your fortune, good luck to you. However, most of us are just trying to work out how to get by - how to make ends meet, raise a family, that kind of silly stuff.



Edited for typo.

Hi, I made a post on this a while back http://www.housepricecrash.co.uk/forum/ind...c=70147&hl=

After seeing media and the forum had articles about houses for $100 it doesn't seem to work out that way.

If you buy a house from a state auction you can be liable for some deliquent taxes or the interest on them, privately there isn't this risk. You just go to an office and show proof of ownership to get them cleared. Either way these don't come to much as houses are repossesed quite quickly and they want to avoid putting people off. Even rich people find the taxes high in Detroit, Wayne County compared to much nicer places. The offical line is "Generally no"

Tax is based on mils, a mill is $1 per $1000 of the value rated by the state, which is good on the way up and bad on the way down. It's only about 83mils for Winter+Summer or one year. YOu would pay around $830 pa on a a 10K house. It is capped after certain periods and reductions are available but still cheap.

The main cost is Housing Code, in 2004 Detroit changed that to Blight Notices to make it civil instead of criminal and speed up demolitions and fines. Blight Notices are weeds in the garden, old sofa in the backyard, parking on grass, graffiti, vermin or animal droppings, not clearing snow from the sidewalk (which you are responsible for repairing) fences not maintined. The minimum fine is $100 per day, up to $10,000 so these bombed out $100 shells would have a load of violations tacked onto them. The state has to maintain the property the same way owners do, so they really really want to get rid of it or just demolish it after reposessing for Tax or liens Banks have the same reason to dump it, $1 is the real value $100 pays for the adverts. There was a buy a house for a dollar scheme where you do the work yourself to fix it up and they waive certain requirements, but in at least one case the bank came back and paid the Tax bill so taking ownership and all the work was wasted by the new "owner", it's a vicous cycle as the City has less and less Tax income so squeezed people more, taking money from anyone who would pay, corruption played a part as well.



Before selling you need a certificate and inspection with a time limit of around 6 months to fix these problems. Both will cost money and failing to fix the faults can get you fined again. Work on a small scale you can do yourself, like replacing a small section of sidewalk or redoing fencing, but anything else must be done by a contractor which will add further costs. The adverts I can see all ask the buyer to get the certificate done not the seller.

If you want to BTL the property must be certified for renting which is as strict selling some landlords have recently been fined and had assets seized and a lien put on the houses. Vacant properties can be demolished so being a non resident doesn't stop the responsibility to repair and maintain to a high standard.

Overall it would seem to cost about $1500 to buy and whatever costs to bring up to standard which would be 30K or so, then tax would be based on the rateable value so around 2.5K if you arranged discounts. Buying and leaving it alone would just result in reposession, fixing is expensive and BTL slightly more so.

In addition only 18% or so of people pay the fines, collection and enforcement tends to be a risk in Detroit, amny abandoned houses are used as squats or places to store weapons and stolen cars.

People in America can see the same low prices and people in Detroit could easily afford to buy and know the best areas. Any single or double family residence carries so many regulations you either don't pay like some landlords do and try to get what money you can out of it, or pay loads and then have no profit and a very limited rental market.

There may a very good case for BTL in proper real estate costing 70K or more and getting a reasonable return in nicer areas but nothing amazing from the $100 or $15K houses


The only get out I found and then lost relates to non resident vacant properties with no violations and someone to maintain it, so you could buy, lock it up and then aim only for capital gains like in the UK with 1/4 million or whatever of empty houses. But how likely is that in Detroit.

http://www.ci.detroit.mi.us/fintreasury/faq.htm
http://www.ci.detroit.mi.us/dah/default.htm
http://www.detnews.com
http://www.detnews.com/apps/pbcs.dll/artic.../802190329/1409

http://www.telegraph.co.uk/news/main.jhtml.../wdetroit06.xml

Thanks for that info. All those 'bargains' being so tempting this is very valuable info. I guess those $100 deals would only make sense for someone who would want to live in it.

good research there

Yes perhaps a better strategy and good solid cash flow. You could concentrate your efforts and management in this situation. Eggs in a good basket and look after the basket with a hand picked live in manager.

Absolutely. In HK, 8 or my 9 properties are in the building that I live in. The building is well-managed, and there is good security, perhaps even too much security. I do the initial clean-up and redecoration of each flat myself, so that I can get to know each property. Normally not much work is required, and I can get the flats ready to be rented within one or two days. Since I live within the bulding, I can walk to the flat within a few minutes, and I see the tenants from time-to-time in the complex. I also have gotten to know the people on the Owners Committee, and am considering running myself, in an election next week. I am anything but an absentee landlord. And any investment I make in a building in the US would need a similar sort of commitment from owners, or experienced hands-on managers.

Anyone who buys a $100 house in the midwestern Rust Bowl states, is buying a headache. If they are prepared to live with the headaches, and invest in upgrading the property, and also he neighborhood it is located in, then they may one-day have a great investment return. But that will not come without tackling all the detailed problems along the way.

I wouldnt consider such an investment, because I grew up in Detroit, and have a pretty good idea of what the headaches are, what the neighbors would be like, and what the risks to personal safety would be. I am fortunate to have enough capital to play the recovery game on a different scale, buiyinga building for $1 million or more. I would raher make a 300% return on $1 million than a 3000% return on $10,000.

Have none of you tw@ts ever considered working for a living?

Maybe creating some value, or doing something useful, rather than just looking for the next 'get rich quick' opportunity.

The concensus on this site is that houses are for living in, and that the bubble of of the last 10 years has deprived many of the chance of owning a home.

And yet here you are, seriously discussing the investment opportunities of buying into peoples' misery in deprived areas of the USA.

A pox on all your houses!

Hear, hear.

The reason we are in this financial mess is because speculation has taken the place of investment. We need to return to building real value through effort. Unless the prevailing casino mentality is replaced by one of creating real and lasting value, we are finished. It is impossible to build an economy on betting with fictitious money - just book-entries. We need to invest in technology and manufacturing and trade and agriculture and return betting to the casino where it belongs.

I do about 60 hour a week on my day job so dont get to worried about it. I also know that in some of the depressed areas that are discussed here the locals are crying out for investment in housing. They want and encourage people to invest in their housing and to improve the general amenity. Everyone I worked with in the US was very happy that I was renovating and improving things I dont think you actually understand what the feeling is on the ground up there and you definetly cant compare it to your little world. I think you might be barking up the wrong cave here.

As for your loathing of the BTl'r that fine to and that may be the consensus but it doesn't mean that everyone who invests in property is a scum bag. You have it in for the johnny come lately BTl'r again no worries but what about the wealthy and upper class that have always owned property in the UK. What about that whole elitist class thing that people get killed about that is just the way it is have you ever thought about that. What about the average person who invested in property once in there live you might even know someone that does is this a bad thing or is it just the lightweights who bought between 02 and now that are lowlife ?. What about the richest man in the UK whats all that about then who is the biggest problem him or someone who bought an investment property in a competitive market ?

Personally speaking, I would be more worried about the war mongering goverment, people killing machines, evil people and evil deeds that are been done and have historically been done in the name of the UK than someone who invests in housing in a depressed area of the US.

Rule Britannia

Hmmm....OK, so let's say you buy a few run down houses over the years in for example Liverpool, (and I mean run down) you bring them back to a good standard as do many other developers/speculators in close proximity and suddenly the area looks better, feels better.... You make perhaps approx. 30K per house for your gamble, is that wrong?

I wouldn't call that gambling. Repairing derelict property to convert it from inhabitable to habitable is useful work. It involves materials and labour and adds real value to the locality and to the economy. However, flipping property - buying low and selling into a rising market using borrowed funds, and taking a profit from nothing more than using leverage, is pure gambling.

Agreed, if you look at Maxwell's points, in respect of buying in the US, it's not as simple as some would like to think. There are areas of the US that will never recover in real or nominal terms. The areas are so vast it's simpler and more cost effecient to build another neigbourhood. Unless the OP is single handedly going to spin the earth the other way on its axis and arrange for Detroit's disenfranchised to build cars again in competiton with Asia then certain areas of that state will remain as they are IMHO. I can fully understand yours and others objections, however, Bubb is a full time investor/speculator, that's what he does.

Isnt Chicago famous as the home of Boeing?

Cheap dollar = lots of Aircraft orders from abroad....

All makes sense to me (as long as you do your homework as you say). On a macro level, the US never got as expensive as the UK (let alone Spain) and has fallen the furthest so far.

To me the best thing a BTL landlord could be doing right now (or in the very near future) is looking for properties in areas of the US with a high proportion of properties bought by sub-prime borrowers. The best way to think of it is this: There have been huge amounts of new properties built for sub-prime borrowers who previously could not get access to funds. These people are either simply walking away from their debts (after all, they never had a credit rating anyway) and handing in their keys or are being foreclosed on. The process of selling their houses to recover their debt is a tricky one as the only natural buyers are would-be other sub-prime borrowers, but no one is lending to them any more. So, the only other buyers are investors, but most investors in the US are far too busy tending their existing wounds to start buying more real estate – especially in run-down areas. This means there are essentially no bids in auctions, and the anecdotal evidence I have heard of auctions in Detroit confirms this. So, I suspect that you can get (or soon will be able to get) some pretty attractive yields (even on much lower absolute rental levels) by buying relatively new properties below 20% of their original sale price…

Buy in Chicago on that basis.












I see you've done as much investigation as the average inside track member. Boeing are based in Seattle.

All these places need is a fresh coat of paint, new carpets and curtains…..

http://youtube.com/watch?v=T6WKMNmFsxM&feature=related

Some large detached brick built houses (about a minute in), not just sub prime wooden huts.

Gawd. How pomposs!

Let me get this straight...
If you get paid to be an analyst for a big City bank, and someone else uses your work badly and makes average returns, passing the ideas on to anonymous investor clients, that's fine, because "it's a job.". But if you do the work yourself, and use it in your own investing to support yourself (And also give away many of your good ideas for free on the internet), then somehow you are "not working"?

Believe me, I work far harder than 98% of the people who read these threads, and get superior results, thanks to that hard work and years of experience. That's real work, gents, whether you believe it or not. It's not as easy to support yourself this way, as you may think- try it sometime! The fact that you guys get some of it for free, and want to bite that hand that feeds you the free ideas - that's just amazing to me !!

Buying from banks who foreclosed, or saving someone from foreclosure... is adding to someone's misery??

Hardly. The real villains were those who talked the markets up, encouraged people to take on dangerously overpriced investments, and failled to do their homewor\k on cycles while encouraging others to take too much risk.

Youve got your heors and villains mixed up, my friend! Who has been warning strong against stupidlity and recklessness on tehse threads for years, and over thousands of postings.

Getting sensible people to make clear-headed investments, to help SAVE neighbors and neighborhoods, and build a future when prices are cheap, is a positive act, not contributing to the mess.

Keep posting on this Dr Bubb its much appreciated. I'm interested in this thread and thinking along the lines of an exploratory trip later in the year. However considerable research is required. I'd move over there to do it, so I think I'm going to start investigating the visa options. However I'd always keep a base in the UK.

Out of intellectual curiosity more than anything else - how many times over do you need to recursively apply this rule before you reduce the possibility of further downside to say $1 in every $100 invested?

I really appreciate your posts and find them very informative, I don't have a pension and would like to learn more about making my own investments for the future.

If only we all had your millions to play with

No need to move too fast.
This is the time of investigation and explorations.
Flaws may be uncoverd, dangers exposed, new opportunities may arise.

But the bright glow of opportunity will nit be easily seen by most, amongst the clouds of depression

They simply grew from earlier, smaller, opportunities

So you started out poor?

Spot on, well said Methinks! Where are the threads discussing the opportunities in investing in scientific research, high precision manufacturing, engineering etc? Where is the discussion about creating things of use and worth to mankind? Y'know real things. Merely looking to re-enter the next speculative bubble is simply repeating the mistakes of the past.

Decorating and selling the same houses back to each other is utterly pointless economic activity and is the dumbest form of capitalism, second only to being a BTL leech

Edit: to add leech bit

....and the quality of tenant, in a certain economic recession, in a country that is famous for its one (used to be two) wage packet from the gutter 'philosophy'? just doesn't compute IMHO. Buy now, wait for the upswing in twenty years? Bonkers

My first major score was a stock I purchased for $2,000, which went to $8,000.
With that profit (and some other smaller ones), I bought a small studio apartment, after a cyclical
bust- years ago. It grew from there... and later from some savings socked away from my salary.

But without those investment profits, I would have had less capital, and less confidence...
and might have been unwilling to back my own investment ideas

Well doubtless they are taking place somewhere but this is a forum dedicated to houses and it already has issue's with remaining on topic. Hence why the mods have been tougher recently relegating say gold to respective investment categories.

I can't quite see what the objection is. Many on this forum are in the market for a house at some stage presumably when they have fallen substantially in price. I can't see what difference it makes looking for a house in the UK, the US or Spain?

However it will be a very long time before anyone can whip up a speculative bubble in housing again. Well, not for at least for another 10-15 years when everyone has forgotten the last time.