Detroit Homes Become Big Investment for Realtors
International and local real estate investors are buying up vacant and abandoned homes in the metro Detroit area in hopes to revitalize the city
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"What got everyone up in arms in the neighborhood was they took one of our beautiful houses and took all the landscaping out," says Helen Broughton, an 18-year East English Village resident. "I understand it saves money from a business perspective, because it costs money to manicure. But if they downgrade the look of the neighborhood, who's going to move in?"
Attracting quality renters is a concern that residents share about any investor.
"Until the crash of the mortgage industry, this area was 98 percent homeowners," says Stacy Pugh, president of the Rosedale Park Improvement Association in the northwest Detroit neighborhood of nearly 1,600 houses, where Metro purchased 61 houses.
"Now we've seen a shift in that a lot of renters who couldn't afford this area before (have moved in, and) sometimes they bring the bad habits with them," Pugh says, citing grilling on the porch, violating noise ordinances, putting a basketball rim in the middle of the street, and parking that blocks the street, corner or berm.
"I can't say that these are all (Metro) properties," Pugh says. "I'm giving you some of the issues we face with new people moving into the neighborhood."
Balistreri, 27, says East English Village has experienced individual "slum lord" investors who have not maintained properties or resolved complaints.
However, Balistreri says he has received no complaints about Metro tenants. And he has assurance from the company that "if we have any issue with a tenant, it's a no-tolerance policy ... they'll evict them and find someone else."
So far, he says, "the tenants in the neighborhood have been great," and several young homeowners who've moved in have attended neighborhood meetings.
Beydoun—with a 99 percent occupancy rate and a tenant waiting list—says he's so committed to smoothly integrating renters into traditionally owner-occupied neighborhoods that Metro is developing a course teaching tenants about home maintenance, neighborhood culture and ownership.
"The American Dream of home ownership is where the residents of Detroit will prosper the most if things come to light for us," says Beydoun. "We say it all the time: Our goal is not to be landlords in the city. Helping someone become a homeowner is a big issue for us."
That's why he says his company has met with Quicken Loans' Fresh Start Program to help tenants raise credit scores and qualify for mortgages.
Meanwhile, Beydoun says his landscaping crews mow more than 900 properties across the city—about 250-300 a week; vendors are penalized for complaints or fined if problems are not remedied within 24 hours.
Balistreri says he recently called Metro to clean up a "trash pile" in front of a house, and "they took care of it within 24 hours. That is indicative of my experience with (Metro); they're very responsive and quick."
Beydoun welcomes feedback: "If everything that you heard was 100 percent positive, then it would sound staged."
Metro donated $500 to each neighborhood association, he says. "At first they said, 'What do you want for this?' We said, 'It's like the olive branch to extend our good faith to show you that … we're going to be good community partners.'"
Broughton says she was impressed when the association requested a meeting with Metro and the company met with the board and members—and agreed to fund the area's "voluntary paid security patrol."
Residents are relieved that more investors mean fewer squatters.
"My block is one of the longer blocks with 55 or 56 addresses, and some are two-family flats," says Latisha Davis, 37, an East English Village block captain. "Last summer, I think my block had … 12 vacant properties. Of those, five houses had squatters. This summer, I think I may have one."
Balistreri says the problem has improved significantly. "When I first moved in, there were two or three squatters. I can say for certain that there are no squatters on my block now."
Istamboulian adds: "There's a lot of criminal activity with abandoned homes. Sometimes you risk your life because of the lawlessness. You really have to be careful. I've walked into homes with squatters, and run into people taking drugs in the home."
Vandalism is another problem. "You can't leave a finished home unoccupied," he says. "When my guys finish a home, overnight vandals come in and break the windows; steal the furnace, water heater and air conditioner. We have to pay people to stay at the homes until a tenant moves in."
Still, Istamboulian says, "The pace is actually picking up right now," especially along the Grosse Pointe and Southfield borders. "Slowly, the neighborhoods are changing."