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
(page 3 of 3)
Istamboulian says his biggest client is Fabian Tan, owner of Midas Development Corporation in Singapore.
"According to him, they're going to revitalize one neighborhood at a time," Istamboulian says, adding that they've "mapped out a five-year plan" to purchase whole neighborhoods. "We started a year ago with roughly 110 houses," he says; they've steadily obtained packages of 10 to 15 houses.
"Out of 280 homes just purchased a few months ago, they just finished 40 of them last week." He says most have already sold to investors.
"These crews can't work fast enough for people who want to move in," he says; they have a waiting list for tenants.
Midas' website includes testimonials from people such as Singapore investor Shawn Moh, who says, "With so many investments in the market, Midas is truly a rare gem for offering a fixed 15 percent per annum rental yield for Detroit houses!"
The Midas website says the company "has provided affordable rental homes for 300 families in Detroit" with "a portfolio of more than 500 homes in the renovation phase" and "plans to acquire and manage up to 2,000 more distressed single-family homes by 2014."
Istamboulian says he's hosted seminars to sell Detroit real estate to investors in Singapore, India and China, with plans for Vancouver, Great Britain and Australia.
But his team recently canceled a California trip; the Midas homes sold so quickly, Istamboulian says, that they had no inventory to offer investors.
"We actually wanted to move a little faster; we were shooting for 100 a month." Standing in a freshly painted, two-bedroom bungalow that's being renovated on Detroit's east side, Istamboulian adds, "It's good for the city. The neighbors are happy, the investors are happy and the tenants are happy."
"I'm very happy being here," says Keith Bingham, 38, beaming in front of the three-bedroom brick bungalow that he's rented for seven months. "My landlord is a good guy. I asked him to cut down a tree and he came right out and took care of it."
Istamboulian says when Midas Development obtained the house at the county tax auction in October, its busted roof and boarded-up windows made it seem destined for demolition.
But now it's got a picture window, white shutters, a new roof and a manicured lawn on a vibrant street.
Bingham, a health care provider, says the house enabled him to leave a rougher neighborhood and provide a nice home for his five kids; he hopes to own it someday. "It's home!" he says.
Detroit's real estate revolution coincides with Wall Street investors buying homes in bulk across America, says Alan Mallach, senior fellow at the Washington, D.C.-based Center for Community Progress.
Detroit investors, he explains, "are putting in millions, not billions," like giant hedge funds investing in the Sun Belt.
"I've got my fingers crossed for these Detroit investors," Mallach says.
Beydoun says everything will get better with time.
"I believe wholeheartedly that our city is already turning around. It's in the process. If you look at (home) prices increasing in value and inventory in the market, that equalizes stabilization of the market."
Investors cite other indicators of Detroit's renaissance: Quicken Loans founder Dan Gilbert's plans for downtown, more companies moving downtown, the Ilitch family's commitment to Detroit, and the opening of Meijer and Whole Foods Market.
Istamboulian says complete revitalization is "not anything that's going to happen quickly. Hopefully, in 10 years Detroit will be vibrant."