Tax lien system blamed for blight in Indianapolis

6 Replies

It was kind of strange opening up the paper this morning and finding myself in a photo (the guy in the blue shirt behind the guy with his bid card up} blaming the Marion Co tax sale investors for the blighted communities in Indianapolis.

I think the article makes some good points, though.  A vacant house that goes to sale time and time again and stays vacant for 5-10 years is not worth it for anyone.  Maybe a large city should sell deeds, instead.

http://www.indystar.com/longform/news/2015/11/14/b...

A lot of finger pointing with no definitive root-cause analysis. Leave it to the expert journalists... I have a love/hate relationship with the Indy Star. 

Very interesting article. I don't know enough about the auctions and the tax lien system to have an opinion, but definitely an interesting read. Seems like if they limited or cut out the big funds with a lot of code violations from buying at the auctions, some of the problems could be reduced, though probably not resolved.

@Dennis Weber   interesting slant on things.. we have the same issue in Portland we have 6 blighted homes that have have multiple offers for 50k over ask  ( just kidding but not really )

I bet in our city of over 2 million you could not find over 150 vacant boarded up homes and if they are some rehabber is getting ready to totally redo them... 

Its just the area you guys are in.. OLD cities with huge amounts of very old inventory. In our market the oldest inventory is close to downtown and its also the most expensive.. often selling for 300 to 500 a sq ft. for a remolded PDX 4 square.  We never had hoods so you just don't have blight like this.. same with most West coast cities. other than LA and Oakland.

This is really not that complicated in appraisal world its physical and economic obsolescence.. Too many home for the amount of people that need them. Just like Detroit it has 40,000 more SFR's than people that can use them..

Foreigners be them from Singapore or CA get sucked into this really cheap stuff not really understanding what a Hood is and a Ghetto is.. they will lose most if not all their investment over time of that I have no doubt.  Most of these areas are beyond help.. you can buy the stuff rehab it try to rent it only to have it destroyed by tenants within 24 months. I have one client from Aussie who bought a low end duplex in INDY 60k he rehabbed it 3 times in 20 months finally sold it and lost over 50k on it.. not possible for out of area folks to turn they hoods around if they are going to turn around it needs to be you local dudes. ( if you even want to) most locals won't touch this stuff this is why its owned by unknowning out of area people who got sucked into it... Same thing happens to one off investors buying cheapo deals in your cities.. they get wiped out more times than one would know.

Now I know one company there in Indy that I have funded over the years that buys at tax sales and they pick off nicer stuff its not all this inner city blighted stuff. rehab them and sell them turn key.. not the best stuff but sells in the 50 to 75k range so C stuff.

If the city wants to fix it they just simply need to tear it down.. once they get enough tear downs in a certain area they can re-position or zone the dirt and create new uses or housing.

@Joel Schafer , I have a hate/hate relationship with the Star so you are a better person than I.

I didn't go to the Marion County sale.  At the sales I did attend there were plenty of individuals who were delinquent on their taxes, not just the evil corporate types.

I don't know what the solution is.  However, for every company that was mentioned in the story there are multiple investors who are buying distressed properties, performing nice rehabs, and upgrading neighborhoods.  But that story remains largely untold because it doesn't sell newspapers.

Originally posted by @Jeff James :

@Joel Schafer, I have a hate/hate relationship with the Star so you are a better person than I.

I didn't go to the Marion County sale.  At the sales I did attend there were plenty of individuals who were delinquent on their taxes, not just the evil corporate types.

I don't know what the solution is.  However, for every company that was mentioned in the story there are multiple investors who are buying distressed properties, performing nice rehabs, and upgrading neighborhoods.  But that story remains largely untold because it doesn't sell newspapers.

 @Jeff James precisely. There are many indy BP members that have been successful at executing exactly that.

This is part of a long running series the Star has been running, and I think they've done a nice job on it. The current system (tax liens) used is terrible, and why most cities have gone away from it. Most all buyers of liens have no interest in taking the property....they are just trying to collect the 10-15% interest. If the owner doesn't redeem, the lien holder just lets it go back to sale. Or take title, slumlord whatever they can get out of it for a couple years, then abandon. That's how we end up with properties that are perpetually stuck in purgatory. The treasurers don't want any reform as they need the revenue....but it's a very short sighted strategy, IMO. 

I don't fully agree with Jay, there are many urban areas close to downtown Indy that are full of renewal and the demand is there by retail buyers. Indy isn't Detroit. The tax system as is makes it very difficult for would be rehabbers...in some cases.  In others, I agree that tear downs are a better option. The city has just begun a new ' abandoned home ' law that allows for much quicker resolution of vacant property.