Try To Flip Quick Or Try To Get Off Demo List?

2 Replies

Hello. I recently made a purchase on two foreclosed homes - one being in Detroit. My partner and I had come to find out after an extensive research session that many houses on the same block had been demolished over the past year or two. It turns out that in March of 2018, an inspector from the city had walked the property and placed the house on the list to be demolished with a provision to reopen the case due to the integrity of the house having some potential to be saved pretty much. My partner and I didn't put a lot of money into buying the house and figured we could simply resell it to another buyer who was willing to fix up the property, but we were also contemplating going through the paperwork and submitting the application anyhow and having an inspector come to take a look at the house and possibly take it off the list if the house meets their requirements of course. We are worried that worst case scenario the inspector will find something structurally flawed with the property and we will be out the money due to the fees of the application/inspection eating into our already tight profit window. Has anyone else dealt with Detroit houses on the demo list before? Do you think it is worth it to get the house off the list or just try and flip it to another buyer who is looking to rehab the property? If my partner and I were to go the route of trying to find a buyer to sell to, how long would we likely have to flip it before the city decides its time to demolish it? Thanks guys for your help!

@Alex Rodolitz

I haven't worked over in Detroit.  There is a similar process here in Des Moines, however.  I actually re-habbed a property that had been condemned which is where we currently live.  It's a beautiful house and I'm proud of the work.  I'm glad I didn't know the house had been condemned when I did the project - I don't know that I was mentally prepared for that uncertainty.

The process here goes:

  • First declared a public nuisance
  • Then fully condemned and put on a list to demo

That said, most cities have very limited resources with regards to actually demolishing and give a huge nod/bias to situations where investors are fixing stuff up.  No idea what you're dealing with over there but I hope this is helpful.

Generally speaking once something gets on the public nuisance list, then there is quite a bit more scrutiny during the project than normal.  That can add cost.

The main question I have is can you handle the project, and can you speak to options/risks associated with any structural needs, if any? Secondly, does the project pencil out financially? I'd think these two things have to be true to really move forward....

My partner and I's plan was always just to turn around and sell the property to another investor anyhow. I've called the buildings safety engineering and environmental department in Detroit and asked them a few questions about how long I would have before the house itself would be demolished. The woman I spoke to told me to call the Land Bank Authority because the demolition department doesn't make that decision. So I called the Land Bank Authority and they told me that the house is not on the demo list yet - which I of course know it is not since the original clerk I spoke to told me that an inspector determined back in March that it may be structurally in tact and they still need to make that decision - the Land Bank Authority clerk than wondered why I was calling because the state didn't declare the property to be demoed. There is really a lot of back and forth on this house and confusion in general in Detroit it seems to me. As I said, I just want to pass this house along to someone else who is willing to rehab the property for a flip or rental. I think my question is really, how much time do I have before the city comes and demolishes the house so I know for my own peace of mind and so that I can communicate that information to any interested buyers?

Thank you Jim for your response. Glad you decided to rehab that property. Sounds like a great project!

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