How to Benefit from Detriot?
Last week, I saw the news Bankruptcy of detroit. Lets see how do we benefit from it.
Over the last 2 years the city realised that if it gives tax incentives, it draws people back. And that is what it has been doing! But without a good budget it restricts the free play and scalability of this action. Filing for bankruptcy allows the city to focus on Rebuilding Detroit. It allows the court to rule the income received to be diverted to uses such as infrastructure, lightings, security and education. Which are the basis to attract people back to the city. Having good schools, a strong police force and a beautiful surrounding allows the middle income from the suburbs to return to the city. And by filing for bankruptcy, it allows the court to pull the hand brake and tell the creditors to wait. Since the creditors are stubborn and unwilling to back off, they get nothing. But technically, now the money channel back to the deserving residents.
What to look forward for as investors?
1) With more $ to relight the city, clear it’s thrash and upkeep the landscape. It definitely increases the rental value of any estate. Which results in an increase in yield in years to come.
2) With schools having funds to employ more teachers and subsidy for education, more people will pour into the city.
3) With more occupation it increases the tax base, allowing the city to relax on the property maintenance budget hence a lower property tax in the city.
4) With budget to feed a bigger police force, the crimes will reduce and gives even more confidence for the suburban residence to move to the city. The city is filled with so much more sturdy homes compared to the suburbs it’s such a pity to keep them unoccupied.
5) With the suburbanners coming in, more home buyers will be available. Home buyers, drive up the home prices. And that means an appreciation in property prices for US.
You should also know that;
The city has been granted $10m from the feds to clear blight. Which will create jobs in the city for the next 3 years to come.
The allocated funds for section 8 is not affected by the bankruptycy.
A $220M renovation to a convention centre is about to complete. Bringing in Business tourist to the city to fill up the occupancy of 5 new hotels totalling to almost another 1000 rooms in Downtown. Allowing more commercial spaces to sprout out and contribute to the city’s coffers.
So what do you guys think of the future of Detroit?
Comments (2)
hi paul, you can click here to see the tax benefit. http://www.detroitmi.gov/DepartmentsandAgencies/PlanningDevelopmentDepartment/BusinessDevelopment.aspx
Arh Elaine, almost 13 years ago
Hello Arh, Thank you for highlighting these positive aspects and ongoing developments in Detroit as well as some potential opportunities for investors. Could you speak a bit more about the tax incentives that the city has been offering to attract citizens back? Are there any incentives specifically for investors? Where can one get this information? While it is good to have incentives in place, do you have any statistics that might indicate what impacts these incentives may have had or are having? It is often very difficult to shake off persistent negative opinions, strategic marketing and other image management efforts can play a powerful role can achieving this. Though intangible, these aspects are just as important as the other concrete financial and structural efforts being made to turn around the city. Changing the city's image so that a) people who have left want to come back and b) perhaps even more importantly, influencing those who have never lived there to take a chance on the city, will be critical for its future. My 2 cents!
Paul Hector, almost 13 years ago