Detroit fire, a photo by Sam Beebe, Ecotrust on Flickr.
I had an interesting conversation last week about my buying and holding interests in Detroit. I was told about the documentary "Detroit on Fire" by Constance York, a woman who spent about two years talking to the members of the Detroit Fire Department (DFD) and the unprecedented number of fires there.
According to the film, "there are an estimated 70,000 vacant homes in the city, but the numbers change daily and don't include vacant buildings". Detroit had "approximately 6,500 fires in 2008 with 60% - 70% of them being arson". DFD continuously fights an unusually high number of them on a daily basis, and the numbers increase annually. The setters of these fires are as varied as their motives for setting them. While fire damaged buildings can be part of an investors portfolio - a way to obtain property, rehab it, and then sell or rent it for a profit - Detroit poses a unique problem.
The best strategy might now be to buy, demolish and hold. A maintained vacant lot may be the best way to help rebuild the city. If you choose to demolish a property, please use a reputable demolition company as the unconfirmed conspiracist theory suggests that demolishing a home destroyed by fire is cheaper and simpler than demolishing one untouched by fire, and some companies or individuals may be taking advantage of this. The film states that "in 2010, Detroit was given $24 million in Federal funds to help stabilize neighborhoods.... Mayor Dave Bing reported that 1,800 of these homes were demolished [in 2010]." Demolition makes the city safer overall - less traps, less squatting, less repeat fires.
A burning Detroit is deeply troubling but not hopeless. Deeply troubling due to the amount of despair; to the "3,000 missing people", including children; to the anger and rage; to its burning for the past 50 − 60 years; to see these Gilded Age structures destroyed; and to seeing Americans suffering this way. Detroit has hope because of the push to rebuild; because it has been done before in other cities; because Earvin "Magic" Johnson has the gift of successfully infusing new life into depressed neighborhood; and because I have a very special place in my heart for firefighters, especially FDNY. Now I've made room for DFD. And thank you, Constance, for doing such a great job with "Detroit on Fire". As investors who solve problems, it's time for us to turn our attention to this American city. May Detroit stop burning very soon.
