The first day I got there, chock full of excitement to see the city and get a feel for the place (really, people were laughing at my extreme enthusiasm about going to visit Detroit), I biked downtown for the jazz festival and was nearly mugged, or worse, on the way back around midnight (a bunch of guys in a van kept trying to get me to stop and approach the van, to help them get gas...there were gas stations within three blocks in either direction, and the guys in the van were young and looked perfectly capable of walking a couple of blocks to get gas...and the van seemed to be running fine and the guys were giving off seriously nefarious vibes, whispering to each other, etc.). I've biked through the tenderloin in SF in the middle of the night, walked through Brooklyn and the Bronx at 1 AM, and spent time in numerous so-called sketchy places; I travel full-time, so I've been to some interesting places, and I don't travel like a tourist. I try to see the real side of the places I go. I've rarely felt threatened in the nearly two years I've been travelling. I felt threatened in Detroit, on more than one occasion.
Detroit has a reputation for being a scary place because it is a scary place. And, while I enjoyed some aspect of my visit, like finding a walk-up outdoor movie theater setup among old abandoned buildings, and seeing little farms in urban areas (though they seemed to be in a somewhat bedraggled state; they seemed more like a media ploy that has played out rather than an actual sustainable community effort in some of the cases I saw), and the music scene is good, it doesn't make up for the sadness of the place itself.
Also note that those $6000 houses (and even less) will have property tax of several thousand per year. Detroit is still valuing houses at the rates of 10+ years ago, and the tax rate has climbed drastically in the past several years to try to keep revenue up to the level required to keep schools running, roads in decent condition, and police on the streets. Despite all the increases, the city is still experiencing significant budgetary problems. I looked into buying a house there, as it's cheap enough to be damned near an impulse purchase, but the cost of buying, restoring, securing (because you're going to need bars and cameras if you have a decent house within the city of Detroit), and paying the taxes on it will make it much more costly. Still incredibly cheap, but nowhere near $6000. And, you'll be living in Detroit. Not worth it.
Oh, and starting a tech company there? Madness. Notice that only one of those companies is actually worth more than a few hundred thousand (and it's not a startup, anymore, and hasn't been in a couple of decades), or maybe a couple of million, at best. That's not a coincidence. Those would be also-rans in the valley. I've noticed the same thing about most "look at us, we can be a startup hub, too!" articles. They mention a half dozen websites no one has ever heard of, as proof positive that the city can compete with actual startup hubs for tech companies.
It's cool that Detroit is improving. I'm sure some people will make solid money on real estate in the coming years in Detroit. And, I'm sure with an investor making a number of investments in Detroit-based companies, they'll eventually churn out a few decent-sized businesses, and they may improve the city further. But, it's not where you go if you want to start a tech company and you want it to succeed.
If your priority is to help save Detroit, by way of starting a company that provides jobs in Detroit, that's cool. Good on you. But, odds are very good it's not going to become a big tech company.
There are a lot of ways to frame the world as "two options". We have two options with regard to poverty in Africa: Give our savings away to help feed the poor, or buy a new TV or car or whatever it is we were planning to do with that money. We have two options with regard to the environment: We can sell our cars and start biking everywhere, or we can continue doing what we've always done.
Just because a cause is worthy does not mean I'm the person to take it up. I'll leave solving Detroit's problems to the people who have reasons to love Detroit. For people in Detroit who are starting tech companies, and care about the success of their company more than the recovery of Detroit, the smart money is on leaving Detroit for greener pastures.
By the way, I'm not really criticizing your article. I think it's an interesting story; I think a lot of what's happening in Detroit right now is an interesting story, which is why it was high on my "places in the northeast to visit" (right below NYC).
Some areas of Detroit are OK, but if you don't know your way around, it can get real bad real fast. I know at least three people that got robbed at gunpoint in the last couple of months.
Ann Arbor sounds nice, and I know Google has a sizable office there, but it's not high on my list of places to visit (no music scene to speak of, no wild places). If one had to start a tech company in Michigan, I reckon that would be the place to do it. But, why start a tech company in Michigan, at all?
I'm curious about this statement. From what I recall of state law, the houses State Equalized Value would fall to 50% of the purchase price of the home assuming it is not a foreclosure. In the case of foreclosure, fighting a over-valued home (an experience I only have outside of the city) is pretty easy. In addition, in Michigan, a homeowner's SEV increase is capped per year until the property changes hands (known in these parts as Proposal "A", the third rail of Michigan politics). I'm not calling you out or anything. If you could explain that in greater detail or have a reference, I'd be interested to understand since I know some great, honest, giving people who also happen to be lawyers who would love to use their skills to help the city.
It's cool that Detroit is improving.
When Mayor Archer was in charge, the city underwent some pretty serious improvement, especially in overall "image". This is important. Mayoral candidates tend to run on the platform of pitting the folks who live in the city against the folks who've left the city (a technique honed and mastered by Mayor Young that resulted in near life-time tenure as mayor). It was the first time that I've ever noticed a trend of suburban folks actually wanting to explore some of the rare and interesting restaurants in Detroit. Under Mayor Kilpatrick, the city declined dramatically (this was not all his fault, it happened to coincide with a general economic decline, but he certainly didn't help the city's image). Under the new mayor, the image of the city of Detroit has improved. Again, an important thing.
However, the scene on the ground is not yet improved, and I'd subjectively assert that it's not as good as it was during the worst days under Archer. The poorest neighborhoods are getting much worse. I have a friend who moved her whole family to the Brightmoor area to help prostitutes and drug addicts. That area has gotten significantly worse and more dangerous in the last two years as have most of the poorest areas of Detroit.
It's terribly sad, and I can't say that I'm, personally, doing anything to make it better.
EDIT: Fix a cut/paste sentence error.
Before I got to Detroit, I researched neighborhoods, house prices, etc. I was seriously considering buying a house. The nearest RV park to Detroit is 43 miles away, so I was considering buying a house to park at for three months, while doing some repairs and such, and either putting it in the hands of a rental agency when I left (coming back for a month or two each summer in the future), or simply putting it back on the market while living there (this was before I had actually been there and knew I didn't want to live in Detroit). But, every time I found something promising, I'd check the backtaxes situation on the property using Detroit's own property lookup tool and find that $3000 to $9000 was often owed on the property, and that annual property taxes were usually $2000 and up. I was looking at houses in the $3000-15000 range, as that seemed to be what it cost to get a block or two over from some of the seemingly recovering areas. The purchase price seemed to have no relation to the property taxes, and sometimes the cheapest houses had the highest tax rates (and the most backtaxes owed, which explains the low sales price).
I don't know much about the law or the process of correcting overvaluation. But, if it's as easy as you say, why have none of the people selling these properties gone to the trouble to get the rates fixed and adjusted for past taxes? These are insane taxes for property with such low value. I paid about $3000/year in property taxes on a house in Austin several years ago, which had a valuation orders of magnitude more than anything I was looking at in Detroit (and Texas has no state income tax, so has very high property and sales taxes, relatively speaking).
If it is actually easy to get the valuation corrected, and start paying reasonable property taxes in Detroit, then there are many bargains to be had. But, some folks were giving away houses for free, because they had more in backtaxes owed on the property than it was conceivably worth (even compared to other dirt cheap houses with backtaxes owed), for example.
Seems to me that things are badly broken in Detroit. I'm not an expert on how to save cities, by any means, but I don't think things are going right in Detroit, and I feel like punishing people who might be considering buying some of those horribly depressed properties by charging stunningly high taxes is gonna have to have unintended consequences.
Thanks for the history lesson on Detroit and its mayors. I planned to spend some time on the ground there to get a feel for the place, but I knew relatively quickly Detroit was not for me, so only stayed two weeks. Part of the problem was weather...it was already colder and wetter and rainier than I like, even in early September when I was there. So, I didn't really learn much about the place. I checked out Dally in the Alley, the jazz festival (which got shut down due to weather minutes after I arrived downtown), did some bike exploration (never at night after that first day, and never in areas that seemed at all sketchy), and then drove south. Detroit has its charms, but nothing to make up for the brokenness of the city.
I didn't really want to say it, since my experience is so limited, but during my short time there, I just couldn't see how Detroit could pull out of its nose dive, despite many well-meaning people in Detroit who'd like to improve things. Your closing comments seem to support this theory. My research into buying property, and then the research into why property taxes could be so outrageously high on such low-priced properties, led me to realize that Detroit is constantly on the edge of utter bankruptcy, supporting infrastructure that was designed for a big city at its prime on revenues of a poor small city. It just doesn't add up to any sort of good resolution in the next decade or two, as far as I can tell. Given the illiteracy rate, the poverty rate, and the unemployment rate, in the city, it looks destined to dig itself further into the hole it's in rather than climb out. I'd love to see that proven wrong, and there have been a number of really cool films and articles about Detroit's renaissance as an artistic mecca in recent years...but, it looks like a long climb still remains.
I hadn't thought at all about back taxes. That's an interesting point and one that I think could be overcome, but I'm not a lawyer.
why have none of the people selling these properties gone to the trouble to get the rates fixed and adjusted for past taxes
I believe I can take a stab at this. The SEV is not able to be corrected until after the home is purchased and the state assessment is done. When I bought my first home, my father referred to it as the "surprise envelope" (as in, "You may already have won the Publisher's Clearing House!"). The back taxes situation is something you can research and can insure against (though, I'm willing to bet it's far more costly in the city limits). But I think you summed it up the best. Who would want to go through this trouble? You did the research and drew the conclusion that it wasn't worth it. Once you have to bring a lawyer in, unless they're doing so for charitable reasons (and I know a few that do just this), it's not worth the money. Even free, it's not worth the time fighting the assessment/treasury.
Detroit has its charms but nothing to make up for the brokenness of the city
Yes. And I'm sad to say that I completely agree with you.
EDIT: The RV park is 43 miles away was a quote from the original and I forgot to add emphasis to that point so it seemed like I was quoting much more than I was.
Yes I'm moving my startup to either Seattle or Bay area in a few days from Detroit.