Mass Tax Foreclosure Threatens Detroit Homeowners
AP March 30, 2015
Homeowners sit … waiting for their cases to be heard to avoid foreclosure from tax debts in Detroit on Jan. 29. This year, Wayne County officials sent out 62,000 foreclosure notices to city homeowners behind on property taxes.
In Detroit, tens of thousands of people are facing a deadline Tuesday that could cost some of them their homes. That’s when homeowners have to make arrangements to either pay delinquent property taxes — or risk losing their home at a county auction.
When Detroit emerged from bankruptcy last year, it did so with a razor-thin financial cushion. It desperately needs every bit of tax revenue it can muster.
Earlier this year, county officials sent out 72,000 foreclosure notices to homeowners behind on property taxes — 62,000 of them in Detroit alone.
County officials are foreclosing on tens of thousands of homes in Detroit along streets like this, on the city’s west side.
Wayne County Deputy Treasurer Eric Sabree says a moratorium [on Tax Deed Auctions, Ed.] is out of the question because Detroit’s property tax revenue is already spoken for.
“We pledge all the penalties and fees in our bond pledges to borrow money,” he says. “We can’t do a moratorium on police protection or fire protection.”
Detroit resident Sandy Combs lives with her partner of two decades, Ken Brinkley, in a house he inherited from an aunt. She lost her job in 2006 while Brinkley had triple bypass heart surgery. Combs says they paid medical bills instead of taxes, were foreclosed on and their house sold at auction.
They then started paying rent to live there and tried to scrape together enough money to buy it outright. But they discovered that property taxes had not been paid and the house went up for auction again — this time to a company that wants to evict them.
“It’s gonna kill Kenny. He’s 82, this house is all he has. He knows he’s on his way out. How can these people be so crazy? ‘Cause it’s not our fault,” Combs says.
It’s a desperate cycle that Detroit officials are struggling to break. City officials say they don’t want to be landlords — they just want the badly needed tax revenue.
Every time a speculator buys a property and lets it sit vacant, it becomes a magnet for blight. That does nothing to improve the city’s long-term tax base — that’s done by homeowners.
And it remains to be seen just how many of the thousands facing imminent foreclosure will be able to make payment arrangements so that they can be the ones to provide that tax revenue.
Coach Mitch’s REFLECTIONS™
What a mess!
It is not totally fair to blame Detroit’s financial mess on many decades of Democratic Party administration. The bad economic practices have been going on for over 150 years, through Republican administrations as well as Democratic. The same can be said for Baltimore, MD. Our cities have been ill-served by Republican dominated Congresses and by Congresses controlled by Democrats. Certainly Presidents of both parties have deluded Americans for at least 150 years.
The Same Ol’ Same Ol’
Does it not occur that the bad political decisions and the bad political practices continue, unabated, no matter who is in power? It sure seems as if there is an agenda at work, an agenda to reduce the US to a Third World Power. Bad decisions have already reduced US to a Second Rate Power.
Your Financial Future
If you are in politics at the Congressional level, then you are already taken care of. There is already a law in place that allows you to make profits on insider information. Something that regular mortals are not allowed to do, not even Martha Stewart. Please research the congressional fortunes made by the leading lights of both parties, e.g. Nancy Pelosi, $68M, Diane Feinstein, $70M, Mitch McConnell, $22M, etc. They did not come to congress with this amount of monies!
However, if you are a Regular Mortal, then you are not plugged in and your future and your family’s well-being are tied to your decisions. And you had better be correct, because very few of US are able to save enough to live in retirement at the level we currently enjoy.
If speaking to couples who have retired, you find that hassles like rush-hour traffic and deadlines are replaced by financial issues. According to a study by Fidelity Investments, the major issues confronting retirees are health care expenses, inflation reducing savings, reduced social security benefits, and outliving their savings.
So – What Do We Do?
There are only two choices – make more passive income or make active income.
Passive income will be that income derived from investments in which you give the decision making over your investments to someone else, such as Mutual Funds, stocks, bonds, etc.
Active income will be anything where you take over the decision making regarding your investments, such as investing in a business, e.g. real estate, a restaurant, starting a service business, etc.
Sadly, Most Choose Passive Income
Most envision themselves sitting at the kitchen table, looking at the stock pages in the newspaper and seeing how their stocks did that day. If the stocks went up, then they will have a good day. If the stocks went down, then their day starts off bad. They have nothing to do with any business decision. They just hope that the management team is making good decisions so that a profit can be made.
Historically, the stock market produces an 8% rate of return before taxes. If you pay 40% between state and federal taxes, then you retain about 4.8%. The average 2013 inflation adjusted US household income was $51,939.
The Real Numbers – Read Them and Weep
You would need to have saved $1,0820,750. and generate a net 4.8% after taxes in order to attain $51,939.
The average American saves 4% of their income a year, according to the latest savings statistics for 2014. Therefore, it will take the average American 25 years to save one year’s worth of living expenses. It will take 25 years to save $51,939. I won’t even calculate how long it will take to save $1,0820,750!
How do you expect to live well in retirement? The quick answer – you won’t.
The brave choice, the smart choice, the only real choice, is going for Active Income. Find something that you like, turn it into a business and dedicate yourself to it. That is the way to create another stream of income.
After examining multiple streams of potential income, my choice is real estate investing. Of all the real estate investing systems, like foreclosures, rehabilitation, buying subject to the existing financing, leases, etc. my choice is tax delinquent property and notes. My preferred method of dealing with individual properties is to option the property with $1. Everybody can scrape together $1.
The Coach Mitch Way
The average first time profit of my students is over $20,000. Do one transaction each 3.5 months and you will have earned $51,939. for that year. Do one transaction each 1.75 months and you will have earned $51,939 to live on and another $51,939 to save.
If you don’t provide for yourself – see the story above.
BTW, with 62,000 tax foreclosures in Detroit, you can carefully invest there. It is a major American city and it will rise again.
G-d Bless US –
518-439-6100 until midnight EST