DETROIT (AP) - Foreign investors who have tried to buy distressed Detroit properties in hopes of turning them around for income are now reporting huge financial losses.
Danny Kwanten is one of potentially hundreds of Belgian investors who were drawn into Detroit’s recent housing comeback, expecting 10 percent to 15 percent in annual returns renting out houses to city residents. But only after Kwanten plunged over $80,000 into two houses was he exposed to tenants who didn’t pay rent, costly house repairs and high property taxes.
Speculators have long attended the Wayne County annual tax auction to buy houses for as little as $500 and resell them to unwary foreign investors, the Detroit Free Press (https://on.freep.com/2ptKYUj) reported.
Critics who want the law authorizing such sales changed have suggested more restrictions on the ability of speculators to participate in the auction.
Kwanten said he fell for the pitch that Detroit’s housing recovery was moving so fast that investors should buy before it’s too late.
“It’s still a nice city. I have met nice people. That’s not the problem,” he said in March. “The lesson? OK, it’s my fault. I was naïve. I lose the money, it’s a shame, I learn from it. But I’m angry.”
Xavier Meplon, another investor in Belgium, filed a lawsuit in October against Michael and Jessica Anthony who sold houses to Meplon, Kwanten and others. Meplon alleged the couple knowingly defrauded him.
Andrew Herold, Meplon’s attorney, said the Anthonys operated through multiple real estate partnerships and with a Belgian real estate agent who recruited the investors.
“No, there’s so much that goes into buying investment properties in Detroit, let alone having to worry about nefarious folks,” Herold said. “It’s not exactly as easy as it sounds.”
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Information from: Detroit Free Press, https://www.freep.com
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