Breaking and Entering

When you’re trying to start a company and you don’t know what you’re doing, a good strategy is to do anything anyone will pay you to do that’s even remotely connected to your idea. That’s how, in the winter of 2014, my cofounder Tim and I ended up driving all over the worst parts of Detroit, breaking into a series of increasingly dilapidated houses. We were taking inventory of them for a guy I’ll call Ryan, who we’d met on a web forum for real estate enthusiasts. He was an investor from Nevada or Iowa or someplace like that, and he’d just bought a lot of around a dozen houses in Detroit sight unseen.

Well, “investor” is a generous term. “Investing” in real estate by blindly purchasing a batch of abandoned houses in a city you’ve never visited is like “investing” in your savings by buying lottery tickets. Actually, it’s worse than buying lottery tickets. If you buy a winning lottery ticket, you can trade it in for cash on the spot. But when you buy a batch of abandoned houses, even in the best-case scenario, an enormous amount of stress and toil awaits before you’ll begin to see even the glimmers of a profit. More likely, you’ve just thrown your money away. At least with a lottery ticket you get to enjoy the act of scratching off the numbers.

Detroit at the turn of the 2010s drew in tons of guys like Ryan, people who’d done just enough internet research to think they knew something, and who thought they might be exceptions to the rule that there’s no easy way to get rich quick. The combination of the ‘08 housing crash, high property taxes, and decades of white flight and disinvestment had seen Detroit’s population crash from a high of two million to around 600,000, and as a result, abandoned houses were everywhere. Some were occupied by squatters, but most had been empty and decaying for years. Many had decayed so far that they barely qualified as houses anymore. When a property’s owner went three years without paying taxes, the county would repossess it and auction it off, sometimes productively (we ourselves lived in a house we’d bought at auction and spent years restoring), but more often to unsuspecting buyers like Ryan.

Ryan’s imagined path from new owner of a dozen mystery houses to kingpin of a thriving real estate empire was murky and, frankly, probably impossible, but the first step was figuring out what the hell he’d just bought. And so he turned to us, two twenty-four-year-old internet strangers, presumably the only people young enough, naïve enough, or maybe just plain dumb enough to go scope them out for him.

Most of the houses Ryan had bought turned out to be in such disrepair that we could write them off without even bothering to go inside—in fact, some had crumbled so far that there had long ago ceased to be any meaningful distinction between their inside and their outside. The few that were still standing were all in neighborhoods so far gone that even a brand-new house there would have been essentially worthless. Still, we wanted to give Ryan a thorough report, so we went every one of them we could get into, announcing our presence loudly, over and over, to minimize the risk of succumbing to some grim fate at the hands of an unexpected occupant. I guess we weren’t technically breaking in, but if someone were to have confronted us, we wouldn’t have had much firm evidence of our belonging there to show them.

Inside, we’d inevitably find the scattered detritus of abandoned lives, the things people discard when they have to leave suddenly, or when they no longer care about the impression that remains after they’re gone. Occasionally we’d encounter something grim—blood stains or drug paraphernalia—but mostly this was an exercise in cataloguing the mundane: old furniture, torn-up books, baby clothes. Once, though, in a basement, we found the skeleton of a dog, still leashed to an iron pipe, and I spent the next few weeks imagining the kind of person who wouldn’t at least untie their dog before abandoning him. At least then you could tell yourself that it wasn’t a certainty he’d died, that maybe he was still out there, roaming the streets of Detroit and eating out of dumpsters.

To his credit, Ryan was incredibly good-natured when we let him know that every last one of the homes he’d bought was essentially worthless. He understood that he’d rolled the dice, though I’m not sure if he realized how much those dice had been rigged against him, how rare it was for someone to make one of these bulk purchases and end up with anything of any value at all. There were daily realities in Detroit that were unimaginable to outsiders—if you’d never been there, it might not have even occurred to you that the house you were buying could be the only structure left standing on its block.

Later on, we’d go from doing odd jobs like this one to running a real property management business, and we’d encounter so many people who were much less reasonable about luck that wasn’t nearly as bad as Ryan’s—acting like maintenance expenses were unforeseeable Acts of God instead of a standard part of owning rental property, or implying that a tenant who had fallen behind on rent easily had the means to pay and was just choosing to be obstinate for no reason other than to annoy their landlord. Ryan, on the other hand, was laid-back—a trait rarely found among real estate investors. I’ll never understand how so many people can enter a risky business like real estate—or really any business at all—and yet be so psychologically unprepared to accept that things will occasionally go wrong.

The whole thing was a farce that, like all the best farces, also had an element of tragedy. Behind every house we’d seen there must have been heartbreak—a couple underwater on their mortgage, trapped in a declining city, who’d eventually just walked out and started over somewhere else, or a family who’d been in Detroit for generations and watched neighborhood after neighborhood decay past the point of habitability.

Eventually I started to see the entire tax auction system as a kind of purgatory: in scooping up these properties and pawning them off onto buyers who were set up to fail, the county only created the illusion of actually doing something about all the abandoned homes. Once they discovered the reality of the situation, buyers like Ryan would inevitably default on their taxes and allow the county to repossess their homes, after which the whole process would begin all over again. Today, Detroit’s city center is so vibrant that it’s basically unrecognizable compared to what it looked like back in 2014, but in the outer neighborhoods that comprise most of the city, this same cycle keeps repeating itself.

It’s easy to tell an oversimplified story about real estate in Detroit, or any of this country’s many other past-their-prime Rust Belt cities: mercenary outsiders, greedy landlords, another age-old tale of avarice and exploitation. And while my real estate days certainly led me to meet many people who wouldn’t have been out of place in a story like that, more often I met people like Ryan: well-intentioned but in over their heads, trapped in situations where no one comes out a winner. You look around and you think, there must be a better way to do things than this—but then there you are, twenty-four years old, driving from one abandoned house to another, trying to find a window you can open wide enough to crawl through and sneak inside.

Yours in wondering what Ryan is up to these days,

Max


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