Jailed Ypsilanti landlord's biggest property sold for $1.21 million in bankruptcy auction
The Eastern Highlands property on LeForge Road in Ypsilanti Township.
Tom Perkins | For AnnArbor.cm
Jailed Ypsilanti landlord David Kircher’s largest property has a new owner after the sale closed last week.
A court appointed bankruptcy agent sold the multi-family apartment complex known as Eastern Highlands for $1.21 million to Capital Investment Company, LLC of Ann Arbor. The sale closed Wednesday.
The property at 1266 LeForge Road in Ypsilanti Township was subject to an investigation in 2004 that led to Kirchner being sentenced to a 5-year prison term for pumping raw sewage from the complex into the Huron River.
Only 47 of the 128 units at the complex are inhabitable. Some have been completely stripped down to their studs, while others are “shells” that need significant work.
“For someone that wants to go in and fix them up building by building, there’s a lot of upside here,” Colliers International Ann Arbor agent Brendan Cavender said. “And I think they’re going to do that.”
Cavender, who along with Jim Chaconas represented Douglass Ellman, the US Bankruptcy Court Trustee, said that there was a lot of interest in this property from across the country.
“People see a 128 unit property right on a college campus, and these days that attracts a lot of attention,” he said.
“We had calls from Texas, California, Boston, really everywhere. Unfortunately since they let some of the best buildings go into disrepair that scared some of the potential buyers off.”
He added that despite the dilapidated condition of some of the buildings, the bidding on the property was aggressive, with nearly 10 companies taking part in the auction held in September. The starting bid for the property was $500,000.
Township records show that the assessor valued the property at $375,900 for tax purposes, making its market sale value approximately $750,000.
Nearby River's Edge Apartments, also on LeForge Road, was purchased in June for an undisclosed amount and is going to be re-branded and re-developed by its new owners.
Colliers also is representing Ellman in the sale of the remaining Kircher properties that are being managed as part of his Chapter 11 bankruptcy proceedings.
Cavender said the total value of closed homes is approximately $1.5 million, with several more due to close in the coming weeks. Kircher’s debt has been reported at approximately $2.7 million.
Capital Investment Company declined to discuss its plans for development of the property for this article.
Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2
Comments
johnnya2
Mon, Nov 5, 2012 : 11:46 p.m.
This is a steal for the company purchasing. Think of the conservative numbers. Rent of $800 for 128 units is $1,228,800. Let's build in some non occupied months every year and take the gross revenue to $1 million a year. If they sink $25k per unit into the property, you are talking about a monthly nut WITh the purchase price of under $30k per month at a 7% interest rate. Revenue will be more than double that. I am betting they can get in under 25k per unit AND rents can be higher than $800. I would jump at the opportunity if I were in the real estate business.
hermhawk
Mon, Nov 5, 2012 : 1:11 p.m.
Those are apartments I wouldn't touch with a 100 foot pole and I would urge others to do the same. Kircher maintained these units worse than some projects and trailer parks.
Tesla
Mon, Nov 5, 2012 : 7:37 p.m.
There's room in this deal for 2 million in improvements and still show a profit in three years.
Tesla
Mon, Nov 5, 2012 : 7:36 p.m.
Or the people that bought them could rehab them, improve them all, raise the rents to 850 a month and in this rental market get 100% occupancy. Think big picture people. 1.2 mill for that property is a steal.
mady
Mon, Nov 5, 2012 : 3:18 p.m.
Amen, hermhawk. raze 'em and rebuild.
HB11
Mon, Nov 5, 2012 : 12:48 p.m.
@Jondhall, do a little research and contact the Washtenaw County Treasurer's office if you would like to bid. Sure the property may be slightly undervalued, but look at the condition in which it currently sits. Property values will equalize with reassessments after the improvements from the new owners.
jondhall
Mon, Nov 5, 2012 : 11:19 a.m.
So how might one go about bidding on the remaining homes ? Is that a reasonable request that might be included in the informative article ? In my opinion this is one property that was under assessed, such a loss of local tax dollars.