What about a Militarized REIT that Recolonizes Detroit?

New Venture Capital, Meet Old Venture Capital

Welcome back, and as always, thank you for reading! As a reminder, I am getting married (tomorrow!) and will be on my honeymoon, so I am able to do less content than normal. However, I had a few short post ideas that have been bouncing around, so I scheduled them ahead of time so y’all have something to read. This is one of those, and though it’s shorter, I hope you enjoy it! As always, please tap the heart button to like this article so Substack knows to promote it. Thanks again!

The Idea

A few months ago, I saw the below meme going around X, and, though it’s satire and more than a bit of an exaggeration, it got me thinking: what if there was a militarized company able to act in the same way that, say, the British South Africa Company,¹ the Virginia Company, or the East India Company acted? That is to say, what if they could use force to better develop existing natural resources, bringing stability to an area in doing so?

One answer is that, abroad, there are resources like the mineral wealth of the Congo that men like Erik Prince can get contracts to take over and provide security for, thus making them valuable rather than hellholes. Prince actually just got a contract to do just that in the Congo.² Hopefully, he’ll do better than the CIA.³ But that is only abroad, and for extractive mineral wealth that desperately needs a full Western military presence. What about something domestic? What about settlement that recreates the magic and sustainable wealth of American development?

The answer, I think, is that much as there are opportunities in the hollowed-out Rust Belt,⁴ there is a great opportunity in America’s hollowed-out neighborhoods. Just think of the wasted capital in cities like Detroit, Baltimore, St. Louis, etc., where whole neighborhoods of well-built houses⁵ sit vacant because their residents fled.

The reason for the abandonment makes sense: de-industrialization, the crack crisis, and lax policing make them about as dangerous and poor as Johannesburg, for many of the same reasons.⁶ But it also means that whole swathes of essentially valueless neighborhoods exist in which the houses are still livable — there aren't trees growing through the living rooms or deer bedding in the bedrooms yet — but no one lives in them because crime and the lack of jobs made whole neighborhoods uninhabitable. Adding to the problem is that the cops are either corrupt, as in Chicago,⁷ or simply don't exist because they quit the force.

What that means is that entire cities, in some cases, and swathes of them, in many others, are dying for want of residents who add value rather than subsist on crime or the dole. They can't afford the police they need to draw residents, can't attract businesses because there aren’t residents to buy from and/or work for them, and can't raise the municipal debt they need to rebuild because they are dying.

But it doesn't have to be that way . . . as Detroit's Greek Town area shows,⁸ there's a space for heavily defended areas that attract valuable guests, businesses and residents, and can be successful so long as the crackheads and gangsters are chased away by men with rifles.

The problem for our dying towns and cities, therefore, isn’t that recovery is impossible. Rather, it’s that they often can't afford the investment levels and police presence necessary for a Greek Town-style rebuilding, and because of that have trouble attracting new residents that would spark a revival of sorts by providing the resources necessary for it. It only works in a sliver of Detroit because a few wealthy company owners bought up real estate and demanded employees move back to town, which generally isn't replicable.

That gets to the militarized REIT (Real Estate Investment Trust, or a company focused on developing and running a specific sort of real estate) idea⁹: what if you had an East India Company-style, well-capitalized company that provides security and government services in the Western manner, in exchange for rents and limited liability for its owners. Such a company could take advantage of situations like that in Baltimore, where the city government is willing to sell abandoned homes for a nominal fee if buyers will move in.¹⁰ Right now, buyers won't, because of the danger; if you could provide safety for the purchased area, and subsidize the cost of living in such a situation, people could move back. So, the problem is not finding opportunity, but how to provide security, and make it desirable and profitable?

Providing that opportunity and security is what a militarized REIT could do.

The Functioning of It

The General Opportunity

Say there is an abandoned neighborhood of a thousand houses that are still livable, if a bit of work is put in by company contractors to repair damage, add working appliances, etc. The yards will need to be brought back from becoming a jungle, new shingles put on the roofs, the stripped copper piping replaced, etc, but the houses can be made liveable, and the area is contiguous.

Those houses could be bought and refurbished, with new windows and floors, for probably a few tens of millions or so, a pittance for a reasonably sized company, REIT, or fund. The houses sell for nothing and refurbishment could probably be done inexpensively when skilled tradesman are brought on to do it in a standarized fashion, on a grand scale.

Drawing In Residents

And how to draw people in? Well, remote work makes it pretty easy. The East Baltimore Company could just install Starlink or other high-speed wifi, and either use residents to staff online jobs itself, as a branch of the company, or allow people to move in who have a reasonably stable online job or local work and agree to stay there for, say, a period of 5 years. That would be long enough to get the neighborhood back on track and let a local economy develop. It would make sense to focus on families, as they would set down roots that make their staying more likely, and are in need of more services that are generally provided locally, thus helping boost the local economy.

So, at that point, you have livable houses and people who could live there. But why would they? I’ll get to describing security next, but the actual draw could be pretty interesting, as the 19th-century railroads/prairie towns are relevant.¹¹

A major problem and cause for outrage is that housing is unaffordable. A chunk of the reason for that is that America, like Europe before America opened, is largely full, and so it is getting more expensive. Or, rather, the safe parts where work is obtainable are expensive and increasingly crowded. But what if you opened the neighborhoods I've described so far back up? That would at least help, and open up a great deal of family housing.

Options for Long-Term Residents

To draw the families who need that housing in, the militarized REIT could offer two options for people with families of good character (no felonies, litigious history, etc.), the demographic that should be focused on as they'll contribute more to the local economy and set down roots.

One is that they can, in exchange for remaining present the whole time and keeping the house in good repair (much like the Homesteading Act farms)¹² rent for nothing or a nominal fee for 5 or 10 years, enough time to let the local economy develop, and then buy for a flat fee at the end. A reasonable amount could be 3x the average annual wage provided to residents by your staffing agency, something that encourages finding good jobs and is quite reasonable after half a decade or more in which they could put together the savings to buy it. They'll get it for a steal, as the area is valuable again, and as long as a deal is struck with the city for low, flat property taxes and you manage the local building well, the fund would make a profit, too, given how cheap the houses originally were. Further, it obviates the debt and mortgage issue that causes long-term stress for families.

The other plan could be, as a way of delivering some ongoing revenue for the fund, an interest-free mortgage for the time period in which the resident agrees to stay, at the same income multiple for the house. So, if they're going to agree to be there on the company plan for at least 10 years, it's just $15k a year—very affordable for them and something that builds the local economy, being good for the town, residents, and company.

Profits and Incentives

Paired with either strategy would be holding onto some of the land and businesses in the now-desirable area, as the railroads did when building in the post-US Civil War era.¹³ This could be the ground-rent in the business area of the city, local amenities like parks for which an annual fee could be charged, company-run businesses like stores and restaurants, or even “home farms” that provide fresh food for residents of the town and are ever more valuable as the number of residents increases. That leads to long-term income for investors and value to the fund, with the rebuilt and repopulated neighborhoods being the spark that gets it going.

This was done in some vacation towns in England to great effect in the second half of the 19th century, as David Cannadine describes in Lords and Landlords: The Aristocracy and the Towns, 1774-1967.¹⁴ Retaining ownership of enough real estate to matter and the key infrastructure (such as the water plant, gas plant, etc.) necessary for maintaining influence while drawing in rents, but so long as that is generally done, as Cannadine shows, the profits can be immense and benefits large for everyone.

Obviously, everything would need to be tweaked to align incentives, but it would be possible to draw people into the area and help them buy a house in a very mutually advantageous agreement that creates long-term returns and income for investors without tightening the screws on residents.

So, residents would get to live in a safe and affordable environment in which they're on track to own a home after living affordably and safely for years, while fund/REIT/company owners get the opportunity for huge, value-add driven returns and future steady income streams at little original cost. Further, the fund would be adding value rather than doing the typical predatory behavior about which Isaac Simpson wrote in his fabulous There's Gonna Be a War in Montana.¹⁵

Government, so long as it plays ball, gets new, taxpaying residents that weigh little on municipal infrastructure, as the fund handles most of it, from internal roads to security, and has future opportunities for property taxes that haven't existed for decades, and new businesses and investors after the neighborhoods are revitalized.

Security

Of course, security would have to be provided, and the REIT would want to handle that. The best way to do this would be through 1) raising a force of local residents that are primarily focused on security, and 2) striking a use of force agreement with the municipal and state government that allows them to use whatever level of force is necessary to protect residents.

The security force would probably be essentially militarized police that focus on security from external threats. With proper screening of residents (a deal to obviate pro-crime Civil Rights law¹⁶ would have to be struck, much as the case with Orania¹⁷), internal security would likely be less of an issue, as is the case in Orania.¹⁸ Those militarized police officers would live in the community, adding more residents and revenue, and so be committed to defending it, and could be trained in EMT/fire response. Paired with this would be firearms, medical, and firefighting training for residents. In short, it would be much like an early American settlement: largely self-reliant from a security and governmental services perspective.

Critical to this would be striking a deal with the municipality and state about use of force laws, so that there aren’t constant issues about shooting invaders/robbers and being taken to court. However, South Africa's contractor situation shows that private security can defend neighborhoods reasonably effectively so long as the guards are well paid and motivated,¹⁹ and having the guards live in the new area would add motivation.

This would effectively be creating a modern walled town within a town, or a Wild West-style palisaded town. Inside you would want to build the aforementioned services: grocery, retail, recreational amenities, even municipal services like gas and water, etc., so people have less of a reason to leave the "Green Zone."²⁰ As mentioned above, that not only makes security easier and adds resident safety, but creates yet another potential avenue for income generation and value add, so long as fairly done, for the fund.

A Huge Opportunity

If you could live in a pleasant place where you never had to worry about your child getting murdered like Austin Metcalf,²¹ could live and work around like-minded people, and could buy an inexpensive home, would you? Most would, and that’s the opportunity provided by the project. It's a win-win-win of the sort that hasn't really been seen since Homesteading, and likely would be far more profitable and safer than subsistence farming on the Indian-infested Prairie ever was.

That’s not to say it’s likely. There are a great many obstacles in place. But it could be achieved, and the opportunities for those willing to put in the grunt work and capital to achieve it are immense.

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2. https://www.reuters.com/world/trump-supporter-prince-reaches-deal-with-congo-help-secure-mineral-wealth-2025-04-17/

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5. https://x.com/NormanDodd_knew/status/1898879028230062104

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7. https://www.latimes.com/archives/la-xpm-2000-mar-30-mn-14295-story.html

8. A great description of it here. ZMAN’s stuff is well worth paying for:

Travelogue: Ghost Town

9. This wouldn’t necessarily have to be structured as a REIT. But it probably would have to be a large and well-capitalized company of some sort, so as to limit liability and provide the capital necessary for the development and running of one of these towns

10. https://www.wbaltv.com/article/how-to-buy-baltimore-city-1-dollar-vacant-houses-sale/60539429

11. https://en.wikipedia.org/wiki/Railway_town#:~:text=Becoming%20rail%20hubs%20made%20Chicago,where%20no%20settlement%20already%20existed.

12. https://en.wikipedia.org/wiki/Homestead_Acts

13. This is described well in: The Republic for Which It Stands: The United States during Reconstruction and the Gilded Age, 1865-1896

14. This has been one of my favorite reads from my reading list, so far:

15. There's Gonna be a War in Montana

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19. https://www.npr.org/2024/01/07/1223358578/as-police-lose-the-war-on-crime-in-south-africa-private-security-companies-step-

20. https://en.wikipedia.org/wiki/Green_Zone

21. https://www.wfaa.com/article/news/crime/frisco-track-meet-stabbing-bond-reduced-house-arrest/287-27b4fed9-e2c1-4bf6-82eb-134fad8d6991