I read an article in the Chicago Tribune a little more than a month ago and was shocked when it stated that the median home price was $7500 for December. So in my daily news scrub, I came across an AP Press article on the Detroit foreclosure market and I was interested in what was going on today. Well the outlook is a little shaky to say the least…or is it?
Now if you just look at the statistical data, you would say Detroit is in a tailspin that they probably can’t pull out of. For example, if you look on the Roost site, there are almost 25,000 foreclosures in Detroit alone. Couple this with the fact that people are leaving in droves, the automobile industry is in shambles and the city is on the verge of bankruptcy and most people would not touch the Detroit real estate market with a ten-foot pole. But they are.
People and companies are working with local real estate agents and buying homes in batches of 50, 100, even 1000. The deals are just too good to pass up. But they are not being purchased from US-based investors alone. Many are being bought from people abroad because their currency is stronger than the dollar so they can buy more for their money.
Another huge benefit is the potential cash flow these homes can generate. One of the examples that were mentioned in the AP article was how Darren Veness, who lives near Brighton, England , views the value of purchasing in Detroit. Veness stated, “Do the math, you can buy and rehab a home for $20,000, then rent for $900 a month. Three to four months of the year, rent is going to pay the taxes.” These homes really do start to look attractive when you know that rentals typically range from about $800 to $1,000, and many are subsidized by the government.
But is this enough to make it worth the effort? Some say yes and are buying till their heart is content. I for one am looking at the mass exodus out of Detroit and the instability of the auto industry as reasons to pass on these “great” real estate bargains.
For more information on Detroit real estate, click here.
It depends where you are getting the property.
Right now I don’t think real estate in Detriot is a very good investment. Charlotte, NC is a much better choice. charlotte nc real estate
Again I am thankful to you for more informative post… I am also read that article.
I have always looked at buying real estate as an investment, regardless of the market conditions. Sometimes you get a really bad deal while other times you are rewarded greatly. These people buying homes by the hundreds stand a much greater chance of losing everything should something happen to those properties.
This is exactly why I stopped working as an agent and started a real estate school to train them. There is a lot of risk but a well educated agent can turn any market into a prosperous business.
I’m here in Detroit right now trying to buy property. It’s not as easy as you might think and there are quite a few traps to be aware of. Firstly I’m 99% sure that the good properties are being purchased by real estate companies (or members of their immediate family / good friends) before the property actually reaches the open market. They may be listed publicly and show as active “For Sale” properties however when you actually make enquiries with a real estate broker he / she is able to access more up to date information that shows an offer was alread in or accepted. Not bad on the morning the property is released!
Another trap to be aware of is the City of Detoit itself. I have just spent a very frustrating day dealing with various City of Detroit departments attempting to gain permits to renovate a property….only to find that 4 permits are required….plumbing, building, electrical, mechanical. Now I’m not talking about a major re-build, merely replacement of the heater & associated radiators, replacement of missing plumbing fixtures (toilets, sinks, bath-tubs) – which were stolen and sold as scrap, replacement of light switches / light fittings and the re-building of a front porch retaining wall. 4 separate permits required for this work. Total cost of these permits $2,600. All with a stipulation that only owner / occupiers are permitted to do this work themselves – so investors must use licenced tradesmen….Hmmm it’s okay for an owner occupier to do the work himself / herself….but apparently an investor is somewhat less capabale….come on I’ve been doing this my whole life! So I’m expected to pay $2,600 for 4 permits, then pay for a tradesman to do the work I’m more than capable of doing myself (I’m more than happy to pay tradesmen to perform gas / pressurised plumbing / electrical and structural building….but the DIY stuff come on! Then once this is done I then have to pay for 4 different inspectors to come and inspect the work of the licences tradesperson….really is this 1970? Is this Life On Mars! Then to add insult to injury I then need certificates of compliance issued by the city before the city will consider issuing a certificate of occupancy, before it will then issue a certificate for a rental property. Then they want to re-inspect the property every year to ensure ongoing compliance! It’s a nightmare, I’ve already had to walk away from one property because of the micro-management by the City of Detroit. The City of Detroit is its own worst enemy….they are driving Investors like me away!
Mayor BING, realise what is going on in your City and fix it!