BiggerPockets

I'm from Houston and im just getting into REI. I was thinking about getting into the Detroit market and i talked to a real estate agent and he said the houses that are real cheap are a bad investment and he told me he found a house for $50k on the nicer side of Detroit with a tenant in it renting for $900 a month. But i see houses saling for 2 and 3 thousand dollars what is the better way to go?

The Agent most likely told you that because he/she wanted a nice sized commission, because as we know the commission on a $2-3k house isn't that much. There are nice houses for $2-3K that banks need to get rid of. Most of the cheaper houses are okay, I've lived in Detroit all of my life and have passed by and viewed the insides of these houses plenty of times. I agree with Jawsette, in addition to the condition of the house the numbers should also work. I can definitely help you navigate through the nicer deals in Detroit... I am not an agent, I am a fellow wholesaler and I'll make sure the deal looks good from all angles. Feel free to Private Message me...

If you live in Houston, what would you be looking at houses in D-Town? Stay in your own area and out of the war zone 3k houses. If they are bank owned, investors can see them on the MLS. They would rather have the bank pay them commision than to pay you a wholesale fee.

Find out what the local job market is like. Bottom line, no jobs, no rent.

The 3k houses are in war zones stay away. The commission on a 50k house in Detroit isn't much anyway. Tell me the neighborhood and I can tell you if you should buy.

Do not buy anything less than 3 beds. 4 sided brick no slab foundations and make sure you have a garage. Be sure that if you are buying in Detroit that the property is fully rehabbed with a warranty. When you get the appraisal required MLS comps 6 months .5 miles radius MAX. Let me know the neighborhood.

Another tip. TAXES. Do NOT believe the MLS listing. A lot of those homes have homestead exemptions. Taxes are roughly 3.5% similar to Dallas. Here is what you do. Get the SEV number from the tax accessors office. Then on the website you will find a calculator use that. Let me know if you need help. I also have a friend selling houses in Detroit for over 10 years. If this deal doesn't work for you I can get you connected with him as additional outlet.

Cheers!

Nick, you have a 14k property producing 1k in rent?

Wow. Detroit area isn't as bad as they make it sound.....

that's correct.

$50K for a repaired home in the nicer areas is to much. Having said that what hood is it in? There are million dollar areas of Detroit (The city - not "metro") -and there are several $500K hoods as well - so it all depends on what area...

Assuming it isn't a deal of the centuy and your buying a 500K home for $50K then your paying to much.

$30-35K all day long for beautiful brick homes in the nice parts - repaired.

People who do not know Detroit talk about the rental market or the war zones - most are full of it.

One of the most stable rental markets in the US for the past decase. Homes (mine anyway) rent and re-rent in 2-4 weeks each and every time - never a vacancy longer then that.

$3-4K house CAN be in good areas - heck - I just bought 3 $750 homes and one $1,000 home - including a 2,500 square foot duplex in a GREAT part of the city....

So - while I agree the realtor may be looking for a commission - don't do it - I wouldn't pay over $30-35K for a rehabbed home in the best parts of the city that will rent for $895 - $935 all day long.

Just be careful on the low dollar homes - a lot are being offered on QCD only and your responsible for any taxes / water (today I had a list of 10 homes - $10K and the back water came to $45K) so just be careful.....

QCD = quit claim deed. Meaning no closing / no titlework prepared - you are on your own. Bank sells house for $1,000 - you give them $1,000 for their rights in the home.

You now own any liens / water bills against the house - meaning you owe it.

If you do your homework before you buy and run your own title and call the water company your cool as you know what your getting into before you get into it - but if you don't you could get stuck with liens / high past water bill (water in Detroit follows the house not the person - gas/electric follow the person not the house)

"The house that i purchased is a 4 bedroom, 2 bath home for just under 10k. Needed minor rehab (4k) and will rent for 1k a month, and will attract better quality more responsible tenants."

Amazing. You could throw a lot of resources into figuring out how to repeat this 100 times.

$1.5mm investment grossing $1.2mm and netting $600K!