$1-5k Homes in Detroit

11 Replies

There are a number of 1-5k homes for sale in Detroit, MI. So they need a complete renovation from top to bottom. Some have fire damage, as well as a million other things wrong with them.

What I am wondering is if there are even investors who would want to deal with them? Is it even worth it to me to buy a place for 1-2k?

Most of the $1k houses you see listed in Detroit are Land Bank owned. They have restrictions on how quick you need to rehab the homes (six months) and who you can work with. It's a pain in the butt, and while it may be worth it to some folks, I don't see the value in it.

Most of the stuff in that $1k-$5k price range has been picked over by local investors like roadkill picked over by vultures. The in-editable bones are left. I think @Alex K. just mentioned today or yesterday that there's nothing really worth buying in that price point any longer. 

Of course, some out of state folks will take a shot at these and get burned. Seems there's always someone eager to relearn someone else's lessons. But the majority of these will likely get razed eventually.

Originally posted by @Chelsea Broersma :

There are a number of 1-5k homes for sale in Detroit, MI. So they need a complete renovation from top to bottom. Some have fire damage, as well as a million other things wrong with them.

What I am wondering is if there are even investors who would want to deal with them? Is it even worth it to me to buy a place for 1-2k?

 No. Take a cruise to the Bahamas or something instead. 

@Chelsea Broersma I bought 21 of these junkers from 2009-2011. They were $1-5K back then and they still are today. They are on the worst streets and attract the lowest quality of tenants. Do not buy these. Cash flow on paper will never happen because in reality you will never collect 12 months of rent in a row and will spend heavy on cap-ex yearly.

If you must invest in (metro) Detroit, stick to $60K and above and more importantly rents at $1200/month/unit (SFRs in nicer neighborhoods)

Originally posted by @Chelsea Broersma :

Thank you for everyone's input. I have steered away from that category. I'd love to see Detroit grow back to what it once was, but not at the expense of my sanity at the moment.

If you want to participate in Detroit's comeback, just move up market a bit.

Trying to get in the $1k-$5k range is literally the bottom of the barrel. So far, my lowest purchase has been a $40k house that only needed $2,500 worth of work. 

I plan to go "down market" a bit more, but it's going to be via the tax auction. So a bit of a different game.

 

Originally posted by @Chelsea Broersma :

@Travis Biziorek Makes sense. Thank you. I hope the tax auction goes well for you. I don't know enough about them yet.

I don't either. This will be my first rodeo there. But I know my focus areas well, and I should be able to avoid a disaster (I hope) lol.

 

Originally posted by @Chelsea Broersma :

@Travis Biziorek Have.. fun? :) (is that the right way to say it? I mean, I hope that everyone gets some level of "fun" out of this business, regardless of level of experience)

I've having a ton of fun with the entire process. Learning a lot, getting to know new folks. There's not much to dislike.

 

In some instances it makes sense; prime area, experienced rehab crew, and adequate funding.  These deals are for well capitalized and seasoned investors.  I would not recommend for a newbie!