One thing I'll say for him. If he lives in Detroit, and is getting involved with the community, then he has a better chance than most people Looking at Detroit from afar. With boots on the ground, I think you can fair much better in a rough(er) market. I wouldn't suggest anyone follow his lead without a solid and trustworthy team in Detroit.
My understanding is that holding costs are also incredibly high. You can pay $500 for the place, but your tax bill may be 10x that.
Man! I constantly think about Detroit! As history shows us, everything is cyclical. It's all about the timing. That said, he's either on to something, or throwing money away. I tend to take the value investor thought process and see it as a gold mine. Unfortunately, I'm down here in Texas. I would love to find someone willing to partner in the area though!
One thing I'll say for him. If he lives in Detroit, and is getting involved with the community, then he has a better chance than most people Looking at Detroit from afar. With boots on the ground, I think you can fair much better in a rough(er) market. I wouldn't suggest anyone follow his lead without a solid and trustworthy team in Detroit.
My understanding is that holding costs are also incredibly high. You can pay $500 for the place, but your tax bill may be 10x that.
Detroit is tricky. I just had a day field trip there where my friend who is deeply involved in the community showed me what is going on there. Detroit is definitely making a come back, I believe that 100% but it is with blood sweat and tears and there are going to be some Huge success stories and probably a lot of failures. I live an hour and a half away in Lansing, and I'm not close enough to get involved there. You have to be in the scene, eat at the restaurants, chill at the coffee houses get to know the art scene and underground movements to really know what's going on and where it's all going. It's totally a gold mine right now, but you HAVE to be there. You have to do Detroit for the love of it right now, not just as an investor. I think you have to be apart of the community to fully understand it and develop your strategy from there.
The problem with playing the "long" game in Detroit is the property taxes. Many homes that I bought for $500-1000 have annual property tax bills of $2000. Throw in another $1200-1500 for insurance. You'll go broke waiting for the day that Detroit finally turns around.
Dan Gilbert ceo of Quicken has invested billions in detroit and has bought large commercial buildings pennies on the dollar it takes vision,and guts. One only has to look at at the dramatic turnaround of GM over the past 7 years
Dan Gilbert ceo of Quicken has invested billions in detroit and has bought large commercial buildings pennies on the dollar it takes vision,and guts. One only has to look at at the dramatic turnaround of GM over the past 7 years
http://www.cnbc.com/id/102116432
hahaHAHAHAHAHAAH comparing us investors to Gilbert HAHAHAHAHAHAHAHAHA you have no idea what is involved in trying to get into the down town area
I agree but the big sharks move in first and it filters down to the little guy You have to have the expertise and vision to sniff out those neighborhoods that might change early
An example was downtown Vegas 5 years ago The ceo of Zappos started buying on Fremont street years ago and investors quickly moved in when they got wind of it Today is a desirable area with upscale tenants Your expertise is to sniff out these events early and take advantage It is not something t laugh at but to capitalize on thru farming your area
Vegas has been nothing near a smooth ride and even with the major push from the former Zappos CEO many of the startups he bought in seem to not be doing very well. For instance, here is an article about the problems in the area:
Regular people are shut out of downtown and midtown. The next build up I think is going to be behind the MotorCity Casino. Many properties are already cleared out. This would connect to Corktown. Also right next to a huge development for the new Wings arena.
It has a good chance since most of it is already gone and there will be massive investment right in that area. Corktown is such a cool little neighborhood. Can't even find one for sale in the area
I don't do the $500 houses, they are usually too far gone to be worth anything. The $500 house thing has always been a bit of a myth. I don't know anyone who has made money on a $500 house. The new land-bank is starting to actually tear-down a-lot of the $500 homes. If you actually watch the video Darren isn't even buying the $500 homes. If you are going to invest here, buy solid homes in stable neighborhoods. You can find good houses (I tend toward duplexes) for 7-20k. With a little tlc are up and rent-able, decent neighborhoods rent from $600-$1000 no problem. The tax rates are high, but the assessed values are so low that if you aren't lazy, or stupid, you shouldn't be paying much more in taxes than you do elsewhere. Finally, this market eats up absentee landlords, absolutely destroys them. If you aren't going to be active and involved (or at least pay someone to do it for you) don't bother, you are wasting your money.