$6900 for Detroit home. Godd or bad price?

8 Replies

The current issue of Money mag has a full article on whether low prices are low enuff or not. Detroit is used as an example,as well as Vegas, Phoenix, and others. They use a price/rent ratio and the comparisons today to yesteryear. Good read. I read it on the plane today. Rich

depends on the condition and location.
I know of a guy who buys HUD homes for cheaper than that in detroit area and immediately auctions them off.

Some have been 2-3K, but LOOKOUT for those houses with obsurdly high taxes.

I've been dealing in this price range for 2 years now and it amazes me how many people don't get the concept that it isn't about the price - the price is just a qualifier that a house is worth a second look.

The price is good as long as you know your market and know houses. I've lived in the market I operate in for 2 years now and know when a $6000 house is a buy or a nighmare. I've bought houses for as low as $4500 and skipped on houses lower and higher than that in price. I can do that because I konw my neighborhoods (a city name is worthless as neighborhoods vary) and I have a background in construction and property insurance claims and know exactly what happens to a house when certain things occur and know exactly what it takes to put a house back together and what are unnecessary extras to putting a house into rental condition. And yes, I carry a gun when I go into a vacant REO that I bought for under $10,000.00. I can handle that.

You can't get into these sub 10k houses from an armchair without expecting a royal screwing to be par for the course. I do work with "armchair" investors on 2 ends of this - borrowing from them and selling to other armchair investors after I have it performing again (though I do MUCH less of the second part anymore - I hate selling them once I get them working). This middle ground of taking the cheap houses and getting them performing is not for the lazy, feint of heart or those who aren't willling to physically be in their market for the transition period as these houses go from vacant liabilities to occupied investments. If you're not willing to do that or have something better going on that makes sense to focus your time on, you're better off going with 30-50k houses that are rented.

Tim

Originally posted by Tim Wieneke:
it amazes me how many people don't get the concept that it isn't about the price


On second thought....maybe it's our natural inclination as consumers to over focus on face price without examining true cost. I don't think any of us has not had to retrain our consumer viewpoints to investor viewpoints.

Originally posted by Tim Wieneke:
Originally posted by Tim Wieneke:
it amazes me how many people don't get the concept that it isn't about the price


On second thought....maybe it's our natural inclination as consumers to over focus on face price without examining true cost. I don't think any of us has not had to retrain our consumer viewpoints to investor viewpoints.


I can agree with this. As a consumer, when you are deciding what product/service to buy, what is the first thing you look at? Price. Then you may look further into it, such as additional bonuses or any future costs, but for most people I think it really stops at the initial cost.

Here's a link to the article Rich mentioned ... it is a good read!

http://money.cnn.com/2009/10/16/real_estate/Real_estate_bargains.moneymag/index.htm?postversion=2009101612

You also need some sort of exit strategy. I don't see one in Detroit for a LLLOOOOONNNNNNNNGGGGGG time. Rich.