Real Estate Investor · Portland, OR · Member since 2008 · 1k+ posts · 23 votes
Ok Detroit Michigan members... I have a few questions...
I have heard about Detroit on the news a lot lately… i.e. foreclosures etc.
I was just playing around on Realtor.com and saw there are 11,754 homes for sale that are 3+br that are under $50k. Out of those, 5500 of them are under 20k.and 1600 of them are under 5k... What? Are you serious?
Also in some of the listings they say things like…
- SEV
- Buyer must obtain city inspection and sign ACR with the city of Detroit
- Buyer responsible for any municipal requirements
Huntsville · Member since 2008 · 137 posts · 3 votes
18y
Detroit really really scares me. I like the fact there are tons of great deals on the market right now, but in Detroit there seems to be ALOT. The economy really scares me as well there. I get deals sent to me all the time from Detroit, sometimes 40 cents on the dollar. The only thing I can see is buying them to hold for cash flow, and then hope the economy gets better in the future.
I love Grand Rapids because the economy is great, there are so many awesome projects going on in the city, tons of new jobs added all the time. Plus the crime even in the bad parts are nothing compared to Detroit, or most cities for that matter. And the deals I am getting are great!
Real Estate Investor · Portland, OR · Member since 2008 · 1k+ posts · 23 votes
18y
Originally posted by "real2":
Go see the area.
Learn the economy.
Learn the neighborhood.
There is a reason that so many houses are priced so low. If renters & buyers were knocking on the door, the prices would be higher.
Thanks.. I understand those things...
I was just wondering if prices have been that low for a long while... or if they have dropped 50%, 60% or 90% in the last ____ years, ____ months?
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
18y
The population of Detroit has been decreasing since 1950. The auto industry is not doing well and will do even worse if there is a major recession. The governor of Michigan has decided that raising taxes is the best way to handle Michigan's problems.
I think this bumper sticker says it all: "Will the last one out of Detroit please turn out the lights?"
Real Estate Investor · Portland, OR · Member since 2008 · 1k+ posts · 23 votes
18y
Originally posted by "MikeOH":
The population of Detroit has been decreasing since 1950. The auto industry is not doing well and will do even worse if there is a major recession. The governor of Michigan has decided that raising taxes is the best way to handle Michigan's problems.
I think this bumper sticker says it all: "Will the last one out of Detroit please turn out the lights?"
Mike
Thanks Mike for the reply... That is a great bumper sticker!
Seems like there should be a way to make money there... Or, is it that there are so many houses available, that the rents are too low.
Real Estate Investor · Member since 2008 · 13 posts · 0 votes
18y
I've been investing in the Detroit area for 5 years now, and have seen a lot of things change over that time. I wouldn't touch Detroit city right now. There may be deals there, but it's too risky for me. All of you make some really good points. The economy there is very scary, but the city itself is doing a lot to try to encourage businesses to move here. The counties around Detroit do have good deals though. Cash flow is the name of the game here. You can get REO's very cheap, but like real2 says you need to do your research. I've built a great team back there, which is vital if you're not local. I'm in LA, so the opportunity for cash flow at the low prices is very appealing. My property manager just said last week that the rental market is getting better. Unfortunately, a lot of people are losing their homes, but they need to live somewhere. There is money to be made in any market, you just need to do your due diligence, and buy right. To answer a couple of the other questions, yes there are that many properties in those price ranges, but some can be completely trashed. And, the rate of depreciation varies depending on the area. In the last 9 months, values have declined in some areas 50-60%, but in others only maybe 10-15%.
Real Estate Investor · Auburn Hills, MI · Member since 2008 · 37 posts · 2 votes
18y
I have just started investing in Detroit (Dec "07"), and the prices for the bank owned and foreclosures are staggering. I see the Detroit market as a gold mine. I will continue to purchase properties for 20k or less to own free and clear with 50k plus in equity every month! Buy and hold, Detroit is a renting city. You can't lose with no mortgage and the tenants paying your property taxes! The economy will turn around and all the investors will be looking to get a piece when it does... and I will be there to wholesale half the city. :superman:
Real Estate Investor · Auburn Hills, MI · Member since 2008 · 37 posts · 2 votes
18y
Originally posted by "EricFoster":
Ok Detroit Michigan members... I have a few questions...
I have heard about Detroit on the news a lot lately… i.e. foreclosures etc.
I was just playing around on Realtor.com and saw there are 11,754 homes for sale that are 3+br that are under $50k. Out of those, 5500 of them are under 20k.and 1600 of them are under 5k... What? Are you serious?
Also in some of the listings they say things like…
- SEV
- Buyer must obtain city inspection and sign ACR with the city of Detroit
- Buyer responsible for any municipal requirements
What does all this mean?
Thanks,
It depends on who you are buying from. Some properties in Detroit will require an inspection on them before you purchase unless it is waived in the contract and sold "as-is". The buyers will pay for these inspections and you as the buyer will be responsible for the repairs that are neccesary. The ACR (Affidavit of Compliance Responsibility) is a form that you sign at the City County Building acknowledging that you received a valid inspection report prior to the sale or transfer and that you accept full responsibility for the repairs to the property. You can not occupy the property or rent it out without first obtaining a Certificate of Approval or Temporary Occupancy Permit from the Buildings and Safety Engineering Department. However, you can flip or wholesale the property anytime you choose. I hope this answers your question.
Real Estate Investor · Auburn Hills, MI · Member since 2008 · 37 posts · 2 votes
18y
Originally posted by "EricFoster":
Ok Detroit Michigan members... I have a few questions...
I have heard about Detroit on the news a lot lately… i.e. foreclosures etc.
I was just playing around on Realtor.com and saw there are 11,754 homes for sale that are 3+br that are under $50k. Out of those, 5500 of them are under 20k.and 1600 of them are under 5k... What? Are you serious?
Also in some of the listings they say things like…
- SEV
- Buyer must obtain city inspection and sign ACR with the city of Detroit
- Buyer responsible for any municipal requirements
What does all this mean?
Thanks,
It depends on who you are buying from. Some properties in Detroit will require an inspection on them before you purchase unless it is waived in the contract and sold "as-is". The buyers will pay for these inspections and you as the buyer will be responsible for the repairs that are neccesary. The ACR (Affidavit of Compliance Responsibility) is a form that you sign at the City County Building acknowledging that you received a valid inspection report prior to the sale or transfer and that you accept full responsibility for the repairs to the property. You can not occupy the property or rent it out without first obtaining a Certificate of Approval or Temporary Occupancy Permit from the Buildings and Safety Engineering Department. However, you can flip or wholesale the property anytime you choose. I hope this answers your question.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
John,
I deal with markets at this price point (more stable than Detroit though) whre my average price is $8,000.00. I use private money to acquire the property then refi it out with a standard mortgage. I do have a mortgage broker that will do 20 and 25k loans for me.
What you will find in markets that have these properties is that the real estate professionals who live there must simply adapt to the market if they want to survive. That's why I have a mortgage broker where I invest who will do 20k loans. How did I find him? I took a yellow pages and started calling and asking.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
Here's an other funny/interesting thing. If you buy these houses right - some cashflow positively on hard money loans...lol. That's very counterintuitive to what I was taught by Chicago "experts".
Real Estate Investor · Standish, MI · Member since 2008 · 26 posts · 0 votes
18y
Being from Michigan I have inquired about Detroit and was told to stay away.
Obviously its going to vary depending on where you are at in the city, but I was told about large numbers of the homes having all the copper ripped out of the walls and also that rehabbing is very difficult because the homes become targets of theft while trying to rehab them. You can't leave anything on the property while you're not there.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
Originally posted by "bstein14":
Being from Michigan I have inquired about Detroit and was told to stay away.
Obviously its going to vary depending on where you are at in the city, but I was told about large numbers of the homes having all the copper ripped out of the walls and also that rehabbing is very difficult because the homes become targets of theft while trying to rehab them. You can't leave anything on the property while you're not there.
Funny story - one of my hobbies is blacksmithing and I was transporting one of my anvils one day and stopped at a rehab. I decided to leave the anvil there (about 125 lbs) while I drove to Chicago to take care of a few days of business. When I came back, someone had stolen the anvil - but left all the copper..... Scrapping the anvil probably got them 1/10th the amount of money in scrap iron as the copper and I know for sure it's the harder thing to remove.......
Real Estate Investor · Auburn Hills, MI · Member since 2008 · 37 posts · 2 votes
18y
At what discounts of the ARV are you able to get the homes in Detroit?
20 cents on the dollar?
Also, what financing are you using to acquire these homes? Are you financing them yourself?
I'm not entirely sure, but isnt any amount under $50K impossible to get a loan for, either with private lenders or banks?
John T,
I will have to get back to you on the ARV discounts to make sure that I provide you with correct information (I will PM you with this). I pay all cash for my properties with no financing. Financing may be an option in the future with a large bulk package/deal. All of the properties that I acquire have at least 50k in equity, and produces positive cash flow.
Real Estate Investor · Auburn Hills, MI · Member since 2008 · 37 posts · 2 votes
18y
Originally posted by "bstein14":
Being from Michigan I have inquired about Detroit and was told to stay away.
Obviously its going to vary depending on where you are at in the city, but I was told about large numbers of the homes having all the copper ripped out of the walls and also that rehabbing is very difficult because the homes become targets of theft while trying to rehab them. You can't leave anything on the property while you're not there.
You are absolutely correct Brian. As you mentioned, it depends on where you buy and the area. A lived in area with homeowners who maintain their properties is more likely to not allow suspicious activity to happen at a vacant property on their street or neighborhood. Those are the areas that I target. The homes that get the copper ripped out are in the areas where vacant homes are excessive and visible. Some properties, as the one I purchased in Dec "07" are replacing the old PVC copper with Red and Blue "rubber tubing" to deter the theives from stealing the copper from these vacant houses.
As dumb as it sounds I have joined this forum to learn more on Detroit. As a middle aged person with an inheritance we are thinking about purchasing one of these places, making it liveable and having a paid for house for life. Have also considered another one for income (rent). Most of my investments up to this point have been gold, silver and rare coins but Detroit can't be in distress forever. It will eventually re-establish itself if nothing else as a service job city as most of the south is. Was born and raised in Detroit, got moved to the south because I was too young to say I don't want to go.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
18y
That may be true, but the real question is whether any of us will live long enough to see that happen. The Detroit population has been steadily declining for decades - will that change in the next 40-50 years? I'm not so sure.
Real Estate Investor · Mountain View, CA · Member since 2008 · 234 posts · 32 votes
18y
Hey Newbie,
Are you sure that the properties you are buying for $20k and renting really have at least $50k in equity? Frankly, I'd be surprised if you were able to actually sell these properties for $70k or more. If so, seems to me you'd be much better off just flipping than buying and holding - run the numbers and honestly it would be a no-brainer. $50k profit now vs. maybe $100 per month - not even a decision to be made it seems. Especially in a market where appreciation will not be seen for a long time. At one per month which you seem to think you can easily find, that's $600k pre-tax per year. Where do I sign up?