A FEW THOUGHTS FOR THE NEW DETROIT INVESTOR
.
Whether you are an investor from the suburbs, another state, or another country , and you're thinking you cannot lose by getting a house in Detroit for $1 (or even $1000) – be sure to think it through. The initial price tag may sound too good to be true, but when you factor in potential back taxes, water bills, the municipal bureaucracy, and the minimum repairs required to get a decent tenant placed – your headaches will multiply and your returns will shrink.More often than not you will put a lot more time, effort, and money in than you ever would have ever thought.
.
If you really want to be a successful “absentee” investor, do yourself a favor and get connected with reputable people that will look out for your best interest. Have them screen the homes and actually give you an estimate to get a responsible tenant in place (and keep them paying). Understand that many bargain homes will be stripped of the copper plumbing, the furnace, and water heater. There is a decent chance they won’t have functional bathrooms, windows, doors, or kitchen cabinets (if they have any). This is all assuming you have no fire or water damage, a decent roof, and a decent foundation.
.
Even if you are willing to completely rehab your homes, know that the “bargain basement” type will very often be in a neighborhood with burned down or boarded up homes, empty lots, and maybe even some “entrepreneurial pharmaceutical activity” at night. This means you will have an extra expense of keeping your projects supervised during rehab (I have literally had tacked down carpet stolen in a matter of hours before), and extra management expenses to collect from some of your tenants.
.
So am I saying this to scare you away? Absolutely not. The one thing you will learn about Detroiters is that we say things how they are. Detroit has great people and holds tremendous opportunity. It also, however, has many challenges with which you may not be familiar in your “backyard”. Expecting to buy 10, or 50, or 500 houses because the law of averages is on your side may or may not be the best approach. Geographically, you may find that only about 15-20% of Detroit has nice, solid homes in well occupied neighborhoods. There are still thousands of great deals in these neighborhoods, but you will not often get them for a dollar. It is for you to decide which route to take (to pay more up front or to pay more later).
.
The point is this – do your due diligence. Understand some of the potential obstacles before you dive in head first. Do not feel as though you will miss the boat if you don’t buy everything in sight (or in some cases, without having even seen them!) There will always be more homes (many of which will be on the market from other investors that did not do their homework).
.
Whichever investment strategy you choose - welcome to our great city and the best of luck to you. Be sure to bring the enthusiasm and optimism we at Real Detroit Homes have, and you will be successful here. Thank you for having the faith to help us move forward in our city’s renaissance, and let’s all work to get a great family in every Detroit home!
Sincerely,
The Staff at Real Detroit Homes
If you have any ideas or questions about our commentary, e-mail us at investors@realdetroithomes.com . Please type "out-of-state investor" in the subject line.
or call us at 313-653-1173. We look forward to hearing from you.