Irish person buying in Detroit (Wayne: sale, real estate market, rental)

[t00054583]

Hi all,

I have recently been given the opportunity to buy a house in Detroit. It belongs to people I know who no longer want it and just in conversation I said it might be something Im interested in.

There is some work to be done to it, it needs a new boiler and furnace and a new kitchen, but other than that its just usual wear and tear like painting and new carpets.

I was thinking of renovating it and either renting it out or selling it. I think I should have it up to standard for about $25,000. It is a 2 storey, 3 bedroom, timber framed house on a mostly red brick street. It is in the 48221 zip code in the Bagley neighbourhood.

I am from Ireland and live in Ireland so have never been to Detroit. What Im wondering is if the idea of renovating this property to rent it or sell it makes any sense?? What kind of neighbourhood this is?? Is there much of a market for renting at the moment or if I sold it would a property in the area get more than $25,000??

Any help would be appreciated.

Thanks

[suzy_q2010]

Detroit is still one of the most depressed real estate markets in the US, so reselling it any time soon might be difficult. Perhaps someone here can tell you if that particular neighborhood is doing better with sales.

You would be so far away that you would need someone to manage it, which would be an expense you need to consider, if you chose to rent it.

I notice that it is near the University of Detroit and not too far from Wayne State University, which might help you find tenants.

I have a house that is in one of the Detroit suburbs that I decided not to sell when the real estate market bombed. I am an absentee landlord, and I do have a management company. My first tenant did not work out well; she left owing rent and stuck me for the water bill. The current tenants are great and have been there about three years now. I own the house outright, so there is no mortgage expense for me, either. I make a little money each year, and I can afford to wait out the market.

You might want to visit the renting forum here on CD to get an idea of what it means to be a landlord.

[animatedmartian]

Bagley is a pretty good neighborhood and you might be able to sell it or rent it out. You probably won't your money's worth for investment for quite some time though. Detroit's housing market has been improving but only at a few thousand dollars over the past year (from a very low median).

However, being an out of state landlord can get sort of finicky in Detroit. Although Bagley is a pretty stable neighborhood, it's always best to at least check out the house first hand and visit it occasionally or have someone do it for you. We have a problem of squatters taking over homes if they appear vacant for any length of time in almost every neighborhood, this usually leads to owners having to go through the process of legally evicting said squatters before someone could move in (which in some cases can take more than a month).

It'd probably be easier to avoid this from happening if you or someone else would easily be able to reach the property and keep tabs on it, otherwise it seems like a very big hassle for someone while being so far away.

[Retroit]

Not recommended.

[maclock]

Originally Posted by Retroit

Not recommended.

^^^^^^^^^^^^^^^^
This.

[YohnCarter]

As I've posted before on this site, selling Europeans Detroit rental Properties has become a giant investment scam. There are reasons the average home in the city sells for under 9k. If you are buying from a company, run away. They are probably trying to sell you the property at 2-300% of its real value. If you are buying from an individual, make sure you do sufficient due diligence. Remember, most likely they are cutting their losses. Be careful about over improving. There are many neighborhoods where you could buy a tenant ready home for under 25k. Pay for a trip here before you spend a penny unless losing 100% of the investment is no big deal, its way too risky to be doing from Ireland.

[jackmichigan]

I offer a simple but firm recommendation: Do not even consider buying the house!

It is difficult enough to manage a fixer-upper in Detroit if you live next door. To try to do so from afar would be nearly impossible. Housing prices in Detroit appear to be cheap, but buying a house in Detroit can be very costly! I've fixed up my share of Detroit houses over the years, but I would certainly not recommend someone get into that type of investment today unless they had suitable experience, got a great deal (median sale price in Detroit is less than $10,000), and were going to live in the house or very close to it--and were able to flip it in short order. As an absentee owner, even a good deal is not worth the headaches which could easily result. You can afford NOT to buy in Detroit.

Also, FYI, taxes in Detroit are atrocious. Assuming your friends own their home as a principal residence, once you would buy it the taxes would be considerably more since non-homestead properties are taxed at a higher rate. The tax assessment level would also likely jump if they have owned it for some time, as assessments are "uncapped" upon a sale.
(Michigan has "State Equalized Value" and "Taxable (capped) Value". Too complicated to explain in my short reply, but taxes on the house would invariably go up.)

Detroit also has a BIG problem with scrappers who will steal you blind...as well as with squatters. Far too many houses also get taken over by drug dealers and are subject to arson. Detroit is not a place to toy with absentee real estate investments.

P.S. If I still haven't convinced you, I have a house in a relatively good Detroit neighborhood that I'm looking to unload for $5,000.

[YohnCarter]

Also, if the house is vacant, how do you know its shape? Are you relying on the sellers? Empty house often end up with the wiring and plumbing stripped. They get burned, Squatters break windows and doors, occupy and destroy properties. Likewise, be careful re: taxes. You could easily end up owing more than the house is worth. How do you plan to find a property manager?

[zthatzmanz28]

Going beyond the IT'S TOO GOOD TO BE TRUE CONCEPT--

If it were viable, wouldn't more people be doing it? Why does a house that costs $1.00 go unsold for almost a year?

If it were a great deal, wouldn't the cost reflect the demand?

Buying a "great deal" sight unseen is very tempting, if you haven't stood in the house, you have no idea.

If I had a warehouse full of broken Toyotas and wanted to get rid of them, I would lower the price. If I still couldn't sell them I would continue to lower the price. In theory I should start selling them once they reach the ideal price.
There has to be a reason why Detroit real estate CONTINUES to drop and still goes unsold.

It is your money and your time. Buying to own and live there is a better wager of your money as opposed to buying to rent (LOL) or flip (LOL)