Buy Boston-Chicago area house? (Detroit: apartment, rental, houses)

[sf512]

City is selling those historic area house for $10k+, of couse the 10K is not right on the Boston street. So many houses are listed on city auction website for sell.

One of my friend who lives in west wants to invest some money in Detroit house market. I can't answer his question.

Is it a good buy for investor? I think some cost is too high like property tax, winter gas, crime...

[animatedmartian]

The houses that the city is selling is only open to Michigan residents. The city is trying to discourage investors and speculators and wants actual residents to live in the homes. If your friend wants to invest in some property, he'll have to look at homes that aren't being sold by the city.

[sf512]

Yes, you are right. You still can buy the house if you are non-residents, but you must open a local company and live in the house at least 1 month to pass the certificate exam.

Let assume you are michigan resident, still a buy?

[animatedmartian]

It's hard to say really. At most, the taxes would be of biggest concern, but the value of these homes aren't really expected to go too much higher than what they're currently at. ROI won't be very much at least for quite some years.

[sf512]

Thank you. The ROI is very important. like you said, the property tax, rehab cost can kill the rental income if the house value can't up in the future.

[animatedmartian]

If it was one of those bigger houses, you'd probably have to split it for multiple tenants though I'm sure there's probably some regulations preventing that. Then again, I'm not sure.

For a smaller house, the rent would probably have to be comparable to those like in Midtown and Downtown (around $2/sf). But again, I'm not really sure Boston-Edison has reached the desirable level of being able to draw those willing to pay rent that high. A would-be investor would probably be better off owning one of the apartment buildings in the area at that point.

Overall, this area still has a few years to go but it's hot but really isn't suitable for lower-income tenants except for the apartment buildings.

[Retroit]

I would discourage investment unless the investor knows the situation in Detroit in great detail (i.e. more than can be learned on an internet forum).

[Retroit]

Have your friend read this: //www.city-data.com/forum/detro...-homeless.html

[sf512]

Just asked my friend read the articles. Well, Edison-boston area may not good as the ROI is too low. As an investor, if you can find some areas maybe like university district, close to midtown, close to Grosspoint. You can always get a house under 40-50k with rent around 800. The ROI can from 10%-18%, still better than bank CD.

BTW, the article " Go East.... and become homeless" can only prove that the author has a really bad luck.

[zthatzmanz28]

If you plan to live there until you die, love the historical aspects of a great home, and commute in and out of Detroit for most of your needs and wants, it is a GREAT DEAL.

Think you will rehab the place and flip it 2, 5, or 15 years later for a profit? HIGHLY unlikely.