This Is For Everyone Who’s Thinking Of Buying One Of Those $500 Homes In Detroit

detroit petoskey9384 Petoskey Ave, currently listed at $130.

Its been recently reported that in theory, you can buy  a bunch of houses in Detroit for $500 or less. We’ve already seen people talking about scooping some up, just as a  speculative investment. But it’s a bit more complicated than that. Turning to a couple of young professionals moving to Detroit to add some color about this phenomenon.They said it’s not quite so simple as just plunking down a week’s salary. In many cases, if you want to purchase one of the bargain properties, you  will also have to pay all the back taxes the property owes. Tifani Sadek, a lawyer who with her husband just purchased a home in the  Woodbridge neighborhood for $94,000, pointed us to a site called Why don’t we own this, which compiles data on distressed properties in metro  areas that can help people figure out what else they’re going to owe.The site is almost a real life version of the Matrix — endless blocks of  foreclosed and bank-owned homes.

Here’s a screenshot for Detroit.

(Red dots = foreclosed homes; yellow = conditional; green = redeemed):

detroit real estate map

A typical example is the property at 13858 Fleming

It’s assessed at $7,073. But it’s also behind an additional $7,603 in taxes and fees (and not  including your realtor’s fee). Plus, as soon as you buy it, it’s likely going to be reassessed, meaning  you’ll start paying even more in property taxes. Just up the street, 13545 fleming is listed @ $70. Actual market value is at $32,000 -$40,000 There is one way to get around the initial back taxes, Sadek says: every  fall, Wayne County (in which Detroit sits) hosts a two-day  property auction. Bidding starts at $500. Any properties that don’t go on  the first day — the worst of the worst — are voided of their back dues, she  said. The money is only half of this story. It also appears buying the cheapest properties in Detroit can take a toll on  your psyche. Jeremy Brown, who works in real estate in the city, he says  that  many of the cheapest houses have to be completely rebuilt, not least because  thieves have stripped them of basic infrastructure. Nearly all of them have mold, require all new  electrical, plumbing, ductwork, drywall, many times a roof, all new windows,  doors, cabinets.  Basically everything.  Anything that can be taken  and sold, has been.

cheap detroit home14678 Mapleridge, which is listed at  $100.

It’s impossible to understate how aggressive the cities  thieves have become in some of these neighborhoods, Brown said. You almost need to pay someone to sleep on an air  mattress in the house while you are working and move in immediately upon  completion,” he said. “If these houses sit, people WILL break into them.   You put in a new toilet, bathtub, and vanity…that night people come in and rip  it all out.  A business partner of mine had a house broken into 5 times  over the last couple of months, and it is in a much better area than the stuff.  It is hard out there, and people are  trying to survive. Despite all that, it may seem tempting to plow into a market that probably  will not get any worse. But Sadek warns locals won’t take kindly to property vultures: I am happy people want to invest in Detroit  but it is extremely detrimental when they do so from afar and don’t fix  the house up and rent it out. People that sit on houses often do more  harm than good. There are lots of “investors” sitting on blighted houses waiting  for their value to rise, which will never happen when tons of people do it. If  people buy homes, I really hope they’ll treat it the way they would any other  home.  think hard before going in on these ultimate  fixer-uppers.

If a deal Sounds too good to be true…It Typically is

 

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