Hello fellow monkeys,
I was wondering what you guys think about investing in the Detroit real estate market? It looks like they are slowly starting to get on the right track and there are some super bargains on houses available. Feel free to let me know what you guys think about this and if anyone has any experience investing in Detroit.
There was an article I read about detroit real estate, and I think it made a few good points: Just because the prices are cheap, doesn't mean you don't have to pay the back taxes on them. Also it is very difficult to renovate households down there due to the rampant crime. Supposedly anything that is being worked on in the house, are stolen overnight. The detroit police are infamous for their slow response time and that should definitely be considered. I don't think detroit will be a good investment until manufacturing or some sort of job creation is brought back.
http://demographics.coopercenter.org/DotMap/index.html
Yup
Didn't you see Robocop, dude? Red Forman is going to totally screw up your ROI.
I actually asked myself the same question when i visited Detroit several weeks ago. It is definitely a huge gamble when you are talking about buying up lots of vacant / half demolished homes on the outskirts of Detroit. By outskirts I am referring to anything outside of downtown Detroit and the vicinity of Hart Plaza and the General Motors HQ.
Sure you can buy homes for $1.00 but the reason why you can do this is because the government wants to collect the taxes on the property opposed to collecting nothing. The reason why i say that this is a huge gamble is because no one knows how Detroit will look like in 25+ years. There is just so much wrong with Detroit and its government on a fundamental level that it is hard to know when, if ever, it will be a thriving area. All I can say is that the city's population decreased from something like 2 million to around 800,000 in a very short period of time.
On the flip side there are also vacant office buildings in downtown Detroit. Although most of these buildings have been vandalized these properties could make for great development plays down the line. If Detroit ever recovers and starts attracting people these are the properties that will have the most potential for growth in terms of their value.
The question is even if you bought one of these buildings at a steep discount, how long can you sustain the tax payments that you will be required to make before you yourself go into foreclosure. But then again there may be tax abatements or subsidies available. I just dont know.
Hope for something like this: http://www.buzzfeed.com/mariahsummers/the-ad-industry-seizes-on-detroit…
All about crime. Urban theory states no cities can develop until crime has been tackled.
Do any of you believe that the prices are so low, you might as well take the chance and buy some up now?
Or from another angle - how bad can the situation really get? And what are the chances of this situation occuring?
Do any of you believe we are being overly cautious?
Have some experience in Detroit. Having invested in quite a few markets throughout North America (personal and investor funds), I have to say the logistics of investing in Detroit are a bit different than other areas. $1.00 homes are not an investment. If they were worth time or effort, they would not be getting sold for a buck. There are props in Detroit that will cash-flow for sure, but an exit strategy is even more crucial there than most other markets, and prop managers can be a concern in a lot of areas, which is to say there are a lot of streets/neighborhoods where collecting rent/renos/repairs is not something I'd wish upon anyone. There is a fair amount of investor activity in the downtown area, but there are so many areas of blight and decay killing any real market improvement (not to mention the crime) that I find it difficult to see Detroit as a whole as investment worthy.
Real estate is out of my wheelhouse so take the following with a grain of salt.
All I picture is a very illiquid product that you won't be able to get out of but have to pay taxes on. Ideally your potential tenant should have a decent paying job so why aren't they buying these houses? Hell, buying and installing a new water heater is more expensive than some of these homes. I'm not even sure a perfectly ideal investment can be found, let alone worth the ensuing headache.
Hi @iceman1, Here are a number of real estate buyers in Detroit but according to Yelp reviews, only some of them are good enough. If you cannot find the right buyer on your own, you can always seek buyers that pay cash for homes in Detroit. Contact estate home buyers in Detroit and hope for the best deal for the house.
Chinese Buying Detroit Real Estate (Originally Posted: 12/12/2013)
The main problem is convincing people to relocate to Detroit. This will require creating more jobs.
The weird thing is that a lot of US manufacturing is being outsourced from Detroit. Many of the parts are produced in China. Ford assembles cars in Mexico. GM and Chrysler Assemble cars in Canada. Meanwhile, many foreign automakers including: Honda, Nissan, BMW, Mercedes, Toyota, and Hyundai are building plants in the south eastern US.
Full article here.
I guess China is interested in U.S. farm land in the Midwest....
Seems likely
All consulting companies should just move to Detroit. They travel for most business anyway. Plus, the cost of slightly more expensive travel could potentially even out when considering the low cost of real estate and cost of living in Detroit versus a place like NYC.
Good point, @"yeahright". Outsourcing and recruiting firms should relocate to Detroit. Also, banks should move their MO and BO roles to Detroit. It's close to Chicago and it's probably a lot cheaper than the southeastern states.
not just Detroit, Chinese investors and buyers are interested in buying US real estate in general. NY is also one of the hottest areas for Asian capital.
NY prices are just loony. The P/R ratios are way out of whack. The NYC market investors either have ridiculously low IRRs or they plan to buy high and sell higher. It seems like a Ponzi game to me.
Chinese capital is flowing into NYC real estate? I hadn't noticed.
Not just US real estate market, Chinese capital is looking for real estate all around the world, sydney, london...........
That was a bit of sarcasm. I'm quite aware of the Asian interest, I deal with it often.
agreed. Australia, Africa and European countries are also targeted regions.
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