Detroit real estate update
If you haven’t noticed Detroit housing is a national media subject. They love talking about $100 Detroit homes for sale or that Detroit is becoming “landlord land”. And they are right much of Detroit housing is becoming owned by investors. Not many people want to move into Detroit from the suburbs. One of the main reasons is the quality of the school system. A better school system would help make people want to live in Detroit
There are investors buying Detroit homes cheap from all over the country and all over the world. They believe that can make a lot of money renting homes out from out of state and out of the country. I believe they will be in for a rude surprise. Being a landlord in any state takes time and some experience.
The Detroit housing market has unique issues that a lot of out of state and out of country investors don’t realize. I think after a couple of years we will see many investors flee the Detroit housing market. The high taxes, the inability to consistently rent the homes, the vandalism, and then to be able to collect rent will become issues for these foreign investors.
I wish I could be on the phone line when the management company calls them for money to replace the stolen furnaces, hot water heaters, or copper plumbing. I can hear the conversation with the foreign investor now. Here is how I imagine it. ”what do you mean they stole the furnace and it will cost $5000 to replace it”. “I didn’t pay that much for the house.” “Can’t you rent it without the furnace” “Can we sell the home for more money now” No you can’t without the furnace. Plus you will have costs to sell the property. “Well I will just let it go”
So I will beleive we will get a fair amount of these homes sitting vacant and abandoned which will add to the decay of Detroit. I’m not looking forward to it. But I think it is coming with this much out of state and out of country investment. If these out of state investors had their own property manager in the state then I think it might be different. But………….
Yes theives remove anything valuable from a Detroit home if the home is vacant. I believe the City of Detroit is going to have some major issues in the future from these “foreign” investors. I think what is going to happen is that some of these investors will give back these homes to the city for taxes. Some of them will owe more on taxes than the house will be worth after being rented or vandalized. Wait until the first tax bill comes and the tax bill is more than what they paid for the home. Many of investors have no clue what they are in for. Buyer beware is definitely key in Detroit home buying.
I can imagine their frustration when they realize that not everything is as it appears to be. That they have been sold a bill of goods by the national media. It’s hard to make money as instate and hands on investor in Detroit. Let alone think you can make money from out of state and out of country. But we do appreciate you sending your money here.
As I say there is money to be made in Detroit homes if you buy smart. Know the market and don’t be led on by people telling you will make lots of money.
Russ Ravary your Metro Detroit realtor
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