Should You Cash In On Detroit’s Real Estate Market?
Following Detroit’s bankruptcy filing, a lot of attention has turned to its real estate market. You can pick up a house in Detroit for under $500. However, recent news reveals that this is easier said than done and the allure of a price tag that could be less than a week’s salary might be too good to be true.
For one thing, you have to pay back the back taxes that the property owes, and there aren't many ways to cut corners on this. An auction held every Fall, though, relieves the potential homeowner from paying back taxes if the house isn't sold on the first day of the two-day event, but these houses are usually in the worst condition.
Jeremy Brown, who works in real estate in Detroit, gave Business Insider the low-down, saying that homeowners should be primarily concerned about the neighborhoods these homes are located in and the amount of work that it would need done to be deemed livable. Houses need to be almost ‘’completely rebuilt” and the fixing-up stage would have to be monitored very carefully.
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 [that appeared in this article]. It is hard out there, and people are trying to survive.”
Still, aside from the money factor or whether or not your home is safe while you fix it up, buyers should be aware of the rest of Detroit’s problems. In a city that has an average police response time of nearly an hour, you’d have to be prepared to take on the city for the damage it comes with, and see the potential of what it could be.
If you’re not looking for a residential fixer-upper, commercial real estate has more of a clear-cut case. The city’s midtown, downtown and riverfront areas are frequently patrolled by police and are in more well-off areas. But those downtown properties have a waiting list.
About seven or eight companies are offering incentives to purchase or rent. If you lease, you get $2,500 a year, and $20,000 to purchase,” says Austin Black II, broker and president of City Living Detroit. “We're working with a 98 percent occupancy rate… in an OK building, you can rent for $900 to $1,000 a month, and for a new building, $1,200 to $1,400 a month.”