Home Buying in Detroit>Question Details

Greg, Other/Just Looking in Outside U.S.

$1 houses whats the catch? arm chair investment of major headache advice please?

Asked by Greg, Outside U.S. Wed Mar 3, 2010

Help the community by answering this question:


Remember the Maxim - You get what you pay for.

$1 may seem like a deal - until you realize it may be a major liability.

The best real estate investment is a LOCAL investment. One that you know - can visit - can keep an eye on - and a neighborhood that you have good instincts for.

PLEASE - heed.....

Good Luck!
1 vote Thank Flag Link Wed Mar 3, 2010
if your interested in investing in property in detroit contact me?
0 votes Thank Flag Link Tue Mar 9, 2010
The catch is that it costs the foreclosing bank more $$ in taxes and carrying costs than it's worth to basically give it away.

The houses are not move-in ready and will require an investment to make the necessary repairs to bring them up to code.

For the experienced investor with the resources to pull it off I'm sure there is money to be made, but it's far from a no-brainer.
0 votes Thank Flag Link Mon Mar 8, 2010
Do lots of research! There are GREAT deals out there, but there are traps also. Consider the total investment, including repairs. Know the neighborhood and what homes are renting for. Check the tax records and find out what you will need to do to get a CO. You can do all this yourself or find an agent who specialises in this type transaction. Consider finding a partner who does rehabs to lesson your exposure to loss. Good luck if you go to fast, congratulations if you take your time. Here are a couple articles that you can start with.

0 votes Thank Flag Link Wed Mar 3, 2010
Hi Greg

It's great that you're looking into real estate investing but you do need to check things out a bit more.

HUD is one source -they sell $1 homes to municipalities or to qualified non-profits under certain conditions. Private citizens are not eligible. I'm not aware of any other $1 homes except on occassion when someone wants to sell you the home only and wants you to move it off their lot.

I would suggest looking at HUD REOs for decent homes at a decent price.

High expectations for $1 homes, short sales and other "bargain" homes are unrealistic. Take the advice of Don and Gerard.

Let me know if I can help. I can finance nonresident non-US nationals.

Eagle Nationwide Mortgage, Thomas.Stevens@ENMCdirect.com
0 votes Thank Flag Link Wed Mar 3, 2010
The catch? They pretty much don't exist.

There have been a few instances in which cities have taken condemned or abandoned buildings, then sold them for $1. Usually, though, there are lots of strings attached: The owner has to fix the property up to code, the owner must be an owner-occupant, the owner can't sell the property for 5 years . . . stuff like that. That happened in the Logan Circle of Washington, D.C. maybe 30 years ago (when I was living there), and I know it's happened in other places.

There are ways to buy properties cheaply. You can get shells in Baltimore (and probably other cities) for $15,000-$20,000. You can get cheap single-family homes in some rural areas (example: Spartanburg, South Carolina) for $30,000 or so. You can get nice manufactured homes for $15,000 (2 bed/1 bath) or $40,000 (3 bed/2 bath) in some decent areas, such as Chantilly, Virginia. You can get some homes in questionable condition in some depressed urban areas (Detroit, for instance) for maybe $20,000. You can pursue tax auctions and perhaps pick up some properties inexpensively.

But there are always catches. I mentioned the catches with the $1 homes I knew about. Shells in Baltimore? They'll cost $50,000-$70,000 to rehab. Manufactured homes? There's also ground rent, ranging from $200 or so up to over $800 a month. Depressed urban areas? Rehab costs, maintenance, and finding tenants . . . as well as possibly owning a depreciating asset.

Many are still very good investments so long as you understand what you're getting into.

Hope that helps.
0 votes Thank Flag Link Wed Mar 3, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
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