What does a $6,000 home in Detroit look like?

Posted by: Prashant Gopal on March 5, 2009

The median home in Detroit fell 39% to $7,000 in January compared to a year earlier. Yes, it’s cheaper now to buy a house in the Motor City than it is to buy a car.

It got me thinking. What does a $7,000 house look like. I asked Stanley Inges that question a few days ago. Inges, a 58-year-old Realtor in Detroit, says he bought 8 foreclosed homes with cash in the past year in the Schoolcraft/Grand River area, on the west side of the city. All of the homes were brick and the prices ranged from $1,000 to $14,000. And of course, each of these homes required significant work. At this price range, homes aren’t in move-in condition. The $1,000 home required $18,000 of work. He had to replace all the radiators in the $14,000 house because they were stolen by vandals. But that home has 8 bedrooms on two levels and a three-car garage.

He’s living in a 3-bedroom home with a new roof that he purchased from a bank last year for $6,000. He put in about $10,000 to redo the kitchen and bathrooms and he says it’s beautiful now. Check out this photo of his living room, which is equipped with a pool table:
Inside a $6,000 home.jpg
He’s renting out a few of these units for $700 a month, he said. But he says he’ll really make money when the market turns around and home prices start to climb again.

“I want to save money and buy some more houses,” Inges said. “One day I’ll be a millionaire. I’m on my way.”

Many out-of-state investors have come into the market to do exactly what Inges is doing. They are buying up houses with cash and filling them with tenants. But it’s not necessarily as simple as it might seem. Marion Tindle, a Realtor in the Detroit suburb of Farmington Hills, cautioned that there are risks associated with buying rental properties in Detroit.

For one thing, it’s hard to find reliable tenants in a fast-deteriorating economy. Home prices are falling in part because Detroit has a staggering 20% unemployment rate. And it’s possible to get stuck with a vacant house that requires high tax payments and other fees, she said.

Tindle, whose coverage area includes Detroit and its suburbs, says it makes more sense to pay $30,000 for a decent house in a more stable suburb such as Oak Park than to buy in the city.

“You might spend money fixing up a place in Detroit and then you could just be sitting around a while until you find decent renters,” she said.

Reader Comments

Strategery

March 7, 2009 3:51 PM

Some areas of the US are dotted with ghost towns caused by the local economy collapsing. Could this be a modern day ghost town? How is the neighborhood? A $1,000 house might not be worth it if there is crime everywhere and no jobs are available. And, how strict are the zoning laws? In some case, it might be worth demolishing a house and placing a manufactured house on the lot.

volonte williams

March 11, 2009 10:41 PM

The market for reo, foreclosure and wholesaling is awesome and what better time to get into this market?

Detroit homes are cheap and these bargains can be had for as little as $500.00

I have purchased 7 homes in two months and plan on buying 30-50 by years end.
I have started a blog on the subject at http://detroitgoldmineproperties.wordpress.com/ and forsee Detroit as the next haven for ultra high yield cash on cash rental income flow.

Detroit is a Goldmine!!

Kristy

March 12, 2009 10:28 PM

Each investor/buyer is different - I would be cautious if any REALTOR is giving you financial advice or steering you into or out of a particular area.

manuel

March 14, 2009 7:57 PM

ya me gustaria tener una casa en detroit

new roof

April 2, 2009 4:07 AM

It's look so beautiful.I think it's not so much costly.I want to invest in it.Thanks for the advise.http://www.newrooflongisland.com

New Roof

new roof

April 2, 2009 4:07 AM

It's look so beautiful.I think it's not so much costly.I want to invest in it.Thanks for the advise.http://www.newrooflongisland.com

New Roof

Detroit Foreclosures

June 2, 2009 3:28 AM

The first three months of 2009 showed that one in every 136 Michigan homes were foreclosed. Don't miss this lucrative opportunity to for the maximum return on your property investment in Detroit.

http://buyhomesdetroit.com/

MARIO SANCHEZ

July 8, 2009 7:29 PM

HOLA LES SALUDO DE GUATEMALA QUISIERA PEDIRLES DE FAVOR SI PUDIERAN ENVIARME INFORMACION REFERENTE A LAS CASAS QUE ANUNCIAN EN MENOS DE U$5000.00 SERA ESTO POSIBLE PUES QUISIERE MAS INFORMACION AL RESPECTO YA QUE DICHAS CASA HAN DE REQUERIR REPARACIONES PUES ACA EN GUATEMALA A ESO ME DEDICO Y ME GUSTARIA PODER HACERLO EN ESTADOS UNIDOS TENGO VISA Y NESESITO SABER SI PODEMOS HACER ESAS COMPRAS Y SER DUENOS LEGALMENTE MI TEL ES EL 57515789

Thaddeus Buttmunch MD

January 3, 2010 10:36 PM

The school system is bad and there is crime everywhere! How would you be safe?? If you are White they don't want you except for breakfast!

Jason Simpson

January 22, 2010 5:38 AM

Well there is plenty of stock for your investments in Michigan if you are up for it and get that passive income in your account every month. For me I love it www.cashflowgold.com.au this is the best time every to setup for your future, thanks Michigan

Jason Simpson

January 22, 2010 5:41 AM

Love Michigan, bargain property and quality tenants this has been great and look forward to assisting in building a bigger and better Detroit in the future.
www.cashflowgold.com.au

jesse

March 1, 2010 3:22 AM

Detroit might be one of the fastest deterioting cities.. but i think the economy will turn around.. it just takes time. Invest in it and i am sure all the investments from out of town will bring up the city. Topnewz.com

David Bredin

March 14, 2010 8:25 PM

Stop writing crap in Mexican you illegal alien trash, and mow my frickin' lawn!

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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