Detroit has seen a lot of interest from investors lately. No, they are not interested in cars. Investors are checking out the market prices on real estate. Detroit currently has some of the lowest priced homes on the U.S. market. The city has become a buyer’s market with all the new and previously owned homes hitting the market.
Some homes in Detroit have been marked down to a third or a fourth of their original value. For anyone interested in buying cheap homes, Detroit has become a gold mine. Whether you are looking for a new home to live in or you want to invest to turn a profit later, these are some of the best deals you can find. There are some factors to why the real estate there is so low. Here is the 4-1-1 on buying cheap real estate in Detroit.
Why Real Estate is Cheap in Detroit
Several factors have contributed to the decline of real estate values in Detroit. Most of them are minor but the most important one is the near-collapse of the automaker’s industry. After all, Detroit is the center of the U.S. auto market. The manufacturing is closely tied into the city’s economy. When the U.S. economy tanked, it took the big auto companies with it.
With manufacturing plants closing and massive layoffs in a city where the majority of the population has something to do with making cars, it doesn’t take a genius to see the writing on the wall. People need to move to find new jobs. Families are unable to pay their mortgages so there are a massive number of foreclosures. Owners with rental property or second homes need to quickly unload these homes to make some quick cash. All of this adds up to drastically decreased property values.
What Does Detroit Have To Offer
Despite the prices, the quality of homes and neighborhoods does not reflect the market. While many homes are in depressed neighborhoods, These are not run-down suburbs or dilapidated homes. Many of the properties for sale are in good condition and in upstanding areas.
Along with reduced real estate, the city has plenty of attractions for home buyers. The Detroit Institute for the Arts is one such attraction. It houses one of the best art collections in the nation including artifacts and other historical remnants.
The city has several museums such as the Motown Historical Museum and the Detroit Historical Museum. The New Detroit Science Center is a hands-on activity museum dedicated to the pursuit of science. Belle Isle is a park in the center of the Belle River and houses, amongst other things, a zoo. Other attractions include aquariums, performing arts, and theme parks.
If you are into sports, Detroit is home to the Detroit Lions. While the fans may not be as fanatic as Dallas fans, the Lions still draw an impressive and very loyal crowd.
Detroit Real Estate Price Ranges
The city has a lot to offer but let’s not forget the main reason to shop there; cheap real estate. The price ranges seem to be all across the board. Homes that are being resold by their owners tend to be the highest priced. You can find colonials, normally in the half a million mark, anywhere from the $300,000 to $400,000 range. Some ranch style homes have been going for $100,000 to $150,000.
Some owners are trying to unload their homes in a hurry. This means they have cut the price down to pennies on the dollar. Some bungalow-style homes at 2,000 square feet are going for as little as $10,000.
Some smaller homes have been going for as little as $5,000 while empty lots sell for around $3,000. With these prices, it is no wonder investors and owners looking for affordable housing are buying everything they can get their hands on.
The best deals are the foreclosed homes. Banks and other financial institutes are trying to recover anything from their previous investments. Depending on where you look, there are foreclosed homes going on the auction block for under $5,000. Some owners or lenders who are desperate enough to get rid of a listed home have sold them for as little as $100.
Mortgage Versus Cash
Buying cheap real estate in Detroit is competitive. Some homes are really great bargains and investors and buyers place as bid on the as soon as they become available. However, cash buyers have precedence over those who have to apply for a mortgage. Using cash to buy real estate is quicker. You don’t have to wait to be approved or for a loan to become finalized and there is less paperwork. Also, cash is a sure sale.
Mortgages take longer, require approval from a lender, and can fall apart at the last minute, leaving sellers and the bank right back at square one. Banks will always give a home to a cash buyer over one that needs a mortgage. So if you have the cash, you will already have an edge over half the competition.
Where To Find The Best Deals
Currently, most of the interest in Detroit real estate centers on the north and northeastern sections of the city. These neighborhoods are mostly middle-class income and the homes are in better condition. A lot of the owners there are victims of foreclosures. The market value for these homes is still high but financial institutes are eager to sell them off.
You can find good deals on cheap real estate by going through a local real estate broker. They will be in the know for all the latest bargains. Brokers get a percentage of the sale but have more experience when it comes to negotiating for a better price. You can also check online and newspaper ads for listings. Look for local auctions that deal in foreclosed homes. While these auctions are heavily trafficked by real estate investors, as long as you have the cash in hand, you should be able to find a deal.