Detroit Real Estate: Out of Fashion. Which Means It's Nicely Profitable
Online, July 1, 2010 (Newswire.com) - Detroit has been hit hard by the down turn in the economy. The traditional motor industry has downsized and there are thousands of people who, through no fault of their own, have been left jobless. This has had a devastating effect of local real estate prices and means that for most regular property investors, the Detroit real estate market is well and truly out of fashion.
However, Ollie Booth of USA Property Investor claims that this actually makes it the perfect time to invest in Detroit property. Mr Booth says "House prices in Detroit are around a third of the price they were a few years ago. As a result of the downturn in the motor industry, there is a waiting list of over 9,000 people looking to become tenants backed by the government's HUD scheme. They are perfect tenants with their rent paid by the government. Because of the strictures of the HUD scheme, which they can't even join until they have been unemployed for at least 5 years, they have every incentive to keep their rented property once they find it. Which means investors have the best of both worlds: low property prices with rents guaranteed by the government."
History shows us that economic problems don't last forever and that cities such as Detroit that are home to essential industries always bounce back when the economy picks up again. Savvy investors use these unfashionable periods as a bargain shopping opportunity, buying properties for cents on the dollar.
The problem faced by many real estate investors is that buying in these out of fashion areas takes local knowledge to avoid being left with an unrentable property. Mr Booth says "We have the local knowledge in Detroit and are able to source properties that are then refurbished to meet the high standards required by the HUD scheme. We also have an arrangement with a major bank to be able to offer non-status, fixed rate mortgages on these properties so that investors can rest at night whilst achieving typical returns of 13% on their investment."