Investing in Detroit real estate isn't for beginners. Part V

One of the investment company officials in the article says Detroit is an investors dream. I myself think it will become a nightmare for them and the City of Detroit. Here is my predicition. I believe we will see a fair percentage of these homes coming back up for sale in the next four years once the investors become disenchanted over:

• Detroit's high taxes for investment properties
• The inability to reduce the investment property taxes easily
• Detroit's renter population and the ability to collect rent
• Detroit's theft problem of vacant rental homes. Losses of furnaces, copper plumbing, radiators, and hot water heaters will rack up unexpected costs.
• Management company fees and poor management companies.
• Lack of demand of for the homes because of diminishing prospective renters.

I think after a few years investors will bail out of their Detroit investments creating a problem for the City of Detroit. I think some investors will just walk away from the properties adding to the City of Detroit's problems. If they have no mortgage the City will lose money. They won't be able to collect the back taxes. They won't be able to collect past water bills. Some of them will become uninhabitable, some will have to be demolished.

The ones that have mortgages on them will be foreclosed on. The people that have $45,000 invested in them won't be able to sell them. They are underwater! So what do they do with them. Do they look for another "overseas" or "out of state" investor to overpay for the home. Detroit properties won't rise in value that quick because.

• Banks not wanting to loan small amounts under $25,000.
• Of new appraisal rules and HVCC (These limit how fast home values rise)
• The demand
• The foreclosure process leaning toward cash buyers over mortgages even if they are lower priced.

What I don't know is how many investors will give up or how soon? That is the problem of the future for the City of Detroit.

These are the many reasons why I don't want take "out of Country investors" or "out of state investors" money. My professional ethics won't let me just take somebody for a ride just to make a buck. The media has people around the world hyped that there are easy pickings here in Detroit. I hate to tell you but it's not as rosey as you think. So before you invest research it well.

From a real estate agent at ground level

Metro Detroit real estate investment information

Investing in Detroit real estate isn't for beginners. Part I

Investing in Detroit real estate isn't for beginners. Part II

Investing in Detroit real estate isn't for beginners. Part III

Investing in Detroit real estate isn't for beginners. Part IV