Detroit’s property is driving in the right direction, say agents, as sales and prices both continue to increase.
Global Investments Incorporated, which specialises in selling homes to overseas investors, has closed on almost 4,000 homes in the last five years, with CEO Mike Moodie saying that the city is “one of the best investments on the planet”.
“Motor City is coming out of some very tough times and getting stronger and stronger each day with prices and sales moving in a positive direction,” he comments, highlighting the regeneration and positive news coming out of the city every day.
“However, it sometimes gets a bad wrap from the media and also different sites that are out there on the web which can cause a lot of confusion with investors,” he adds.
Indeed, the city’s bankruptcy painted negative headlines around the world in 2013. Local broker Al Bean, though, who provides homes to Global Investments, hails it as “probably one of the best things that could have happened”.
“What people fail to understand is that it was an opportunity for the city to get a fresh start. A new start down the path to being a healthy, stabile city,” he observes.
“Detroit has come a long away over the last 10 years, from a crooked mayor to bankruptcy, it has been great to see the city overcome and prosper through the adversity it has faced.”
Indeed, Detroit prices have gradually been recovering since, with the market already near its bottom before the bankruptcy, following the global financial crisis. In June 2016, the number of homes sold in June rose 18.8 per cent month-on-month, according to Redfin, and 5.1 per cent year-on-year, fuelled by growing demand from local buyers, whose personal finances are improving, their spending power boosted, as in most of the US, by low mortgage rates.
Dwindling supply of homes has also helped, with officials auctioning off or demolishing some blighted structures and international investors snapping up the others that can be repaired to resell or rent out to tenants. In the last year, the number of homes for sale has fallen 21.8 per cent, according to Redfin. Sales values, meanwhile, have risen 11.3 per cent year-on-year to an average of $170,000.
Beam. who works, lives and has been brought up in the city, has been a locally based turnkey property source for almost a decade, to both foreign and domestic clients. He notes that the city’s recovery has also attracted billions of dollars from notable investors, such as Dan Gilbert, CEO of Quicken Loans and the owner of the most recent NBA champions, the Cleveland Cavaliers.
“The second richest man in the world, Carlos Slime Helu, also decided to park some money in our city,” he adds.
For those looking to do the same, though, he emphasises that research is key, to understand the pros and cons.
“Some of what you hear in the media is actually true,” he adds. “There are bad areas in Detroit, just like any major city in the country.”
Investors, though, are not being put off. On TheMoveChannel.com, enquiries for property in Michigan rose 78 per cent in the first quarter of 2016, compared to the final quarter of 2015, and rose 85 per cent in June 2016, compared to May.
“Make sure you do your due diligence, or at least make sure whoever you are buying from has done it for you,” Bean advises. “Third party inspections are mandatory if you are buying a home. If you aren’t coming to look at it yourself, you better make sure an inspection is done. Make sure you verify the house is actually rented and cash flowing. Don’t buy houses from someone you find on Craigslist, who doesn’t have a website and tells you he has a ton of houses for sale.
“Looking for the cheapest houses you can find with the highest ROI possible without knowing about the area is a sure fire way to fail in a heartbeat. Know where you are buying homes. If it is the cheapest house in the area, there is probably a reason why. Don’t buy a headache. Buy a quality home in a good area and create positive cash flow and build wealth the right way.”Google+