Cheap Foreclosed Homes in Detroit Aplenty for Cash Buyers

Cheap repo homes are in abundance in Detroit for investors who have cash. Because of the extremely low price levels of houses for sale in some parts of the city, sellers have been favoring cash bids.

Besides, banks have been rejecting loan applications with amounts lower than $35,000. Having been burned by speculators in the past, banks now are very selective in the kinds of home loans they are providing, tightening the credit environment and making cash-low investors or home buyers unable to buy bargain-priced properties.

According to realtors in Detroit, the image of the city is now changing from its identity as Motown and Red Wings, from its rank as the fifth largest city in the U.S. and from its position as a major U.S. manufacturing hub to an image of bargain-priced foreclosed homes.

Now, the news is full of stories of Detroit homes being sold at $6,900. Realtors in the city talk about getting calls from other countries asking about cheap repo homes.

But in addition to the cash requirement, investors planning to buy bargain houses in Detroit need to be prepared about repair costs. Despite the cheap home prices, opportunities for flipping in the city no longer abound. In comparison to other cities with cheap foreclosures such as Las Vegas, Detroit has a lesser chance of price appreciation in the near future, so flipping is no longer an investment option. The city has dropped sharply from its ranking as fifth largest in the country to eleventh.

The investment strategy of buying, fixing and renting out a home is now what is viable in Detroit’s real estate sector. Buyers need to be prepared to spend at least $15,000 for repairs, in addition to closing costs.

Smart buyers need to bring a contractor with them when inspecting cheap foreclosed properties in Detroit. They need to be able to obtain an accurate assessment of repairs to be done and the total costs of repairs, so they would know the overall amount of money they are going to invest in a certain property.

Out-of-state buyers also need to contact reputable agents and rental managers and talk with nonprofit redevelopment agencies in Detroit so they can avoid investment mistakes that could burn them.

Additionally, prospective investors are also advised to drive around Detroit neighborhoods to look at areas that have positive prospects for redevelopment. Cheap foreclosed homes near hospitals, universities or commercial areas have better prospects for higher rentals.

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