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Letitia Patterson-Investor Agent

Your Best Source for Metro Detroit Investment Property - 248-506-9426

By Letitia Patterson | Agent in Detroit, MI

Is It Ever OK to Buy a Home for $1000? Wellll, Sometimes

                Before You Buy Super-Cheap Property, Keep These Things in Mind

Each year in the fall, the Wayne County Treasurer auctions off hundreds of tax foreclosed properties to buyers in and around Metro Detroit.

This year, there was an unprecedented amount: over 20,000 properties and lots available for purchase.

                                      

The tax auctions already make perfectly sane investors turn several shades of crazy, but with this amount of properties, there was a deep ocean of crazy flowing freely.

Typically, buyers that purchase on tax auction get excited while bidding and both overbuy and overpay for homes.

This actually produces a great opportunity for investors who do not know about the auctions to get good properties for very little IF they know a few essential factors from the start.


RULE #1: KNOW YOUR EXIT BEFORE YOU ENTER


1. Exit
Before you spend one dime, think through your goals for purchasing the property. Are you thinking of renting, flipping or selling on lease option?

This is important because it will make a huge difference in the neighborhoods you choose and the prices you pay.

If you're looking to build a rental portfolio, you would want to avoid areas with high annual property taxes because it eats up your cash flow.

Likewise, if you wanted to buy and flip, you certainly would take care to choose a neighborhood with a large number of owners rather than renters.



RULE #2: YOUR CREW IS EVERYTHING

2. Crew
Your boots on the ground team will be able to do the following efficiently:
  • Evaluate the condition of the property
  • Look at what's sold or rented in the area
  • Make Repairs
  • List the property for sale
  • Rent the properties to qualified tenants
  • Tell you if it's occupied
    (** NOTE: County Tax Foreclosed properties may be occupied- it's up to the owner to deal with the occupants)
  • Clear up title issues
    (** NOTE: Tax foreclosures are NOT sold with warranty deeds, so there will need to be $1000-$2500+ set aside to clear up title issues if you're interested in selling them once you purchase)

Your team is essential to aiding you - you can't do it all on your own. Use very qualified help.


RULE #3: DUE DILIGENCE

3.  Do your homework, do your homework, do your homework.

Did I mention....Do Your Homework?!

Before you buy, know what the current condition of the home is, what the area sales or rental amounts are, and who's in the doggone home!

If you plan to buy and sell a home, know upfront what title problems you will have by getting a preliminary title search.

Get an interior inspection, photos, neighborhood photos, insurance quotes, everything!

Have as much of a comprehensive view of the property as you can before you give one dime to the seller.

Will this cost money upfront? Some.

Is it better than going in blind and hoping for the best? Infinitely.


The ideal pricing for Tax Foreclosed Properties should be between $1,000-$5,000.

Depending on the quality of the home, neighborhood and condition, you could look to pay up to $15,000+.

If it's more, it should be in pristine condition or have a tenant already inside paying regularly.


If you'd like to try your hand at safely getting a few tax foreclosed properties for great prices, please contact us. We'll be more than happy to help you buy right.


Good Luck and Happy Investing!




Letitia Patterson is a licensed Realtor in Michigan and certified Investor Agent Specialist. She has sold hundreds of Investment Properties to Investors from all around the world and  loves helping them invest wisely for immediate cash-flow, as well as long-term gain. Letitia's mission is to help make Real Estate millionaires!


Letitia N. Patterson
(la-tee-sha)

Office: 248-905-1531
Cell: 248 506-9426
Email: myrealestateteam1@gmail.com

 

Comments

By Kerry Lucasse,  Mon Dec 31 2012, 19:53
Fantastic, fantastic post! I feel so bad about the Detroit real estate market (and several nearby suburbs). I see how people could get so excited about the idea of buying a home for $1000 or $5000 that they don't think it through.
By Letitia Patterson,  Tue Jan 1 2013, 04:10
Thanks so much!

It can be done, but planning and aligning the right resources are the most important actions an investor can take to ensure success.
By Helen Oliveri,  Sun Jan 12 2014, 11:34
Great blog!

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