| Detroit hosts excellent opportunities for prudent | | | | one street there were eleven boarded properties, |
| investors purchasing REO / Bank Owned properties. | | | | three fire damaged property and numerous |
| This particular type of property is excellent for | | | | abandoned buildings. What this investor failed to |
| international investors looking to profit from the Detroit | | | | appreciate was that when considering Detroit for |
| property market. | | | | property investment you capitalise the first three rules |
| The benefits of REO properties are that bank will | | | | of property 1) LOCATION, 2) LOCATION, 3) |
| ensure that all liens are paid when they take title. This | | | | LOCATION. |
| will ensure good title without added expenditure for the | | | | Location is very important when considering to invest |
| investor. | | | | in Detroit. In fact, it is the most important factor to |
| The strategy used by REO investors is simple. Firstly, | | | | consider, when purchasing real estate in this city. Do |
| they purchase the property at a substantial discount. | | | | not be swayed by low prices, only be swayed by the |
| Secondly, they fix up the property and then re-sell it at | | | | particular neighbourhood. |
| an affordable price to attract first time buyers. First | | | | In contrast, there is a successful foreign investor who |
| time buyers in Detroit are able to take advantage of | | | | owns several properties in the various good |
| the tax credit and other government backed schemes | | | | neighbourhoods around Detroit. However, he used a |
| to get first time buyers on to the property ladder. | | | | different investment strategy - buy to hold to cashflow. |
| Unfortunately, some investors get it this simple | | | | This particular investor purchased good quality |
| strategy wrong by overlooking the obvious. Investors | | | | properties for around $25,000. Rather than selling it, he |
| that do not perform the correct due diligence or use a | | | | rented the properties at around $900 per month. This |
| reputable investment agency can suffer the harsh | | | | allowed the investor to successfully cashflow the |
| consequences. For example, a foreign investor brought | | | | properties and potentially resell it until the market |
| a REO property for $7,500, renovated the property by | | | | spiralled upwards. |
| spending another $5,000 and placed it on the market | | | | The wonderful thing about property investment is that |
| for $20,000 for resale. But, after several weeks of | | | | if you buy in at the right property, in the right location at |
| unsuccessful marketing, the property was reduced to | | | | the right price, you will be able to make the investment |
| $15,000 and it still remained unsold. However, a quick | | | | work. But as with any type of investment |
| drive through this neighbourhood pointed out that in just | | | | comprehensive research is critical. |