Detroit

Detroit, Michigan was known as Motor City. How about now? Since the automotive industry is on the move (downward) what now? What is Detroit’s focus? Are they going to focus?

Someone called the other day and said, “Do you know what the average home price is for Michigan?” I said, “75.” He said, “Well you’re almost right, wait a minute, you were guessing $75,000 we’re you?” I said, “yes.” He laughed and said, “Wrong. The real price is $7,100.”

I’m sure Michigan would argue differently, however those of us in the business of acquiring homes on a bulk basis would differ with you.

The big question is, What if you could buy for $7,100? What would you do then? The answer is that the home would have to be heavily rehabilitated. How much you’re asking? It would take a minimum of $10,000 to $15,000 to do it.

Is that economically feasible?

Here are the numbers:
$ 7,100 is the acquisition cost
$15,000 is the rehabilitation cost
$23,100 is the Total
$ 5, 775 is the 25% profit you need
$28,875 is the amount that must be financed (100%)
$ 262.39 is the new monthly payment less any taxes
$300.00 is the amount with taxes and insurance

How many people do you know that can’t pay $300.00 per month for a house payment? In 5 years they can sell it. If they keep it 30 years they will own it. Why wouldn’t we want to own a home?

More information on Detroit from FORBES

Here an interesting option.