I saw a piece in Yahoo News about this and I wanted to pass it along. I get at least a couple of calls every month from out of state folks asking about these.
The article does a good job in explaining just why a $500 house isn’t the bargain that people think it is. Here it is…
Tempted by Detroit’s $500 Properties? 5 Things to Know
By Beth j. Harpaz, Associated Press – March 11, 2015 4:45 PM
DETROIT (AP) — Sixty-two thousand properties have faced foreclosure in Detroit this year over unpaid taxes. About half will likely be auctioned for $500 apiece this fall.
Buying homes or vacant lots for $500 might sound inviting, even in a city as troubled as Detroit. After all, look at New York: Decades of crime and decay gave way to a real estate boom that has gentrified even outlying working-class neighborhoods. Properties that sold for thousands in the bad old days are now worth millions.
But there are no guarantees. “The opportunities are there but there are huge challenges,” said Dang Duong, a law and business student at the University of Michigan who has bought and renovated several dilapidated homes in Detroit. “If you’re under the impression you can buy a property for $500 and wait a few years until Detroit has recovered, that’s going to be difficult.”
Here are five things to consider before buying property in Detroit.
1. THE HOUSE MAY BE OCCUPIED
Are you prepared to evict former owners, longtime tenants or even squatters? Loveland Technologies, a mapping company that has surveyed every property in Detroit, estimates that half the properties facing foreclosure are occupied, housing about 100,000 Detroiters.
Critics question the morality of buying occupied homes and fear the program may increase Detroit’s homeless population. They say many owners stopped paying taxes because they weren’t getting city services in return. Others say those who failed to pay taxes contributed to Detroit’s troubles.