Hubbard Farms house available for $1,480

ATTENTION MODERATORS: I am not a real estate agent. Please don't delete this post or the following link.

http://www.realestateone.com/vp/List...0&cd_MLS=95445

The 4 bedroom, 2 bath house at 1544 Vinewood St is available for just $1,480. According to the listing agent and a next-door neighbor, the house is NOT fire-damaged. I asked the listing agent why the house is available for so little, and he stated, "It's a foreclosure." He said it's been available for about a month.

The house is boarded up. Maybe a Hubbard Farms resident like Melocoton can shed some light on the condition of this house. It's not as architecturally impressive as others in the neighborhood.

I don't know how bad the interior is. But I do know that Hubbard Farms is a great neighborhood. It has a lot of what non-Detroit residents complain that Detroit doesn't have - COMMUNITY PRIDE/INVOLVEMENT and DIVERSITY. Vernor Highway and all of its businesses, Mexicantown, a Detroit public libary branch, Clark Park,Western International High School, and two buslines - Vernor and Joy, are all within a couple blocks.

So if there are any suburbanites or Detroit renters who are considering taking the plunge to being a owner-occupant - PLEASE CHECK OUT THIS HOUSE. Be a contributing member of a great urban neighborhood. It's worth a look. At least the initial investment will be tiny.

Can I bring my 14 dogs and set up my shooting range in the back yard? ;)

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Originally Posted by Detroitnerd

Can I bring my 14 dogs and set up my shooting range in the back yard? ;)

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If they're guard dogs, one or two wouldn't be a bad idea.

Not a bad price.

Tell the owner if he's willing to cut 5 grand off the price, I'll consider it! ;)

IF I had the cash, I MIGHT JUST BUY IT.

Well, I'm going to take a look at the place, and I'll report back if I find anything interesting. The close-to-zero cost of the house, though, doesn't automatically make it an interesting investment for a potential landlord, and maybe that can start to explain why houses in Detroit are sometimes not worth anything.

Let's say I decide I'd like to buy the house, fix it up and rent it out. Here's how that will probably work financially, based on past experience.

Purchase price: $2,500 for all practical purposes [[there are some fees), so if you plan to hold onto it for ten years, that's $250 per year, or about $22 per month. [[Note this is pretty close to zero, on a month-to-month basis.)

Taxes: $2,000 per year [[look it up). Now, technically you ought to be able to argue that should be reduced based on purchased price, but good luck with that in Detroit, so figure $167 per month.

Insurance: Wow. If I am going to buy a place to rent it out, I need to have insurance sufficient to cover potential loss, mostly due to fire. Replacing my purchase price does me no good; I can't replace the house for what I paid for it. A policy sufficient to protect my interest, in that ZIP code, is probably going to cost $4500 a year, which amounts to $375 a month.

Renovation [[capital expense): I haven't seen the house yet, just a couple pictures, but a house built in 1890 and for sale at a very heavily discounted price probably needs a bit of work. I'd guess it'll take $25,000 at a minimum to get it into decent enough shape that I could rent it to a family with kids, and be able to look myself in the mirror. Again assuming I plan to hold the property for ten years, that's $208 a month.

Repair escrow: Old houses constantly have nickel and dime things going wrong, which of course tenants expect a landlord to fix. A very low estimate of such things, for a house, is $1500 a year, or $125 a month. If you think that's high, ask any landlord.

Profit: I'm nice, but not Mother Teresa. If I'm going to sink my shekels into a property and rent it out, there has to be some kind of return for Papa. Let's review: under this scenario, I buy the place for $1,500 plus various fees, fix it up to make it good enough to rent out, keep up the taxes and pay the required insurance, and be able to make necessary repairs, and all that is going to cost me $897 a month. If I can't make 10% a year on this complicated of an investment, there's no point in going to the trouble, so I add $89.70.

Bottom line: I have to be able to find someone to rent this house for $986.70 a month, or it's not worth the bother. Now, I will be pleasantly surprised if I can find a tenant who can pay that and is willing to pay that.

And that's why so many houses sit empty.

If you'd like to dispute this, please dispute some detail; don't just go down the "that blogger is a jackass" road. I concede I am a jackass; there is no value in repeating the claim.

Being a foreclosure, the cheap price is designed to get multiple offers to drive up the price. It would have to be a rehab disaster to sell for that price or big back taxes.

I did some checking and it was built in 1890.
It might be in decent shape based on the sales history.

Financial History

• Single Family Residence
• Year Built: 1890
• 1.50 Bathrooms
• Approximately 994 Sq Ft
• Lot size: 8712.000 Sq Ft
• Stories: 2
• County: Wayne
• Heating type: Heating
• Heating detail: Forced Air
• Parking: Detached Garage 2 spaces

Source: Public Records Last sold for $15,000 on 12/11/2008
Last assessed at $18,262 on 2008

Previous sales

• $100,000 on 2/8/2006

Previous assessments

• $18,262 on 2008
• $17,950 on 2007

Professor Scott, the home owner's insurance figure of 4500 a year seems AWFULLY high. Insurance shouldn't cost more than $1500 a year.

Also, my hope is that an owner-occupant will be buy the house. We have enough "investors", who own houses in Detroit, who don't care about the community in which the house is located, and don't maintain the house or the yard. I live next to such a house in Warrendale. We need more owner-occupants in Detroit - people who are more likely to take pride in their community and contribute to its vitality by maintaining the house and being a friendly neighbor.

Anyway, in your scenario, finding a family that will rent a 4 bedroom house for $1000 does not seem that farfetched, especially if it is restored and updated.

keep an eye out for gang activity/graffiti...

Sold for $100,000 in 2006... mortgage fraud?

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Originally Posted by masterblaster

Professor Scott, the home owner's insurance figure of 4500 a year seems AWFULLY high. Insurance shouldn't cost more than $1500 a year.

Also, my hope is that an owner-occupant will be buy the house. We have enough "investors", who own houses in Detroit, who don't care about the community in which the house is located, and don't maintain the house or the yard. I live next to such a house in Warrendale. We need more owner-occupants in Detroit - people who are more likely to take pride in their community and contribute to its vitality by maintaining the house and being a friendly neighbor.

Anyway, in your scenario, finding a family that will rent a 4 bedroom house for $1000 does not seem that farfetched, especially if it is restored and updated.

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Insurance at $4,500 for a building with knob and tube wiring [[being that it's built in 1890s) or as a rental sounds correct.

What really scares me about this property is "buyer Pays For City Inspec Upon Seller Offer Acceptance."

Why a city inspector? Why not a private home inspector? Does it need an occupancy certificate to get the utilities turned back on so you can live in it? Do I need to hire licensed tradespeople now to do the work? I can see the cost for repairs being a lot higher than $25K once a city inspector goes through it and makes his assessment.

As for rents, are you talking about Section 8 housing vouchers because I doubt you'd get $1,000 a month all cash for a place close to Mexicantown. And, do you really want to deal with Section 8 tenants?

With foreclosures, you're dealing with quit claim deeds. How much is it gonna cost you to fix up your title if you want to sell it? And, do you want to deal with the headaches involved with quit claim deeds?

What also bothers me is the house sold for $100,000 in 2006. Half a year ago, someone buys it for $15,000 and now it's listing for 10% of that amount. Why would someone walk away from $13,000 instead of trying to sell it privately? Maybe he did buy with the intent of trying to flip it after going to one of these $2,000 Robert Allen get rich quick real estate seminars at Cobo Hall and couldn't and realized it was better to just give it back to the bank. Why didn't the guy who had it for half a year try to rent it out for $1,000? It makes no sense. People don't just walk away from properties after 6 months over $15K unless he discovered something serious and costly. He may have even stripped the copper plumbing, toilets, fixtures, kitchen cabinets and anything else that's saleable to try to recover his loss after deciding to walk away. Whoever buys it is probably going to be giving it back to the city for back taxes so they can demo it. I realize that it might be interesting to learn about real estate. But, if you want to learn the hard way, be my guest. I don't want to be a cynic, but I've seen so much garbage circulating around that I can't think otherwise. I'll bet the listing agent won't even let you do a walk through prior to firming up your offer because of "safety" issues or I don't have the keys because the vendor never gave them back or the doors are nailed shut.

If you're really looking for a turn-key bargin:
http://www.realtor.com/realestateand...214_1111513475

Currently belongs, for the time being, to former Deputy Mayor Derrick Colemen who paid almost 400K for it in 2002. This Short Sale can be yours for only $168,000!

Guess his new company Citivest isn't doing that great since they've skipped out on their digs in the RenCen while owing a over 10K in back rent.

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Originally Posted by gnome

If you're really looking for a turn-key bargin:
http://www.realtor.com/realestateand...214_1111513475

Currently belongs, for the time being, to former Deputy Mayor Derrick Colemen who paid almost 400K for it in 2002. This Short Sale can be yours for only $168,000!

Guess his new company Citivest isn't doing that great since they've skipped out on their digs in the RenCen while owing a over 10K in back rent.

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Wow, the agent's Susan Lambrecht. Wasn't that the previous owner of the Book Tower that Ferchill just bought? Can't go wrong with Indian Village for that price and from the picture it looks like it shows well.

If the house was a bargain. It would not be for sale. A realtor would tell a friend or relative about it. That friend or relative would snap it up. It is like a good used car. A really goodseller or bro one doesn't make it to the lot. It is snapped up by relatives or friends the broker..

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Originally Posted by Oldertimer

If the house was a bargain. It would not be for sale. A realtor would tell a friend or relative about it. That friend or relative would snap it up. It is like a good used car. A really goodseller or bro one doesn't make it to the lot. It is snapped up by relatives or friends the broker..

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I do no believe this, at least not at the moment. You can't assume that you can flip even a very underpriced house in any reasonable amount of time, and there are a huge number of houses for sale so the capacity of brokers friends and family to absorb them for future sale is probably pretty limited. I have seen houses that are very, very cheap. I'd probably buy some if them if I needed more houses, but I don't, and my wife has a limited tolerance for being a landlord.

My comments in red.

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Originally Posted by davewindsor

Insurance at $4,500 for a building with knob and tube wiring [[being that it's built in 1890s) or as a rental sounds correct.

I pay $800 for a similar rental house, albeit not in Detroit.

What really scares me about this property is "buyer Pays For City Inspec Upon Seller Offer Acceptance."

Why a city inspector? Why not a private home inspector? I believe it's a hoop the CoD makes you jump through. It's not the same kind of inspection as the kind an ASHI certified inspector does pre-purchase. Does it need an occupancy certificate to get the utilities turned back on so you can live in it? Do I need to hire licensed tradespeople now to do the work? I can see the cost for repairs being a lot higher than $25K once a city inspector goes through it and makes his assessment.

As for rents, are you talking about Section 8 housing vouchers because I doubt you'd get $1,000 a month all cash for a place close to Mexicantown. And, do you really want to deal with Section 8 tenants?

With foreclosures, you're dealing with quit claim deeds. No, warranty deeds. That's the advantage of buying from the bank versus buying a pre-foreclosure. The bank cleans up the deed, buys title insurance, pays old taxes and utilites. How much is it gonna cost you to fix up your title if you want to sell it? And, do you want to deal with the headaches involved with quit claim deeds?

What also bothers me is the house sold for $100,000 in 2006. Half a year ago, someone buys it for $15,000 and now it's listing for 10% of that amount. Why would someone walk away from $13,000 instead of trying to sell it privately? Maybe he did buy with the intent of trying to flip it after going to one of these $2,000 Robert Allen get rich quick real estate seminars at Cobo Hall and couldn't and realized it was better to just give it back to the bank. Why didn't the guy who had it for half a year try to rent it out for $1,000? It makes no sense. People don't just walk away from properties after 6 months over $15K unless he discovered something serious and costly. He may have even stripped the copper plumbing, toilets, fixtures, kitchen cabinets and anything else that's saleable to try to recover his loss after deciding to walk away. Whoever buys it is probably going to be giving it back to the city for back taxes so they can demo it. I realize that it might be interesting to learn about real estate. But, if you want to learn the hard way, be my guest. I don't want to be a cynic, but I've seen so much garbage circulating around that I can't think otherwise. I'll bet the listing agent won't even let you do a walk through prior to firming up your offer because of "safety" issues or I don't have the keys because the vendor never gave them back or the doors are nailed shut.

There's no shortage of cheap, cheap, cheap houses for sale in Detroit. The super low price doesn't have to mean there's some out-of-the-ordinary set of issues you'd have to deal with. It's just another bank-owned house in Detroit. Yes, it's probably not intact. Few are. Welcome to Detroit real estate investing.

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Originally Posted by Det_ard

I pay $800 for a similar rental house, albeit not in Detroit.

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Don't know where your similar house not in Detroit is, but maybe the agent was unaware of knob and tube. I know knob and tube is high risk insurance as that's what the insurance broker said and he quoted around $5,000. I've also gotten quotes in that range for saying a property had students renting them.

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Originally Posted by Det_ard

I believe it's a hoop the CoD makes you jump through. It's not the same kind of inspection as the kind an ASHI certified inspector does pre-purchase

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The listing says city inspector. Read it again. Have you ever had an old house inspected by someone from the city and they didn't find something wrong with it? Certainly, not me or anyone I know. A private home inspector [[which I recommend everyone pay for so you know what you're getting into) will tell you what's wrong with it and you can either do the work yourself, pay someone to do it, or defer it. The city inspector finds it, you get a work order and it must be resolved. I've had work orders issued against me before and it's not a fun process.

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Originally Posted by Det_ard

No, warranty deeds. That's the advantage of buying from the bank versus buying a pre-foreclosure. The bank cleans up the deed, buys title insurance, pays old taxes and utilites.

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I'm calling bullsh-it. That broker has been licensed in Michigan for 20 years and he doesn't know what he's talking about? How many bank foreclosures in Detroit have you done through warranty deeds and with which banks? Are you sure you're not confusing it with short sales?

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Originally Posted by Det_ard

There's no shortage of cheap, cheap, cheap houses for sale in Detroit. The super low price doesn't have to mean there's some out-of-the-ordinary set of issues you'd have to deal with. It's just another bank-owned house in Detroit. Yes, it's probably not intact. Few are. Welcome to Detroit real estate investing.

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No, but it's rare you'll find something that's not gonna require some serious cash. I've been a real estate investor for 13 years. I've bought short sales before, but would never invest in a foreclosure.

Professor scott: Did you get inside yet? I tried to look at it a few weeks ago and the lockbox was stolen and I never got inside.

Dave,

Re knob & tube, yes, the insurance company is aware of it. It's in a historical neighborhood where most homes still have it.

Re city inspectors, I've never dealt with Detroit's but in other cities they've been relatively painless for rental certificates. Then again, I do a good rehab and don't rent out shitholes. Detroit may have some assholes with their hand out, but a little green should take care of that.

Re the deed, I've purchased foreclosures [[not short sales, but rather bank-owned, REOs) here in Michigan. All used warranty deeds.

You can easily buy and rehab a SFH in Detroit today for $15,000 - $20,000 all in that will pass Section 8 inspection. There are even better deals if you look hard. All are foreclosures.

Is your RE investing experience in Michigan or Canada?

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Originally Posted by Det_ard

Dave,

Re knob & tube, yes, the insurance company is aware of it. It's in a historical neighborhood where most homes still have it.

Re city inspectors, I've never dealt with Detroit's but in other cities they've been relatively painless for rental certificates. Then again, I do a good rehab and don't rent out shitholes. Detroit may have some assholes with their hand out, but a little green should take care of that.

Re the deed, I've purchased foreclosures [[not short sales, but rather bank-owned, REOs) here in Michigan. All used warranty deeds.

You can easily buy and rehab a SFH in Detroit today for $15,000 - $20,000 all in that will pass Section 8 inspection. There are even better deals if you look hard. All are foreclosures.

Is your RE investing experience in Michigan or Canada?

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I'm shaking my head...

I have RE investing experience in both countries. I moved up from single families and triplexs to apartments buildings and plazas years ago. I've been burned once in real estate and that was over a piece of crap property I bought in the States at a public auction. I couldn't do anything with it. I couldn't make money off it. I couldn't find another buyer for it. And, I ended up letting it revert back to the city for back taxes. It was an expensive lesson.

To flip $1,500 properties for a huge profits sounds very tempting and who wouldn’t feel curious and at least make inquires and explore how they could get a piece of this cheap foreclosure action? But,. I'm only seeing lots of garbage out there in this $1,500 price range and my gut tells me there's a really big problem with this place that'll make whoever buys it walk away from it like the guy who bought it for $15K and walked away from it 6 months later. But, if you still want to buy it and prove me wrong, go for it dude. I don't care anymore. A 900sq.ft building is a lot smaller than the size of buildings I buy today anyway.

The house is across the street and two houses over from me. It's a nice house and in good shape, especially for the price. The only problem with it is the people who gave it back to the bank took the furnace and trimmings with them. It'll need a new roof in a year or two and some masonry work to shore up the back of the house along the driveway. I've looked at buying it and fixing it up to rent out, but when you already own one house in Detroit, do you really want another?

Buildingsofdetroit, thank you for that information. What do you mean by trimmings?

Brandon,

I haven't been in the house yet, as the listing agent has not returned my calls. Hopefully soon.

Regarding the business about a "city inspector": that is not instead of a potential buyer hiring a building inspector to check out the place; it is simply a city requirement. This has been misconstrued by many posters. If you are seriously interested in buying the house, of course you ought to protect your interest by having a competent inspector of your choosing give the place a very serious once-over. The City also requires that its own inspector check the place out; Dearborn also does this to my knowledge, and probably other 'burbs as well.

Has anybody else nibbled, or am I the only one?

Prof. Scott

By the way, buildingsofdetroit, my earlier estimate assumed there would be major big-deal things wrong with the mechanicals. I figure, any house this old, you're probably looking at a new furnace and hot water heater, replacing some or all of the wiring, new roof and so on. That part doesn't scare me, I can do some of it myself and hire subs for the parts I'm not good at [[like plumbing).

Any house built over a century back, you gotta figure some of the moving parts are shot. Replacing the wiring, if it's actually knob and tube, is a no-brainer. If you know how to do the work yourself, you can save enough on the first year's insurance to pay for the job. When I've done this in the past - not in Detroit proper - I always AIP the old wire, but I don't know if a Detroit city inspector will allow that. It's extra work to rip the old wire out, and pointless. But if you gotta, you gotta.

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AIP the old wire

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huh? what's that?