How low can you pay for a home in your market? Can you get one for $30,000? $10,000? How about one dollar? Investors who live in the Rust Belt or other areas that were overbuilt and were slammed by the housing bust can find some incredible buys right now.
If you look on Realtor.com, you can find over 150 houses, condos, and multi-unit buildings around Chicago for $10,000 or less. There are over 130 in Minneapolis for between $7000 and $30,000. In Detroit, there are over 3,444 listings available for $25,000 or under! The prices get down to $40. In Cleveland you can get some decent homes for under $20,000. 520 of those homes in Cleveland have a starting auction bid of one dollar!
Common characteristics are that most of these homes are bank owned. The banks tend to be more anxious to get these properties off their books than they are to make a dime on the assets. Because of the low, low prices and the need for speed, many are all-cash deals.
A significant portion of these homes require some serious rehab work. Many of these are complete burn-outs that are going to require a full gutting. A lot of times liens, real estate commissions, and all required permits and fees have to be paid by the buyer. The buyers must do some complete due diligence to get inspections, surveys, and all other work before they sign anything permanent with the bank. Sales in the price range are always “as is.”
There may be special local considerations to be aware of. For example, most of the 33 listings between $10,000 and $30,000 in the Cedar Rapids, IA area are in areas of the city that have been flooded. It would be critical to find out if the home is in a “tear down” area and how quickly that work is expected before attempting to buy anything in this zone. In the case of “as is” property it is “buyer beware.”
Most of the listings between $20,000 and $39,000 in Cape Coral, Florida are located in an area of the city that is going to be assessed $25,000 for city sewer and water services. The homes in this area might not need serious rehab, but the assessment becomes a factor in determining the true cost of owning the home in that part of town.
Both the Housing and Economic Recovery Act of 2008 and the American Recovery and Reinvestment Act of 2009 contain several billion dollars for the rehabilitation of blighted neighborhoods, particularly in areas where foreclosure has been the highest. At least $4 billion of the Neighborhood Stabilization portion of the 2008 bill have been distributed to the neediest cities.
Local Investors can’t expect to receive individual grants from these programs, except possibly from other portions of the American Recovery and Reinvestment Act that related to making energy efficiency upgrades to low income housing. Investors may benefit indirectly if they accept Section 8 clients as tenants. More money under these emergency programs will be available in order to get more individuals below the poverty level into decent housing through Section 8.
Individual cities or non-profits may offer grants to Investors for the purpose of buying foreclosed or poor condition housing and rehabilitating this housing. Check your local Housing Authority for options available in your area.
Learn more about property investing. Stop by Bob Massey’s site where you can find out all about how to invest in real estate and what it can do for your life.
