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Can you buy a house for $30,000 in your market? What about $10,000? Can you get one for a dollar? If you live in the rust belt, or another area that was hit hard by the housing bust due to overbuilding or something else, you can find some really great deals these days.
A quick search of Realtor.com found more than 150 homes, condos and multi-unit buildings in the Chicago area for $10,000 or less. Minneapolis has 129 dwellings for between $7,000 and $30,000. In Detroit a whopping 3,444 listings are under $25,000, some as low as $40. Cleveland has some charming places for under $20,000-about 520 in all listed for under that amount starting with an auction bid price of $1.
Most of these homes are bank owned. So the banks are often more worried about getting these toxic ”assets” off of their books than they are about making real money off of them. For that reason, most of these are all-cash sales.
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 could be local factors that you need to be on the lookout for. An example of this is that most of the 33 listings between $10,000 and $20,000 in Cedar Rapids, Iowa, are in areas of the city that have been flooded. You would need to find out beforehand if the house is in an area of the town that is going to be town down, and quickly any work in the area is going to be done before buying anything there. The policy is ”let the buyer beware” in these sales.
A good number of the properties listed for between $20,000 and $39,000 in Cape Coral, FL are located in a portion of the town that has been assessed $25,000 for city water and sewer services. These cheap houses might not need much rehab, but the assessment must be factored into the deal when trying to calculate the true cost of ownership for the home.
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.
While investors can’t expect to receive any individual grants from the recovery acts, except maybe receiving money for making energy efficiency upgrades to low income housing, they could benefit indirectly if they rent to Section 8 Tenants. Money has been provided in these programs to get low income people individuals and families into nicer housing via Section 8.
Some cities as well as non-profit organizations could offer grants to investors to get them to buy houses in need of rehab and foreclosures. Check with your local Housing Authority to see the options in your area.
Want to find out more about property investing? Then visit master real estate investor Bob Massey’s site and sign up to get a free copy of his eBook and his receive his email news and advice column that will teach you how to invest in real estate.
