Forum Replies Created
For ease of use, its probably best to write the loan up as an informal private family loan with formal documentation (prepared by a lawyer). I know you want to hand him a little bit of money and make him responsible for it as well. But too many undeclared loan arrangements cause family issues .. whether straight away .. or later on. The reason I state the loan should be informal is that a registered loan on title outside of the mortgage may affect any refinancing arrangements he wants to take on in later years.
At the sale of property, if you have any doubt on who will be owning the property add a AND/OR NOMINEE clause at the end of the name on signing. Its something you can do if the person purchasing is overseas or absent from being able to purchase direct.
Finally, If I was purchasing for my kid, I'd allocate enough into the initial loan to get him the property (say 20% or a third) and stake an amount for his welfare outside that. Otherwise, should job go wrong or family/social issues happen, he's up a proverbial creek without a paddle. Much wiser to provide a bare minimum for him, and a buffer for any future issues. Heres hoping he never needs it, but its much better than not having it.
Formalise any loan arrangement with a lawyer. There are three reasons, you get the solicitor with a copy of the loan documentation, you get a piece of paper stating the precise terms and amounts, and it will make him realise that its not a gift .. its a formal loan on his behalf. A reasonable solicitor should be able to write something up under 600 bucks. Its worth it for the peace of mind.
A reminder that as a PPOR he has six years absentee before he must move back to claim it as his prime residence.
I've been watching too much CSI:Miami … I think if you check the age of the maggots you can probably work out which tenant is missing and for how long.
I've been lucky .. i have seen most of the impossibles with rental property. The cupboard which opens to streaming cockroaches, the tenant with 9 cats who decides to leave them all behind .. in a kitchen cupboard. The guy who claims his carpet smells … and after steamcleaning we realise its HIM who needs a shower. The 20 yr tenant nicotine smoker who has the nicotine LEACHING out from the walls … you paint .. and the nicotine comes thru the paintwork 2 days later … THAT BAD.
There was also the sub-letter. Oh sure .. its a two bedroom flat from the outside .. but there were definitely 4 sleeping bags per room. Is it possible for eight tenants to happily live in the one 2BR apartment? You make the sitcom for that one.
Dont ever assume how bad crazy can get for a tenant. It can be worse than that.
There are your two streams of thinking with paying off loans. And both are quite valid.
The first is .. to get a loan at the maximum leverage possible and then try to get it down over time combining rental payments and owner contributions, reducing exposure to debt … increasing equity. The banks dont mind it either, as the more money you pay to them is still more money that you are paying to them. Its great, its a form of savings as its placed into your property and reduces your overall liabilities. So its a win-win situation. Banks are happy, owner is happy.
The second is to get a loan at the maximum leverage possible and then be quite satisfied paying the interest only and the bare expenses. Why is this sort of measure attractive? Because the payments from the rental tenancy eventually cover the interest payments and that means that the contribution from the owner is nullified. Its more of a long term solution as you need time and inflation to crack that interest/rental scenario, but it means a minimal contribution from the owner, who can park his next load of hard earned capital in his next property. Its more a OPM scenario .. and for some people this just works fine.
Both solutions are valid.
Steve tends to go with the first in his books due to the fact it leaves borrowable equity in the property. I like to contribute 3% of the property value over and above the loan/interest payments.
As you might guess .. the scenario you choose really depends on your personal situation and how YOU view your investments. The other thing I'd recommend .. regardless of your scenario choice .. is to build a sanity bucket. Its the OOPS tray that you dive into when either income .. expenses or insurance doesnt work. Its just an emergency account that contains enough to support a property for a month (it should contain the equivalent of 2 months interest payments at least. I had my one OOPS without it and scrambled for my payments for a month … never again.
The majority of the advantages of purchasing an investment property lies in the ability to offset any interest payments and depreciation benefits against your existing income. So if you have a reasonable income, the correct approach is to get enough of a comfortable interest bill that you can afford, and use that to minimise your taxable income. Negative gearing is great, if you are on a plastic surgeon's income and you need to reduce your tax bill. For the rest of us, you just need to keep your figures real and manageable.
If you are investing for the long term, go for something like fixed interest, as regardless of the interest rate you pay now .. the figures will change so much that the initial figures wont matter. But the fixed interest part just means you KNOW what you are paying for the period and what you are liable for without any surprises.
And whatever you do .. dont worry about an exit strategy until you are ready for it. Make your best plans based on current circumstances and factor in LIKELY possibilities. The property and tax laws will probably look different by the time you exit your property investment.
To both scott and gips,
If you are sound in your business but need outlets to offset your taxable income, there still isnt a reason why you cant be doing things like positively geared properties or potential cash cows. My basic feeling is if you have a sound business format and the money is rolling in from the operations, stake up for a couple of steady small investments rather than one big one. If you are not familiar with the expectations and/or costs from property … take on a small amount of property thats quite serviceable regardless of any change in circumstances. Pushing loans to the limit allows for maximum profit in the long run, but its also maximum risk. And the first thing you will find if you arent 100% familiar with how to run an investment property is the UNEXPECTED. Gearing to the maximum wont allow you to take on the flexibility you need for the UNEXPECTED (note how that is in caps?).
I'm assuming for this scenario's sake that both of you have a couple of working years up your sleeve in which to create your investment portfolio. Now regardless whether its short term or long term .. the same rules apply. Buy undervalued, buy with good facilities nearby, buy property with an upside. A good investment contains any one of these aspects, and a terrific investment will usually contain all three.
The worst thing that can set you back from making your goals work for you is FEAR. I had a family friend who inherited 500k and I suggested that she invest in a 440k investment in 2006 returning 24k .. as she was getting close to retirement. She felt that it was taking on too much of a concern and not what she was prepared to do. As of 2011 the property is now 1.08 million and the returns are 45k. And she is now living off that 500k and its now about 410k … note the difference in direction?
The path and choice to wealth will come with making educated decisions at the right time when they are required. Tour these forums, any and all small bits of advice you glean may help you make better future decisions.
All I can say on Lehigh Acres is what I discovered by following a property from realtor.com to the google maps overview of it. In realtor it looked ok, it was a little beaten up and for 75k you had a good shell .. nice tiles, someone had stripped out the coppers but heck .. thats not too big a job. Following through to a street view in Google Earth (mapping the precise location) … and it was a nice little house … surrounded by miles and miles of swampland !!!!! With not another soul in sight for miles. There are unknowns .. and then there are BIG unknowns. This Lehigh Acres area (which is quoted with good returns by a certain aussie US buyers investment agency) area leaves me hesitant. Its either VERY new or .. very unloved.
Oh .. while we are on the topic of using Google Earth .. beware their dating system and accuracy for photographs. Most photos marked 2010 or 2011 are actually taken several years ago. I worked this out when scanning the SE corridor in Melbourne and the Eastlink (which was finished a yr ago at least) was still being dug up. That would place the photos online circa 2005-6. There are a lot of areas which have been developed since then, and post 2005 buildings that are new that dont show up.
I had a friend who built at the start of the downturn in property in 1989. He rode the rollercoaster down because he was out there seeking his pre crash dollar. Eventually the banks foreclosed and sold it out from under him.
Moral of the story is, if you are going to want to build on the land, get your plans and permits when we are heading for an upturn again. Riding the rollercoaster down on property is where u get the best sob storys from.
The instant flip deals for developers are now yesterdays news. In the current market properties take longer to sell to get their dollar. And with interest rates going up any day now its not going to get any easier. Best suggestion is, get a set of plans for the site drawn up with a good architect, have your plans ready, but unless you are planning to build immediately hold back on permits. Expired permits often need to be reviewed and submitted again.
Exposure to borrowings in a moving interest rate market is a recipe for trouble. This year is going to have at least two interest hikes, possibly more. Its a year for holding on tight and watching the budget, reducing your liabilities and exposure to credit risks and building up a treasure chest for going bargain hunting when the values change.
Wynyard, I appreciate that you are viewing this all from a certain perspective. I think you should be aware that the system we have now is creating better quality living conditions for a lot of people. Sure its coming in at a price, but i'm sure that poor living conditions are the feeding grounds for bad thoughts, anger, resentment and envy. We are creating an atmosphere of housing that even by world standards is pretty darn ok. Take a look through the lists of property sales agents. Most of our houses are reasonably up to date, have nice clean enamel and tile bathrooms with good looking cabinets and shower fittings in them.
Our country is splitting down social lines that have never been in this country before. We are losing out on our middle class, largely due to the fact that it exists and survives on local manufacturing and local services. It spells disaster in the longer term, both in laws that will be written for 'the rich' and taxes and levies that will be placed on the large revenue streams of land holders. Its not unusual, the property wagon is still a gravy train for most countries, and it will change our mindthink towards property and our social behaviours and norms towards it.
I believe firmly in the idea of property being a commodity like any other, and not a bag of instant riches. It has an undervalued status, an overvalued status, and a median where it rides along with inflation. I think the current price movement is because any usual investment stream for spare capital doesnt exist so people are turning to property and collectibles. Its a shame because in days gone past that money would have gone to something solid like stocks or small business investment. I'm really not sure how long our reliance on a cheap China can exist, but i'm 100% sure that the lack of manufacturing base here will kick us in the future.
Catalyst .. the due dilligence has well and truly been done on this property. And its in a depreciated area, but its in a compact block of 4 right behind the local Centro shopping centre.
To validate your point, there are sites in the vicinity (i'm thinking about certain sites on Kaitlers or Prune St) where you have the large blocks (up to 24) of poorly built units with shoddy accomodation and as a result .. tenancies from hell. But this site is small block, well built, good facilities close to shopping CENTRE and transport. It fits the requirements for a good deal.
The example pointed out was only one of the existing better value deals that exist on the market at the moment. They are not necessarily in the places you'd expect, they DO require the due dilligence, and they can provide better value for someone who is looking for an investment that will provide both CG and income. The point I was making to Wynyard is that he needs to investigate a little bit more to find the deals that will provide both for him. They still exist and they are out there.
Catalyst .. the only student units that i've seen move in a substantial fashion was the ones in North Carlton where they removed the students only clause from the living requirements. When that happened the properties shot up from 125k – 135k to around the 200k mark.
Its a sector that I not only have been watching but I was actually selling at one stage. And from my ongoing observations, none of the student accommodation places with restrictions has moved upwards in CG over the period of 5 years i've been watching it. And as you might be aware .. there has been lots of growth going around.
Dont get me wrong, for the right investor there is no doubt that a good cash return property that you havent any need to sell may prove a boon. But if the banks wont let you borrow on it .. they probably also wont lend against it. It falls short in all sorts of ways from being an ideal investment base. That remains my problem with them.
annacm_88 wrote:Thankyou so much for your reply! I thought that would be the case. Just another question, I have found a studio apartment in sydney for $145,000 with rent of $298 p/w if i could come up with the the money to buy this for example, could owning property help me at all when it comes to borrowing money?
Thanks <br /
=)” title=”>=)” class=”bbcode_smiley” />Answer is yes, but to a point. First the correct answer to your wanting to purchase a studio apartment. These apartments are usually student-only apartments with dedicated management groups doing the servicing and letting arrangements. They are compact start from 22m2 to a max of about 55m2 depending on quality. They are fully furnished .. high quality finishes and .. really lousy investments.
Why lousy investments? First .. you have a dedicated (fixed use) property being run by management services that hold the management rights to your property. It breaks all the rules about running your own investment. You want the ability to let the property out to any tenant you want to .. and you want to be in control of your investment. Finally .. since most of them fall under the 49m2 .. the banks wont deal with them nicely. In fact .. as of very recently .. most banks wont deal with them at all. Just imagine what that means to the next person you want to sell to. These are the duds of the future.
Did i mention that they are also fashion icons? Since the developers do so well with selling them .. they keep upping the ante with quality and features. Better Tiles … and better fittings, greater appliances. So the older ones end up looking like last years fashion.
I will mention the other thing with letting to students. Students are traditionally 1 or 2 year itinerants. They are usually fresh out from living at home .. which means they sometimes (not always) dont know how to look after respect or treat a house or unit. So you are leaving yourself with unstable income sources, additional letting fees and extra damages/repairs requirements. THIS IS WHY YOU AIM FOR GOOD LONG TERM TENANCIES. And students just dont provide that.
Dont let the fact that you are on a pension stop you from buying right. If you are having trouble with the first stepping stone .. try some of the more classic measures for working around the banks. Some dont exist thanks to the GFC .. but most do. I'm sure that you could run a vendor finance deal somewhere that works for you. Or .. being creative .. advertise in the money column of the newspaper. Some of steve's early ventures in the book you read should have given you ideas on how to work a deal.
The answer is yes .. to the idea that having actual income and substantial equity from a property will help you borrow more. But at the end of the day, the banks will ADD that to your existing income. And the banks are really looking for the existing income to generate a record of serviceability.
Jamie M wrote:Personally I'd aim for no less than 10,000 – I'd also suss out ABS/council stats to determine whether the population is growing. I'd also want to see more than one main industry within the town.I go one further on that .. i require that my country properties be localed in towns without singular dependancies. And must have at least THREE main industries stoking the town's employment. It doesnt matter whether thats tourism, agriculture or the annual beerathon it must have at least 3 of these.
I would suggest that if you have 5 Million and wanted to retire in Australia, then you make your house only less than 20% of your total amount. Plus, get your capital working for you ! Dont be afraid of taking on a loan for your house, just dont make it unaffordable.
How is your actual accounting ledger? I mean its one thing to have an internet venture thats paid out well. But do you have any rental or retail assets returning cash? I have a family friend who in the late 70s sold a city office building for 4 million dollars (yes .. in the 70s) However due to poor investment schemes .. and relying on dividends and returns from banks .. 20 years later he still has … about 5 million dollars. Can you imagine how badly his ACTUAL wealth has depreciated? He's gone from being mega rich (in the late 70s 4 million bucks was big money .. and this was a major city site) to being .. just making it.
The biggest thing you must have is your capital working hard for you. If you feel like investing in a house .. you can put in a third or half to limit your vulnerability and still borrow for a mortgage. As long as the other money comes from regular investments you arent going to have an issue with paying it. And your PPOR will be CGT free. So any money you borrow against it .. is money you are putting back into your own pocket.
If i won 5 million on a lottery ticket tomorrow (i wont .. i have played 7 tickets in my lifetime) I'd sink half into property immediately so i'd have a steady income backstop. That would leave me 2.5 million for chasing more lucrative or more risky investments.
So the brief is, your prime residence in australia .. is capital gains free. So for the pittance you'd sink into it for a mortgage, it returns real wealth out the other side. Dont say you dont need extra wealth .. we all do.
The other thing i should point out is thanks to pumping the economy with cash after the 2008 crash, we are on the precipise now of an inflationary climate. So whatever you can do with what you got .. hard cash is not the safest environment.
Gage for yourself what a retirement level income would be. Consult an accountant as to how to gear things effectively. And most importantly .. enjoy your wealth within your lifetime.
Lets play a better scenario for you, long term.
Try this one out for size.
http://www.realestate.com.au/property-unit-nsw-lavington-104851762
Its a set of two units in a four unit block. Price is 245k (that would mean you would need at least a 40k income to support it or a joint 50k). Out of that you will have two incomes (currently $140 per unit but 2BR unit price in the area is now pushing 160) so, assuming you can borrow around the 8% mark that would be an outlay of roughly 320pw to support it. But .. hold on .. incomes are $140 x 2 that sounds like GASP .. a gross income of $280 vs outlay of $320 (p/w). How does owning 2 units for a mere $40 before expenses sound?
Now i did say BEFORE expenses in that last sentence. There would be 3 sets of bills you'd need to outlay for the long term as landlord, which would be .. water connection (NOT usage), council rates, and any community (body corp) bills. I'll use rough figures lets say $600 for the rates $800 for the community and about $500 again for the water connection bill. Summed up thats a total of $1900 or .. as a weekly figure, lets call it 36 bucks a week. Double it for two and its 72 Bucks. Now add the initial $40 a week to that figure and you get to own TWO properties for 112 bucks a week? Scandalous !
But heres the great bit .. as two properties .. every $5 rise in rents .. is $10 overall. So it would only take a $20 rise for your gross ownership for the property to be annulled. And only a 36 dollar rise over that for the property to be paying itself.
Sounds like a lot? Sounds like its going to take time? Remember that the prices are already under market. This doesnt mean you rush out and dump the tenants as fast as possible. Just .. next time one leaves .. you raise the price to market. Never forget the value of someone else paying your bills.
Its also double growth. Its two properties growing at the same time. So a 25k move in price = $50k equity.
Oh .. did i mention that if you got the loan as interest only .. its fully tax deductable? (the interest component).
This situation exists out there already. And I know of it. Its only ONE example of if you think a little you can make a workable deal.
Prob for you would be the banks would be asking for a full 20% .. Thats about 49k on this (plus about 8-12k for stamp duty)
If i was a smart 25 yr old again, I would be asking around for the difference .. because of what deal i could make from it.
But what it would mean for you long term is the equivalent of 15k you'd never have to work for again. You can borrow again using it as extra income (it would mean you could afford to get a better place) and you can sell it if you want to retrieve built up equity.
Thats a deal. Thats money making magic. I've supplied ONE example. I even know of others where you can use just your 20k deposit and get it working for you.
Ask me how sometime. As i said in a separate post, when you are ready to put your foot on the property ladder, there are deals waiting for you.
Wynyard, the best foot forward onto the property ladder is the first one taken.
Did you know it is STILL possible to purchase property under 100k ?
Did you realise that getting in on something .. is always a start?
Did you realise that you can offset any capital gains as income for the year?
Did you realise that despite difficult finance circumstances its still possible to get workable property solutions that will only cost you under $100 a week to run?so, including Stamp Duty (under 4k on a 100k property) its possible for you to have your money working better .. earning more .. and you getting richer sooner.
the minute you stop feeling inadequate, stop making excuses, and start driving your own property wagon is the moment you will start getting rich.
Wynyard wrote:I still think negative gearing and tax breaks for property investors, and even just the idea that property has become a source (or aspiration for) of massive profits, has changed the dynamic between rich and poor in Australia. I still think these factors, along with population growith has caused increased rents, and reduced the quality of housing standards, like no other era in Aus before. I'd like to commission a major stufy into it if I could, non-biased, all sides of the story, and see what the figures said.Wynyard, sometimes a group doesnt realise how good things are.
First the historic reality. Over the past 400 years the historic average for rent has actually been TEN percent of the properties value. So you've been living in a society that now has its rent/value closer to a 4% for the property. Heck, historically you are doing very well. And you are getting a lot of property for that buck. The average house size has moved from just under 15 SQ to a whopping 22 sq, so sit back .. you are getting more house for your buck.
Now with the tax advantages for factoring in renovations .. you are living in better houses than was possible 30 years ago. Most houses are linked up with cheap affordable natural gas, which reduces your overall bills. Wow .. so spoilt. Most of the places out past the 50km zone in Melbourne built over 30 yrs ago have nothing but electric. Simply .. gas connections were not available.
And the rents are so high? Firstly, if you are unemployed, on disability or aged pension, you are getting a subsidy from the public purse to your rents. Guess what this does to rents? It makes them rise ! So you can thank that sedicious welfare system for ramping up your rents. I think we should just cancel that and see how many people make it .. DONT YOU ? (sarcasm)
Thanks to the great government decision to cut back on building public house in large congregate blocks and spread it across the suburbs with the purchase of housing, there are no real ghettoised areas of Melbourne. Sure its increased housing prices as this has taken up otherwise used utility house stock, but you dont have heavily ghettoed areas of Melbourne.
By the way, the answer to most of the housing price rise is commodity stock. For almost 30 years now there hasnt been anywhere NEAR enough replacement stock built proportionate to the growth rate in population. What will happen eventually is .. the housing requirements will be met, there will be enough stock to go around and prices will regulate themselves.
Finally, the real answer to rental issues is demand. As long as there are those evil landlords getting rich .. they are out there developing more stock for you to sit in and complain about how high those rents are. When there arent any, you'll know about it. You wont be able to get housing without knowing someone .. prices will not only be for the rent .. there will be a price to pay just to GET a property. That happens in other countries, I'm sure you are aware of that.
And to end the idea of the evil landlord once and for all, there is nothing wrong with doing legal means that are WRITTEN IN LAW to minimise your tax burden. It means you have citizens providing a housing service that the government isnt .. hasnt and wont EVER be willing to support. I am an evil landlord, I provide housing for people who cant buy it themselves, so be it.
When there are no profits in housing .. you will get a housing market where no-one has any incentive to upgrade maintain or renovate their house. This leads to crummy housing stock, decaying housing, and eventually loss of tenancies. No-one .. even tenants want to live in crap. Crime rates soar, and the cost to maintain the houses is more than the houses are worth. Houses just rot.
<Moderator: delete flame>
I dont know whether any Melbourne readers realise this but I see this already here. We had a wonderful working Royal Melbourne Showgrounds and they cut off a large chunk as VIP parking for the Flemington Racecourse. We had great areas close to the MCG where people could kick a football, now relegated to practise courts for the tennis arena. We had a world class exhibition centre in Carlton with world class gardens, and they scooped up a large section of that for a below par Museum complex.
I'm all for better usage of public facilities and land use, but some of these short term moneymakers bite into assets and benefits which cost us long term. Melbourne is a very utility rich, friendly city. I would hate to see people excreting dollars out of prime irreplaceable assets.
investhut, the fact that your family member is moving down to bathurst is an excellent reason to purchase this property. However the reason you are putting money into a property is you are expecting more money out the other side. If you are going to be doing that with an inert (not going anywhere) city like Bathurst, then treat it like you wont get ANY capital return. If you have your family member sticking 180 into the property .. at 9% that would be covering 100k of the interest with you supplying the difference.
Dont be afraid to pay this one down. Long term it is all in your favour, remember .. capital gains is based on the PROFIT between what you initially purchase at and what you sell at. So .. anything u sink into this property is really money back in your pocket. A reminder though, the only tax deductible portion of this IP will be the interest, the principal will be a taxable portion. However .. its low enough that by injecting $200 a week into the loan (if you can afford that) you would have a property mostly paid off within 8 years. So with a guaranteed tenant of 3 years this works great ! And it will reduce your interest payments over the term substantially. Allowing you to borrow against that equity for something else. Just remember in the meantime .. rents go up.
Unlike city based properties in decent suburbs, i treat my country properties with a greater level of respect. I NEED the tenant in there as finding another tenant in a country property can be a headache. If the tenant complains about a rent rise .. i respond. In the country its the other way around, a tenant in property is worth gold and the rental return is optional. In the city there is enough tenants that you can dispose of a poorly paying one and get a new one at a better rental level. Its the other way around in the country. This doesnt mean you dont raise rents on the country tenant. It just means you try to keep them happy and satisfied as long as possible.
Dont be afraid of purchasing in a country town. Just remember its not a central urban area, and respect it as such. As many people will point out to you, the good deals are often in the country, but you must recognise the property for what it is and what it isnt. Its a country property, you'll have different requirements than a city property. But whatever you do in the country, dont buy into dying townships. There isnt an upside in having the last property standing in town.
Blank Frank wrote:Cheers, xdrew. It is a low soc-ec area, but there is money going in…a Big Box mall is now there, very nearby: Coles, Woolies and sundry stores ++ , but nothing flash in the fit out. Business looks quiet in there.I had a choice of investing in an area with an immigrant issue. The area was Lakemba. At that time the 2br Units were at 120k (dont you wish you could time travel now?) and there were heaps on the market. I took a serious look at the couple of properties that were advertised and i decided against it. MOST of the properties not only had safety screens across the doors .. they had window locks and some even had BARS. They have gone up substantially in the meantime (would 260-280k surprise you?) but i wouldnt touch them with a barge pole EVEN now. My tenants need to feel safe .. secure .. and i need to be able to retrieve my rents without someone complaining that i dont share his religion and wont pay. The rents are still good (above avg at 6%) but the downside is too great.
There are two things with a low soc-ec area. First .. if they own the properties .. they dont add much to them, they cant. Hence there is no way to create an upside. Second, if they rent them .. they arent usually the best tenants. Its a generalising but time and again .. it proves true. What you are out there looking for is areas that are running ahead to having a better grade of home owners in the area. This is usually a lower middle class area. Simply because, they will respect the property .. and as tenants .. you have a better chance of getting a good one. Lower middle class dont want to have to move .. they will respect the property better. Besides .. a lot of lower middle class make the jump and become middle class. This also means they are prepared to pay more for homes in the surrounding area of their existing home (family .. offspring). THIS is what will push your house prices up.
Also beware cul-de-sacs. This is suburbs that dont lead anywhere .. dont have much transport to get anywhere and have people who cant afford to go anywhere else. I believe Cranbourne is heading that way.
British Buyer wrote:And if you're thinking of going to Detroit or Atlanta, you really need to see the most recent Case Shiller graphs for those cities. They seem to be in free-fall….I'm familiar with both cities. On paper they look like bargains, but the housing stock thats left is worn out, the tenants are the worst possible types, itinerant, dangerous, drug dealing, thieves (they will steal floating floors and coppers). Ever seen a whole 92 unit apartment block trashed AND burnt? There is an old hotel for sale now in detroit at $89k its run down and there is mould and water everywhere. There is no upside on either of these towns until the main problems get fixed. And detroit isnt changing anything even with the new (supposedly uncorrupt) mayor. I'm sure there will be books on what Detroit was. But at the moment its not going to do anything to recover. Let it die and take your money to places where it will do something within your lifetime.
I remember looking at the Victorian town of Moe .. waay back in 1986-1987 and thinking .. wow .. these places are 20-25k per unit WOW cheap! Fact is .. its now 2011 and the town of moe still has the best el-cheapo units (now only 65-100k) still the cheapest on the market. Think of where your money could have been working better in the meantime. And Moe has some of the nicer aspects of bad tenancies. But nothing like Detroit.
=)” title=”>=)” class=”bbcode_smiley” />
