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Where can you buy a 3-bedroom home for $1,000 or Less?

Detroit was one of the hardest hit cities during the Great Recession.  As a result, many people fled to find greener pastures, leaving what was left of America's Motor City in shambles. In fact, the size of Wayne County's population has shrunk by more than half, from 1.8 million people in 1950, to 700,000 in 2013.

"We have housing stock for over a million people who don't exist anymore," said David Szymanski, chief deputy treasurer in Wayne County. There are currently 100,000 empty lots and 80,000 distressed properties in Detroit (one-third of the city's total).  That doesn't' include the tens of thousands more properties facing foreclosure in the near future.

The increased supply of homes, combined with lack of demand, has created a buyer's market for Detroit's citizens.  Unfortunately, many shady landlords took advantage of the favorable market conditions by finding a loophole within the system. Many landlords were purposely going into foreclosure so they could buy back the house at auction for a fraction of what they owed in back taxes. In fact, of the 30,000 homes auctioned for sale in Wayne County during the last three years, 22,000 of the owners failed to pay property taxes.

To rectify the situation, a new rule has been put into place which states that a home may be seized if it isn't torn down within six months, or improved within two years of purchase. Additionally, the Land Bank only allows people to buy one home a month at their auctions. They also require that buyers not owe any back taxes or have any housing code violations. "We want people moving into them, we want families moving into them," said Craig Fahle, a Land Bank spokesman. "That's what's going to reestablish the real estate market in this town." As predicted, families are beginning to move into these properties, and paying next to nothing for them in the process.

Sold for $1,000

Antjuan Wyatt recently closed on a 3-bedroom, 1,500 sq ft. home in Detroit for $1,000.  "We were looking for a home in the suburbs, but the prices were too high," said 27-year old Wyatt, who works at a local Chrysler plant. "I was surprised I got this for $1,000."  As purchased, the house needed some work before it could be considered livable. However, the Wyatts plan to spend $30,000 to refurbish their house. At this rate, Antjuan will be able to move his wife and two kids into their new home in 4 months.

 

Sold for $600

Kate Daughdrill recognized a great opportunity to own her own patch of land when she purchased a 3-bedroom home at a county auction in 2011 for $600. The 29-year old Daughdrill didn't stop there, as she went on to buy a total of 7 nearby vacant lots, turning much of the land into an urban farm which she now operates. "When people are present and show care for a home, they can transform that home and that whole block," she said. "Having a presence starts that shift." Daughdrill considers this an opportunity to also spend more time pursuing her passion now that she doesn't have to always worry about how she's going to pay the rent. On top of that, she can contribute towards the effort to rebuilding Detroit.

 

Sold for $500

James Haddrill found his hidden gem in the form of a 3-bedroom house he bought at a 2011 county auction for only $500. When he bought it, it was dilapidated and being used as a crack house. "It was filled with clothes, couches, mattresses," said Haddrill, who now uses the house primarily as a studio. "Cleaning it was one of the craziest experiences of my life." Ironically, his new property is only one block away from Daughdrill's urban farm.

Related Article: The Fred Flintstone of Real Estate Investing

It's been suggested that the Land Bank program be introduced to people in other cities, particularly where space is expensive. Both Wayne County and Land Bank are marketing these homes, in hopes that buyer interest will grow with success stories like the ones you've just read.  Hopefully people's interest will be sparked soon, as a record 80,000 homes in Wayne County are set to go into foreclosure in 2015.

Many of these homes seem like great investments. Do you think these low housing prices will help revitalize distraught communities, or just make things worse?  Leave your comments below.



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