Right now the housing market has plummeted in and around the city of Detroit. House values have fallen tremendously and many have fallen victim to the market. The result is a flood of foreclosed homes like never before. Thousands of foreclosed homes wait for a homebuyer, but most will sit on the market for months or even years. However, there is profit to be made in the tough economy for those willing to take a small risk.
Current prices for foreclosed homes within the city of Detroit range form as low as $3,000 to an average of $15,000. Many homes in nearby cities are selling well below market value. Foreclosed homes can be found in abundance in Warren, Eastpointe, Roseville, and Saint Clair Shores. Many foreclosed homes in these suburbs sell for less than $30,000.
How can you cash in during these tough economic times and make a profit in return? Flip a foreclosed home. Flipping a home means purchasing a home, investing time and money into remodeling it, and then selling it for profit. How can you sell a house when few houses are the markets are selling? You must undercut the market value and to do so, you need to purchase a home that is priced significantly below market value and that is why you must focus on foreclosed homes.
Foreclosed homes offer great value and are ideal for house flipping. Here’s an example. A foreclosed 3 bedroom, 2 bathroom, 1100 square foot ranch in Saint Clair Shores is currently on the market for $30,000. A walk through from a friend suggests that it will need $10,000 in investment to make it move in ready. Let’s do the math. $30,000 to purchase, $5,000 closing costs, $3,000 taxes, $10,000 remodeling costs, and $1,000 for utilities. Your total investment comes to $49,000 :granted you must do the work yourself or with the help of a few friends.
The average home of this size and type sold recently in Saint Clair Shores is averaging $100,000. However, these homes can take up to 2 years to sell at $100,000. If you undercut the market and place your flipped house on the market for $85,000 you can be assured that it will sell quickly. Later you accept an offer of $80,000. Your net profit is $31,000, minus taxes.
From the above example, you can see that profit is there for the taking. Yes, risk is involved. But if you price your home right, select a quality home to begin with, and make the right choices throughout the process, you will realize a profit. Start off small and take your profits and reinvest in another home. During these tough economic times, avoid high priced, large homes because they do not sell. Focus on average single family homes in good neighborhood and you will be successful.