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36 | USA WORDS | Adrian Bishop

A home for $1 I

n America, a dollar can buy you a burger, a coffee – or a house. That’s right – for just $1 you can

invest in a detached home in Detroit, Michigan, currently advertised on the website by ReMax agent Albert Hakim. Unsurprisingly, the distressed homes in the former booming motor manufacturing city have attracted thousands of inquiries from property investors right across the globe who are keen to snap up a bargain. Among $1 listings is a 1,434 square foot three-bed detached home at 13996 Indiana Street, with a 3,485 square foot garden.

According to Realtor.

com, the top price paid for a three-bed home in the same road was $174,000 on 10 August 2006 achieved by 17617 Indiana Street,

which was 1,232 square feet and came with grounds of 4,356 square feet. Mr Hakim’s agency Re/Max Associates

in Detroit has more than a dozen properties listed under $10,000 and over the last fi ve years it claims to have sold more foreclosed properties than any other company in Metro Detroit area. Regarding the $1 properties, Mr Hakim tells OPP Magazine, “I get 300- 500 leads per week from foreigners all across the world. “We are getting a big infl ux from

the Chinese market, with people from Singapore and Asia buying.” The big question is, are these bargain

homes really worth property investors seriously considering? Sector expert Colin Murphy, who runs

investment specialists Torcana, warns investors would be foolish to purchase $1 properties, as the renovation costs and risks make them unsustainable. He says, “A $1 house is a ludicrous proposition that only a fool would seriously consider. “These properties will need extensive

repairs before an occupancy certifi cate is granted and even if you managed to get those for a reasonable price, the unit will

“In the next fi ve years Detroit will be the story of the nation. The recovery is underway”

rent it, you will have to buy some body armour to go collect your rent! “Is it really good value at $1? I don’t

think so, but then I never understood the buyers in the last year to 18 months that were buying homes at $10k in Detroit, so I’m totally stumped by the $1 offer.” Mr Hakim admits that some properties

have problems. For instance, it is common that if homes stand empty for long, thieves may break in and steal the pipes and water tank. But he says that demand is high, with

some would-be overseas investors even trying to reach him in the early hours of the morning.

The homes vary in location and are not

just confi ned to no-go neighbourhoods, he says. “They are in all areas - not only bad areas. “Yes, everything is worth investing

when it’s less than you would pay for a pair of shoes! A one dollar home, plus

inevitably be located in a neighbourhood with above average crime, unemployment, foreclosures and vacancies with very low calibres of tenant. That guarantees you high management fees plus lots of vacancy and repair costs.

“On top of that, the owner of a

100-year-old property will have signifi cant on-going maintenance outlays and annual property taxes. In other words, these are loss making properties with gross incomes lower than gross running costs and negligible resale values.” US developer, Garrett Kenny, who has

strong dealings with Chinese property investors agrees. Mr Kenny, of Feltrim Developments, who has just been exhibiting at a Beijing property show, says you get what you pay for. “There is an old adage, if it’s too good to be true, it usually is. Why are the locals not picking up these ‘great deals?’ I don’t see any interest in the $1 homes from here either - the Chinese are savvy investors. “When you have spent the $1 you will

immediately have to insure it, then you will pay property taxes; oh, and if you do

they seem.


cannot buy a distressed

house and just leave it there. You have

$1,200 taxes, plus $450 title, means that the total cost would be $1,651.” One Detroit developer, Metro Property

Group, is convinced that the city is set for major regeneration.They have been the biggest buyer at county auctions in Detroit over the last two years, acquiring 1,000 properties for around $5million – around $5,000 each, which the company buys, rents and renovates. The cheapest turnkey property currently

on its books is a 1,000 square foot, one bathroom, brick bungalow investment property in Detroit’s Aviation subdivision. The home at 9582 Carlin has an estimated Return on Turnover of 15.17%. Its CEO, Sameer Beydoun, says, “I think

that in the next fi ve years Detroit will be the story of the nation - what is happening in our downtown resurgency, with all the investment that is going into that and with what we are trying to do in stabilising the neighbourhoods. The recovery is underway. It is happening every day.” Non-profi t organisation CEOs for Cities

agrees and has named Detroit among 15 cities with “emerging downtowns” that are attracting college-educated workers aged 25-34.

Agent Lisa Gray, who has worked in

Detroit for 13 years, says she receives around 30 phone calls a day about $1 houses, all coming from native Chinese buyers or those who live in America. She agrees that the $1

homes may not be the bargain

to pay lots of attention and money to fi x it.

And don’t mention the high property taxes based on

subjective valuations

by the government.” For instance, to get a certifi cate of

occupancy from local building offi cials, owners must make repairs, such as new plumbing and electrical rewiring. But she says Detroit real estate prices are now rising, four years after they hit the bottom. According to, at time

of writing there were 3,062 homes for sale in Detroit, at a median listing price of $11,000 and an average listing price $29,109. They are on the market for an average of 132 and 642 have been sold. For more details on the $1 homes, see Albert Hakim’s website:


Forget paying extortionate prices - you can now put a deposit on a house in the US for $1. But what is the catch? Is it a worthwhile investment or a rookie mistake? Adrian Bishop fi nds out: |MAY 2013

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