How to make a loss on $1,000 homes

January 9th, 2009 | economy, real estate, usa

: Image by Getty Images via Daylife

The real estate market is so awful that buyers are now scooping up homes for as little as $1,000.

There are 18 listings in Flint, Mich., for under $3,000, according to Realtor.com. There are 22 in Indianapolis, 46 in Cleveland and a whopping 709 in Detroit. All of these communities have been hit hard by foreclosures, and most of these homes are being sold by the lenders that repossessed them.

……

These houses are almost always small fixer-uppers. Wiring, plumbing and heating systems have to be replaced, walls and ceilings sheet-rocked, plumbing and light fixtures installed and new kitchen cabinets and counters put in. Few come with working appliances.

Often buyers are legally required to rehab these homes to bring them up to code. In Detroit, buyers are required to sign Affidavits of Compliance Responsibility, which obligates them to make repairs outlined in an inspection report. Only after that can a certificate of occupancy will be issued, which makes the house legal to live in.

But even factoring in these costs, they’re still bargains.

Radical cheap: $1,000 homes - Yahoo! Finance

So whats the catch ? Here’s my prediction - many or most of these homes are in neighborhoods that will never recover. These bargain-hunters will be stuck forever paying for repair work and fending off drug addicts from these properties. The chances of getting renters or buyers for these properties are essentially zero - thats what the $1000 home sellers know that the “bargain hunters” dont.

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How to make a loss on $1,000 homes

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