The solid red brick house on a block of similar homes in Northwest Detroit sounds like a steal at US$3,728 (HK$28,906).
But in many ways, it’s a lemon.
The house, sold at an auction last fall, sits at the edge of Detroit’s infamous urban blight. And scrap thieves, or “strippers,” have taken anything of value, including the kitchen sink and metal pipes, requiring repairs of up to US$15,000 (HK$116,310).
“You could take a great picture of this house, put it online and make buyers ... think it’s a good thing,” said Antoine Benjamin, chief operating officer of real estate firm Benjigates Estates, which bought the house at a Wayne County auction to renovate and rent out. “But you have to understand how close you are to wasteland.”
Low property prices in Detroit in the wake of the housing crash in 2008 have lured investors from California to China. Speculators bank on high returns despite a financial crisis so dire Detroit’s state-appointed emergency manager, Kevyn Orr, has cited a 50-50 chance the city will file for bankruptcy.
But small-time speculators eyeing quick profits often let the houses fall into disrepair because they lack the funds for renovations or end up abandoning them - and frequently do not pay real estate taxes.
In 2011 alone, the last year for which data is available, Wayne County had to write off US$170 million in uncollected taxes on Detroit properties. About 100,000 city-owned properties, many of which are abandoned, are in limbo until a study of local property values is completed.