Oh boy, I am not sure what to say on this one, but I feel the necessity to post something on this topic of the Scams in Detroit
Many, and i mean many, scams are going on right now for properties IN the city of Detroit. I am not talking about metro Detroit, but in the city of Detoit there are many investors selling properties (many times in war zones) to out-of-state or out-of-country investors.
i was recently in the UK and several investors approached me regarding some of their "Detroit" homes. They had shared with me that they were told the values were $45,000-$75,000. They also said the management company they had been set up with had told them the 1 home been vacant the entire time. Odd, as vacancies are fairly low in our area if their is a good/honest property manager in place and they are asking market rental rates.
I told the copuple I would "check out thier two investments" in Detroit. I had 3 people drive by both homes - BOTH are rented and one is in a very dangerous - bad area (see the picture of this gem below). Hmmmmmm So I decided to call the company that sold them the investments and ask some questions. I never told them whose homes I was checking on. I told them who i was and that i lived here and was checking out these investments for a few people. I asked them where they got the values from. Of course, they said they would not discuss their information with me, but only thier UK investors. Go figure.....
Today, I was discussing with one of my Private Investigator buddies what he has been up to lately. He said dealing with a bunch of "scams in Detroit". I said, "really? Like what?" He proceeded to tell me about a huge ring going on and with several well known seminar gurus (one of whom is an attorney). There are title, appraiser and property management companies involved. ALL scamming people out of their money and investments. I won't mention companies or names, because some of it is currently under investigation with the FBI.
There are stories after stories I could share with you.
Now, with that said, I must say, not all deals in the city of Detroit are bad. I do not personally invest in Detroit because it is too far away and there is a lot of crime. The management intensiveness of the city is not for my style or portfolio. I have also sold to properties to out of state investors in Michigan based on cash flow (since we have the best in the country - in my opinion) BUT each of my homes I personally purchased knowing it could end up in my personal portfolio (and some have). I also hand pick them one at a time. I only pick them in areas that are safe.
If you are thinking of investing out of state or investing in Detroit, I recommend you VISIT the property and see the area for yourself. Do references from others that have purchased the homes. Make sure they have been in the deals for over a year. This way they have a better track record to share with you. Do not rely on a sales person to emblesh on the truth. It is YOUR hard earned money, so invest it like it is.
Here it is - the "$45,000 - $75,000" valued home sold to a UK investor - worth about $100.00
See you at the top!
Wendy Patton
P.S. Join me on facebook http://www.facebook.com/wendypatton for real estate investing information
I have heard that many home sales in Detriot are almost like the used car market. Homes sells for 5 - 10 K with maybe 10-20% down and the seller carrying the balance for 5-10 years at maybe an 8% rate or something like that. Foreclosure is the norm and then back on the market.
I agree - that's truly shameful, Wendy!
Hi Wendy, As a Michigan transplant I'm always interested in what's going on up there. Sad to see how quickly the scammers can figure out how to beat the system. I hope the ring you are referring to gets whats coming to them !
There are scams going on at all times. Here in Phoenix-we have people renting out homes that they do not own off of Craigslist.
I concur with Harry this is going on all over the country and nothing seems to be done about it.