The Myth of the $20K Homes for Sale in Detroit

If you have spent any time browsing homes for sale in Detroit online, you have probably seen them: massive, historic brick homes listed for the price of a used car.

Recently, Mayor Sheffield announced that Detroit residential property values have climbed to a staggering $10.5 billion. The city is rising, which means true "steals" are harder to find, and renovations require serious capital. Here is what you need to know:

• Banks Won’t Finance an Unlivable Home: Traditional mortgages require a home to be legally habitable. If the property lacks a working kitchen, a functional bathroom, or a central heating system, you likely cannot use a standard Conventional or FHA loan. You will need hard cash or a specialized rehab loan.

• The Hidden Structural Costs are Massive: A "cheap" Detroit mansion often comes with hidden nightmares. Replacing a collapsed roof, running all-new copper plumbing (because the original was stripped), or fixing a crumbling foundation can easily push $100,000 before you even buy a can of paint.

• Holding Costs Add Up Quickly: Even if you buy the house for cash, you are on the hook for holding costs. Property taxes, expensive vacant-dwelling insurance policies, water bills, and city code compliance fees will drain your budget while the home sits empty during months of renovations.

The Bottom Line: 

There are incredible opportunities in the Detroit market, but a $20,000 house is rarely a $20,000 project. If you are ready to take on a renovation, let’s sit down and look at properties that actually match your real-world budget, timeline, and cash reserves.