Detroit, Toledo, Pittsburgh areas

[Jason Mathews]

Can someone tell me what the attraction is for Real Estate Investment in the above 3 areas. I get a ton of e-mail from Wholesalers in those 3 areas, and It appears that the wholesalers are doing quite well.

It doesn't make any sense to me. I read an article a few years ago that said Toledo was voted "the City Most Likely to Die", The Retail market in those 3 areas has been DEAD for more than 25 years, Since the Automobile and Steel Industries went kaput, they each have some of the highest number of foreclosures in the US, some of the highest unemployment rates, banks wont allow Cash out refi's in those areas because values continue to decline, so how are all these "Investors ?" making any money?? Yea, I know, some are buying for the Rental Cash Flow, but unless one has an unlimited supply of new cash to buy more property with, that game can only last for so long.

A few years ago a company called Penny Foreclosures, based in Nevada (interesting in and of itself), was buying up 100s of properties that had been vacant and boarded up for more than 25 years and selling them to what I call Investor Wannabe's. The deal was that one had to pay cash, the company had contractors in the area that would do the required repairs which the investor also paid cash for and they would rent and manage the property.

I even got interested myself and drove to the area to check out a few of the offerings only to find out that the comps they were providing - many times weren't even in the same town as the subject properties, and of the two props I went to see, they were on streets where every single house and business on the entire street was boarded up.

A few years later there was a company doing Investment bus tours to certain area in Michigan with bus loads of out of state investors who were buying like Hot cakes. This company had people convinced that Cash Flow was King and they were even giving the the buyers the first year rental income in advance. I guess when you are buying SFH for $500.00, Putting $5000 in basic Repairs, and selling to an out of state "Investor?" for $25,000 with a Section 8 Tenant in place, you can afford to give a credit for a years rent?

I would love to hear from anyone. especially anyone who has purchased Real Estate wholesale or otherwise in any of those areas and tell me how your deal went, did you make any money, have you been able to flip the property if that was your intention, are you able to Refi the property if holding was your intention, etc.

Jason