Warning to Detroit Investors - Protecting yourself

[Wendy Patton]

I wanted to share a warning to those investing in the city of Detroit.  First, there are a TON of great deals in the city and Detroit has so much potential. Second, where there is a ton of opportunity, there are many times a ton of scammers.  I personally do hard money lending and investing in the city.  I am an owner/operating partner of a local title company (Legacy Title Agency) and we have come across quite a few fraudulent and suspect deeds in the city of Detroit.  There are quite a few people who must be going after vacant or older people with free and clear titles....  They deed it out of the owners name OR they have someone with a fake (looks real) ID show up to sell at the closing table.  It's crazy!  We have had to stop multiple closings and drop a few investors who seem to attract these type of deals (either they are involved or they work with wholesalers who are).  Legacy Title Agency is putting the top notch screen on these transfers for those investing in the city , however I will also share with you there are several title companies locally that the policies they issue aren't considered "good" by the big underwriters.   In other words, if you buy a property thru one of these companies and later go to sell it after you fixed it .... many other local title companies won't be able to insure it for you. 
Also, if you rush a closing in the city there is a likelihood there could be a large water bill that did not show up prior to closing.  In MI the water bill is a lien on the property.  We will not insure a water balance unless we have the proper documentation (which might not happen within days of getting a contract signed)  

How do you protect yourself? 

1) Use a solid title company that won't insure everything 

2) Buy only from legit and solid wholesalers / agents

3) If you can find out if the real seller still lives in the home that is helpful  -  get the story and try to do a little investigation yourself

4) Make sure the seller has a real and recent water bill - We can help you with that also so you don't get stuck with $2000 or more after closing

I hope this helps you all because it is an amazing city to invest in.   Detroit has so much potential still and is really turning around. I love it.