Uk Investor looking at Cleveland/Detroit Areas

[Sam Bastin]

Hi,

I am so new to this, so apologies if I appear like a fish out of water. My wife and I have stumbled across some properties for sale in Cleveland, also Detroit and possibly Atlanta. The properties are being advertised by a management company over here, and have the usual blurb, "Tennant already in place", "20% returns" etc. But we also have many forums warning us off of investing in areas like this.

Some say that they have gone months with no tenants, and that the details they get sent are false and in fact the house they own is in ruins.

We like the idea of doing this, primarily because the property price is cheap, but we don't want to lose £40k in doing so. I have read some of the discussions on here, but its aimed at the American buyer not English. Also can anyone guide me a little on what the Section 8 means. I understand its a government thing, but do any guarantees come with it?

Sorry for being a bit simple, but we are literally dipping our toe in for the first time.

Thanks

Sam

[James Wise]

Originally posted by @Sam Bastin:

Hi,

I am so new to this, so apologies if I appear like a fish out of water. My wife and I have stumbled across some properties for sale in Cleveland, also Detroit and possibly Atlanta. The properties are being advertised by a management company over here, and have the usual blurb, "Tennant already in place", "20% returns" etc. But we also have many forums warning us off of investing in areas like this.

Some say that they have gone months with no tenants, and that the details they get sent are false and in fact the house they own is in ruins.

We like the idea of doing this, primarily because the property price is cheap, but we don't want to lose £40k in doing so. I have read some of the discussions on here, but its aimed at the American buyer not English. Also can anyone guide me a little on what the Section 8 means. I understand its a government thing, but do any guarantees come with it?

Sorry for being a bit simple, but we are literally dipping our toe in for the first time.

Thanks

Sam

 Welcome to the site Sam. 

The greater Cleveland & Detroit area are not any more risky than most other major metropolitan cities. What happens though is investors from all over the world hear just how cheap Cleveland & Detroit are. They then go on google & or zillow with their out of state eyes and see houses selling for $10,000-$15,000. Those houses at those price points are located in the very worst parts of the great Cleveland & Detroit area. Yes Cleveland & Detroit are two of the cheapest markets in the USA but don't go thinking we all live in $15,000 houses out here. Lol my house for instance is $300,000+. 

I created The Ultimate Guide to Grading Cleveland Neighborhoods to give investors like you a much better idea of the greater Cleveland market. In this guide you can see what sells for $10,000-$15,000 & more importantly WHY it sells for that low of a price.

Personally I think it's investment suicide to go into one of the cheapest markets in the world & buy the cheapest possible property. I always advise new investors to start with a higher quality and less risky property. We have those here in Cleveland & they have them in Detroit just like any other major metropolitan area is going to have them.

It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.