Estimated Values in Detroit

[Emilio Basa]

Hi everyone,

I'm a wholesaler in Michigan and focus on Oakland & Macomb county (Detroit suburb areas). After I started marketing I started receiving weekly requests from sellers in Detroit. I didn't want to focus on Detroit, but I'm receiving so many inquiries I want to see if I can wholesale some properties. The profit won't be as much, but I'm sure there are some buyers out there for Detroit. 

My question is (for Detroit investors and other investors in distressed areas), how do I come up with an accurate value on a property? The comps all over the place from $1,500 to $35,000. What formula do cash buyers use to purchase property? 

I just put a property under contract on a home in Detroit and it needs a little work, but it is not  in terrible condition (updated furnace, water heater, new roof, etc). We already agreed on a price, but now I'm nervous because I don't know if I can wholesale it to an end buyer because I quoted it too high. What are your thoughts? 

[Tom Olszewski]

I personally stay away from Detroit although I know several good areas and am sure I will wish I invested in the future.  Detroit proper is such a hodge podge of micro areas it would take me ALOT of research to be comfortable, as tempting as the low entry cost is.  

For comps., you have to make sure they are true comps., i.e., similar conditions and locations amongst other things.  For example, a fixed up house on one block may be worth 15k and the next block over it could be worth 30k.  Detroit is that diverse in pricing, so you really need to focus the comps. as close as possible to your house.

As for formulas, it depends on what you're trying to do. I have different criteria for my positions I plan on taking. It usually starts with how much profit do I want to make and move the needle from there. For a wholesale in Detroit, there might not be alot of room between purchase price, BRV and ARV, but I don't wouldn't know sonce I don't know your deal.

I don't know if this helps, in fact I'm sure it doesn't much, but you can put the comp. package together and figure it all out from there.