Irish thinking of Buying property in Detroit

Benny122

Looking for advice please.

My boyfriend and I purchased a property in Ireland last year which we currently live in but has massive rental potential. We bought it for €50k and did it up. He did most of the work.

We were looking of buying a second property to rent and get a rental income from - however - there is nothing in our budget.

Which led us to look further a field. I am currently looking at properties in Detroit in the price range of $25-$35k get management company to manage and rent it out.

I know a lot of properties in Detroit are in a bad state or in a place location but there are a few that aren't.

A property like this would give a turn over or 12-15% with annual rental income of $8900 but charges such as Taxes, insurance and management need to be deducted from this. Giving profit of over $6k.

I'm looking for advice from an Irish or US property realtor and accountant and I'm not sure how rental income would be taxed in US etc

Would we be mad in the fact that we wouldn't be there but the company would manage it for us and we would get the company to check everything before purchase

Snotty

Having a company management the rental is not the an issue, many people do it and have never actually visited the property they own.
But and this is a huge BUT, you need to do a whole lot of research and looking for the cheapest property is probably not a good idea, it's cheap for a very good reason.
Normally the objective is to get into a market early so future growth is probable and future growth might negate any fluctuations that are enviable.
I know there was alot of talk about rejuvenating Detroit and basically it had hit rock bottom with the bankruptcy but the city was bankrupt and you don't come back from that in years, it's decades.
From a rental perspective, the population has been and is continuing to drop, so the number of potential renters is getting smaller and smaller.
Maybe you know the areas better than me, but I just can't see it as a wise investment.

Benny122

Thanks for the heads up.

I have checked the amount of properties that for rent in Detroit and it seems like a saturated market do you probably just confirmed that I had researched.

May I ask would you know of any other foreign markets we could look at with this budget?

retalivity

I was in a Detroit a couple of times a few years ago....its mad.

Theres the downtowm core, all high rise, outside that you have a new green belt, where there used to be houses, but the majoroty have all been knockes, leaving blocks of empty grass land. The only interruption in this mass of sqaure roads and green is modtown and wayne state uni.
Then go out 5-6k ,or so you start to hit the suburbs where all the white people moved, places thay are still relatively affluent.

It seems an incredibly volatile area to invest in, as others have said the properties are cheap for a reason. Id say thw only moneu to be made there would be through buying something, making it your home, and moving on after a few years

Snotty

Why property?
Are you borrowing for this investment?

Spanish Eyes

Prize bonds.

Benny122

No we have the funds - but we could keep the funds and borrow

Benny122

What else is there other than property

Neon_Lights

http://www.revenue.ie/en/gains-gifts-and-inheritance/credits-you-can-claim-against-cat/double-taxation-relief-usa.aspx

Double taxation agreement between ireland and the usa, may help from a tax standpoint.

Btw where did you buy a gaf for 50k just out of interest?

Snotty

Benny122 wrote: »

What else is there other than property

Come on, don't go back to celtic tiger BS, there are loads of investment opportunities, starting from guaranteed but low returns all the way up to potential 30%+ returns but very risky.

Knowing nothing about you, but what are your current pension arrangements, it could be a good time to max out your pension contributions benefiting from the tax breaks using the savings to offset the lost of income.

You really need to do some of your own research as no one can tell you what investment is best for your situation.

Cute Hoor

The Irish seem to have a great properety affinity with Detroit, not sure if its the fact that it is the US centre of the automobile industry and most Irish people owned a Ford at some stage or what.

Myself I'd prefer to keep the mattress stuffed!
https://www.irishtimes.com/business/commercial-property/eddie-hobbs-brendan-investments-and-the-disaster-in-detroit-1.2970926

Dardania

Snotty wrote: »

Benny122 wrote: »

What else is there other than property

Come on, don't go back to celtic tiger BS, there are loads of investment opportunities, starting from guaranteed but low returns all the way up to potential 30%+ returns but very risky.

Knowing nothing about you, but what are your current pension arrangements, it could be a good time to max out your pension contributions benefiting from the tax breaks using the savings to offset the lost of income.

You really need to do some of your own research as no one can tell you what investment is best for your situation.

Good idea RE pensions, and use it to invest in a REIT if you want to get into hands off property yield

Francie Barrett

Cute Hoor wrote: »

The Irish seem to have a great properety affinity with Detroit, not sure if its the fact that it is the US centre of the automobile industry and most Irish people owned a Ford at some stage or what.

Myself I'd prefer to keep the mattress stuffed!
https://www.irishtimes.com/business/commercial-property/eddie-hobbs-brendan-investments-and-the-disaster-in-detroit-1.2970926

Incredible ignorance, it's like a bunch of lads down the pub decided to buy a property together and went about it in the worst possible way.

The big reason why Detroit property is cheap is because of state property taxes. A house selling for $20k might have an assessed value of $100k (often impossible to have reassessed), put a typical 4% tax on that and your yearly tax bill is $4k a year. Slap your property company's management charge on that and then an inevitable bill for refurbishing after the house gets turned into a crack shack or brothel, and it's very often the case that people could end up losing money.

It's certainly possible to make money as this sort of slumlord, I have one friend who has done it for 30 years and he lives very well. But he vets every tenant, he will visit the properties weekly to collect the rent, he does a lot of his own repairs or knows fellas who can do them reasonably, he scour the paper/dump for free furnishings. If that sort of thing causes you to wrinkle your nose, you have no business being a slumlord.