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Affordable Housing In Detroit Michigan Essay

932 words - 4 pages

In today’s volatile real estate market what was once a solid investment, real estate, no longer is the financial safe haven that it once was. Many of the distressed properties have been completely exploited. These properties have been completely stripped of fixtures, plumbing, wiring, and are merely shells. One area that has an excess of such properties available is Detroit Michigan, which will be the focus of this hypothetical exercise and essay. Affordable housing is always needed, regardless of it is through a standard lease on a “rent to own” basis. By pairing what is a surplus of low cost housing available for sale with a housing demographic in dire need, a social contribution and financial profit can simultaneously be made.

Detroit Michigan has an abundance of distressed properties available for under $1,000 (I actually purchased one myself on EBay for $1,400). With an 11 month time frame, it is very possible to turn a profit and contribute to the housing needs of a struggling community and underprivileged demographic. By the 11th month there will be 10 homes that can be rented or sold to low income residents or other interested buyers. The $150,000 has to be divided in such a way that it is always earning interest. Although a reference is being made to this financial fact and practice, there will be no calculations of the interest applied to the monetary totals in this exercise/essay for the sake of simplicity and brevity. $45,000 of the $150,000 grant will be placed in a 10 month certificate of deposit. If necessary that asset can be leveraged for a line of credit to address any unforeseen occurrences. The $105,000 will be divided into smaller certificates of deposit that mature at various times that correspond with the completion and/or initiation of various project phases. There will also be a business account and limited liability corporation established.

The first two months are consumed by the purchasing process. We will purchase 10 small homes for $500 each (similar to the one I bought). The closing costs are minimal as they will be secured with Warranty Deeds. Each closing will cost $375 which includes Warranty Deed registration and title insurance. In total $8750 will be spent on the acquisition of 10 properties. Each of the Detroit properties is 1000sf or less, and is usually 2 or 3 bedrooms with 1 bathroom. Each property selected, though it may be completely gutted, will at least be structurally sound.

[Please visit Realtor.com and select Detroit, Michigan with a housing range of $500 or less to see the wide selection of purchase options.]

The Detroit area is full of resale warehouses that specialize in used appliances, doors, windows, sinks, toilets, and other items that will make the materials portion of the renovation process...

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