Destination Detroit – Latest reports reveal 2.9% increase in house prices
Detroit in Michigan is not alone in the United States as being a state that suffered in the economic downturn but the 8th highest populated state and one famed for its automotive industry is not one to write off with the latest data from the FNC Residential Price Index reporting 2.9% positive year-on-year growth in house prices since January 2011.
Foreign investors have Detroit firmly in their sights as a lucrative destination in which to invest, attracted by the incredible rental returns and the values which also allows Detroit residents to have the opportunity to live in modernized, secure and affordable accommodation through government initiatives such as the HUD scheme.
It is the HUD scheme – Housing and Urban Development scheme – with whom property investment experts Property Secrets are working, bringing foreign investors together with local housing bodies in Detroit to provide quality homes for residents.
When the automotive industry collapsed in Detroit there were significant redundancies and high levels of home foreclosures, forcing people into rented accommodation. Through HUD scheme initiatives including rent subsidies, grants and general assistance to private agencies or other bodies involved with housing, more and more people are able to stay in their homes. This in turn keeps rents stable and prevents communities from being blighted. But still with over 9,000 people on the waiting list to receive a rented home, more help is needed from investors to modernize existing run down properties and to offer the cash assistance to the government in order for them to subsidize rents.
Alan Forsyth, Director of Property Secrets, informs us,
“We are offering 3 and 4 bedroom, fully refurbished houses to investors from $40,500, (around £27,000) often at least 50% under market value. These were selling 5-6 years ago for over $100,000 and it is just a matter of time before they fully recover, allowing our clients to gain substantially, through our relationship with the banks in USA.
“These properties are subscribed to the HUD scheme meaning that owners purchase houses with tenants already in place, they are paid rents directly from the government plus we offer a 12 month rental and maintenance guarantee so offering a safe and secure investment. And with a typical 3 bedroom home achieving rents of over $800 a month, an average investment through us will NET yield a minimum of 13%, gross yields over 20%.
“Within 3 days of releasing the investment information to our clients we had 19 property reservations. Our clients can see that this is an excellent opportunity for a hands free and profitable investment. I can however understand why it has been met with a level of scepticism by some. When you consider the US property market today and relate these kind of rental yields to it, it seems too good to be true, but the fact is there is such high demand for property rentals and the market has already reached an all time low that on a basic level of demand and supply these figures are not only achievable but are on the modest side”.
As with many regions in the US, there are now some glimmers of recovery and market regeneration in Detroit with the news that the Ford Motor company has chosen to build its next-generation Ford Focus model in Wayne, a suburb of Detroit. Ford intends to invest around $550 million to retool the existing plant in Wayne giving it the capability to make the environmentally friendly electric cars. With plans to produce 2 million vehicles a year there will be a sustained input from the car manufacturer from 2011 onwards and an extra requirement for quality housing in the area to home the workers. With jobs and growth brings prosperity and a positive outlook for early investors.
This outlook is backed up by figures recently released from the FNC Residential Price Index. February historically has been a pivotal month in predicting prices for the rest of the year and so experts are now saying that the market is ready for a gradual rebound and the latest statistics released on existing home sales shows a modest increase. General market conditions have improved in the last 2 months and of the markets tracked by the FNC 30-MSA Composite Price Index Detroit has shown positive year on year growth in house prices of 2.9% since January 2011.
Forsyth continues,
“We are so confident with our investment opportunities in Detroit that we are the only company in the UK to offer 50% finance to our clients, adding a real incentive to buyers. This is at a fixed rate of just 3.95%, and has allowed our clients to increase their return on investment even further.”
For more information and a full investment pack contact Property Secrets on +44 (0)115 985 3963, email investments@propertysecrets.net or visit www.propertysecrets.net