Chase C. Hunter became a real estate investor after a Google search and a $3,800 initial investment. At the time, while living in Houston, she searched for places she could buy cheap property and found ample opportunities in Detroit, with homes selling for as little as $1,000.
“I closed on my first two properties the same day in June of 2021,” she told Realtor.com in an article published Aug. 24. “The day I closed was my very first time in Detroit.”
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Both properties came with significant issues. She paid $2,000 for one and $1,800 for the other, renovated them, found renters and began her career as a landlord. She has since repeated this process for eight homes.
Hunter’s journey was a successful one, thanks to a lot of effort and a little luck, but it wasn’t an easy one.
Rental properties can require a lot of hands-on labor
While Hunter paid very little for the two homes she purchased, that was far from the end of the story.
As explained in the article, she had to invest $85,000 in renovations for the house she bought for $2,000 to ready it for renters. On the second house, purchased for $1,800, she spent $130,000 to convert it into her office because of unexpected water line problems.
Hunter also moved to Detroit permanently and became a real estate agent last year to further her business efforts. She takes a risk by funding the cost of the renovations on business credit cards. She spends time carefully researching neighborhoods to find good properties, is cautious in choosing contractors, and invests in top-notch security due to Detroit’s high crime rate.
She also spends more upfront now to buy her properties, but far less to renovate them. She looks for houses that she can turn around quickly and spends around $5,000 to $10,000 to fix them up.
“At this point, I focus on things I can turn over pretty quickly, such as cosmetic rehabs,” she said. “I look for homes in the $80,000 range, because you spend less on repairs.”
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While her business has been a success so far thanks to this hard work, she also benefited from a major turnaround in Detroit’s real estate market. The median sales price was just $58,900 in 2009, according to Realtor.com, and the city became the largest municipality in U.S. history to file for bankruptcy in 2013, which didn’t help matters.
Investors like Hunter swept in and took advantage of low prices on properties, helping to usher in a revitalization that has helped push the median sales price up to $250,000 as of May 2024, per Realtor.com. With a meteoric rise in home values, investors will obviously have an easier time making a profit than in markets that are more stable and not prone to such big price increases in such a short time.
Barely a decade after it declared bankruptcy, The Wall Street Journal stated Detroit is emerging as “America’s most unlikely real-estate boomtown.”
Passive methods of making money on real estate
Not everyone wants to sink thousands of dollars into rehabbing homes or deal with the hassles that can come with finding contractors, managing a renovation, finding tenants and collecting rent.
For those who want to invest in real estate without turning it into a full-time job, there are plenty of safe and easy alternatives. Some options include:
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Investing in a real estate investment trust (REITs), which are publicly traded trusts that own many properties and pay out profits from the rent in dividends to investors.
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Investing in crowd-funding platforms that allow you to select projects like rental properties or land parcels and pool your money with others to own a small stake.
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Purchasing exchange traded funds that give you exposure to the real estate market, either by doing things like pooling money to buy interests in many REITs or investing in businesses operating in the real estate industry
Each of these options allows you to get the benefits of exposure to real estate without personally having to try to collect rent, contract with handymen or do the many other tasks necessary to own property of your own.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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