Detroit’s real estate market is full of opportunity, especially for investors looking for affordable entry points. On the surface, land bank houses look like a dream. A home listed for $1,000? It's no wonder so many out-of-state investors and local buyers are tempted to jump in.
However, the reality is that land bank houses often come with some big requirements and costs.
Before you dive into buying from the Detroit Land Bank Authority (DLBA), it’s important to understand what you’re getting into. These properties may seem like a shortcut to high ROI, but the risks can quickly outweigh the rewards if you're not prepared.
Let’s break down what you need to know.
Land bank houses are vacant or abandoned properties acquired by government-run land banks, like the Detroit Land Bank Authority, to return them to productive use. In Detroit, the DLBA is one of the largest land banks in the country, managing thousands of properties throughout the city.
The homes are typically listed at extremely low prices—sometimes just a few hundred dollars. The idea is to make them accessible and encourage rehabilitation, especially in hard-hit neighborhoods.
However, the low listing price often reflects the condition of the property and the amount of work needed to bring it back to life.
That $1,000 house might sound like a steal, but once you start tallying the true costs, it’s easy to see how land bank properties can quickly become money pits. Here are some of the hidden costs of investing in Land Bank houses.
Most of these properties have sat vacant for years, with little to no upkeep. That means:
Even experienced investors are often shocked by how quickly renovation costs spiral out of control. It's not unusual for a “cheap” property to require $80,000 to $100,000 or more in repairs.
After years of vacancy, utilities like water and electricity are often disconnected. Reconnection fees can cost thousands, especially if the property needs new lines or meters.
You’ll also need multiple permits and inspections to complete the work. Detroit has strict codes, and failing to meet them can stall your entire project.
Insuring a vacant home in poor condition in Detroit isn’t cheap. Specialized insurance for vacant or under-renovation properties is often much higher than standard homeowner rates.
Plus, you’ll have to take care of:
These costs add up fast, especially if your project takes longer than expected.
When you buy from the Detroit Land Bank Authority, you’re not just buying a property; you’re entering into a binding agreement with strict requirements.
Buyers must renovate the home within a certain time (often 6 to 12 months), and you often need $50k+ in escrow. If you fail to meet those requirements and deadlines, you could face fines or even lose the property. This is legally enforced, not just a suggestion.
That means you need to have a solid plan, funding, and contractors in place before you even bid.
Some land bank properties come with clouded titles, old liens, or unresolved ownership issues. Clearing the title can be a time-consuming and expensive process, especially if you’re unfamiliar with Detroit’s legal landscape.
Even seasoned investors can get caught in a maze of legal red tape, which can delay the project and drain cash reserves.
Many land bank homes fall within designated historic districts. That means you can’t make changes freely—everything from the windows to the exterior paint color might be subject to review.
Zoning restrictions can also limit what you can do with the property, whether converting it into a rental or adding modern upgrades.
Detroit is a city of diverse neighborhoods and wildly different investment outcomes.
Many land bank houses are in distressed or transitional neighborhoods, where blight, crime, and economic instability can be real concerns. These areas may see long periods of stagnant value or slow recovery, making ROI harder to predict.
It’s also difficult to get reliable appraisals in neighborhoods where there are few (or no) recent comps. That can make it harder to:
For out-of-state investors, especially, it can be tough to assess long-term value without being on the ground or having a deep understanding of local market trends.
If you want to invest in Detroit real estate without the stress, delays, and financial risk of land bank homes, there are better options.
Turnkey rental properties are already renovated, leased, and cash-flowing. That means no surprise repair costs, no permit headaches, and no waiting months to see a return.
With Own It Detroit, investors get:
You don’t have to worry about sourcing contractors, navigating city regulations, or monitoring renovations from hundreds (or thousands) of miles away. We handle everything, so you can focus on the return.
Our clients come to us because they want:
We’ve built our reputation on helping out-of-state and international investors succeed in Detroit’s unique market. With a 92% rental collection rate and thousands of successful deals under our belt, we know how to deliver results.
Invest in Detroit real estate with expert support
There’s no question that Detroit offers opportunity, but buying land bank houses in Detroit comes with serious risk.
If you’re an experienced investor with time, capital, and local connections, it may be worth exploring. However, for most buyers (especially those who live out of state), it’s a risky bet with a long list of unknowns.
Before you commit, ask yourself:
If the answer to any of those is “no,” it’s time to rethink your strategy.
At Own It Detroit, we specialize in helping investors make smarter, more profitable decisions in the Detroit market. We offer turnkey properties, full-service management, and local expertise that takes the guesswork out of your Detroit real estate investment.
Don’t gamble on a land bank property. Partner with a team that knows the landscape and puts your returns first.
Explore our investment opportunities or contact us today to get started.