Detroit is one of the hottest real estate markets in the country right now, and new investors are flocking to the area not just for the deals, but for the chance to be a part of a great city’s resurgence. But Detroit isn’t like other markets, and new investors need to ask some questions here that may not be necessary in other cities.
In our conversations with hundreds of investors, we’ve identified seven of the most common Detroit mistakes. In our new series, we’ll be taking you through each one of them, starting with today’s focus: not checking the back water balance.
While the $500 Detroit house may be more myth than reality, great deals still abound in the Detroit market, and it’s not unheard of to find a good deal in the $15,000 – $30,000 range.
But when dealing with Detroit real estate, there’s no more appropriate maxim than “buyer beware.” That $15,000 house could come with a surprise $2,000 bill. The culprit? Back water balances.
In Detroit, as in many other cities, water bills are ultimately attached to a property, not a person. This means that if tenant or owner doesn’t pay their water bill, and the property is sold, that bill is transferred to you, the new owner. And since for many years the Detroit Water and Sewerage Department enforced bill payment only haphazardly, it’s not uncommon to see extremely high back balances. We’ve seen new owners hit with bills as high as $2,000.
And forget about a payment plan: if you’re planning to rent out your property, you’ll have to pay the back balance right away. DWSD won’t schedule a water turn-on, or allow a tenant to put the bill into their name, if there’s a back balance on the account.
Luckily, it’s easy to check the back water balance before closing on a property:
- Call DWSD at (313) 267-8000 to get the account number for the property. All you need is the address.
- Use the account number to check the current balance on DWSD’s website.
At Castle, we’ve been in the unpleasant situation of having to inform new owners about balances they had no idea about. So don’t get stuck with an unexpected bill: check the back water balance before you make a purchase.
Surprise bills for new owners are far from the worst problem with the Detroit Water and Sewerage Department. You may have seen news articles about Detroit’s water shutoffs, which have had disastrous consequences for many residents.
There have been an array of problems with the way these shutoffs were handled, from failures to warn occupants, shutting off tenants’ water for landlords’ balances, and shutting off water for poor residents while doing nothing to wealthier businesses who owe 10x as much. If you’re interested in learning more, this article in the Nation has a good overview.