For a foreclosure, the house at 15461 Kentfield St. in Detroit needed surprisingly little work. The new owner, an investor from the Chicago area named Kevin Holmes, slapped on a coat of paint, pulled up the dirty carpets, and replaced the stolen water heater. The car stashed out back, he learned soon enough, belonged to a neighbor, not a thief using the three-bedroom as a makeshift chop shop.

The simple brick home really wouldn't look out of place in any middle-income Midwestern neighborhood. But in distressed Detroit, the Kentfield house sold for less than half the sticker price on a new Chevy coupe: $6,900.

Giveaway-priced homes are in danger of becoming as much a part of Detroit's identity as Motown, the Red Wings, and the Arsenal of Democracy. Real estate agents in America's 11th-largest city (it used to be No. 5) say they get calls from all over the world asking to see rock-bottom listings.

Surreally, despite a hollowed-out job market and the continuing flow of new foreclosures, Detroit is abuzz with real estate deals. Foreclosed homes in decent condition can sell within hours.

This city is the extreme end of a boom within the bust popping up all over the country as investors try to take advantage of prices not seen in years. (Nationally, home prices are down 31% from the 2006 peak.) Lots of the sales are foreclosures, although just about anything that's moving is cheap.

The activity is centered primarily in fading manufacturing hubs (such as Detroit and Cleveland) and the famous bubble cities (like Miami, Phoenix, and Sacramento). But investors are sniffing around for cut-rate deals just about everywhere from Memphis to Philadelphia.

So maybe you've thought about it too -- whether it was after watching another news story about Detroit real estate, or driving by a house in your town that used to cost $300,000 and now lists somewhere south of $200,000. As you'll see, though, squeezing a profit out of a house, even one as cheap as $6,900, is far from simple.

In this story you'll learn what it takes (besides iron guts) to be a successful investor in this market and how to avoid the rookie mistakes that can leave you stuck with a money pit. Detroit provides the examples, but the lessons of the Motor City apply to would-be investors in any down market.

Despite its economic free fall, Detroit has not become a wilderness where the rules of capitalism no longer apply. To the contrary, they are at work here with a vengeance.

Read More Here:

http://money.cnn.com/2009/10/16/real_estate/Real_estate_bargains.moneymag/index.htm?postversion=2009102206