BiggerPockets

I don't know these guys but I do know Detroit. Out of towners need to be wary of any buy and hold strategy.
Money can be made there but unless you have been there to see it, you really have no idea what is like. I encourage a trip there before you invest money blindly.
You can see for yourself what they truly mean by "good neighborhood".
It is very easy to trick out of towners into thinking a 10,000 house is just too cheap not to buy. In fact, many, many houses in Detroit are actually worth negative amounts. They have more costs involved than they are worth. Even some of those may be able to be rented in the short term but are still worthless or will be money pits in very short order.
There are some guys on here who work the Detroit market. Kevin Kaczmarek or something like that is one.

Hi Michael,

Thanks for you interest and I appreciate you doing your home work on my company!

Detroit is a city easy to love and to hate. Like most cities there are good areas and bad but with Detroit, the bad areas are rather large and many of them look good.

I focus on an area of North West Detroit where homeowners still live, people still want to rent, and homes are still worth $55,000-$65,000.

The reality is that most of Detroit is unworthy of investment and as the saying goes, location, location, location! The difference is that this is particularly important in Detroit.

I have wholesaled over 200 houses in the city of Detroit since 2007 and most of my buyers are out of state or out of country so I'm familiar with the specific needs of this type of investor.

Do your homework on me! Check out my linkedin profile and view my recommendations.

Detroit is a great place to invest if you are interested in great cash flow, long term appreciation (7-12 years), you buy in the right area, and you have a great team working with you on the ground.

If that is not what you are looking for, then Detroit is not for you.

Also, Eric is spot on if you invest in the wrong area of Detroit. There is a reason a house is only $10,000! If it is too good to be true, it usually is.

Don't hesitate to call or email me if you have any additional questions. Thanks.

Michael,

There is a huge opportunity in Detroit if you Invest wisely. Our Real Estate Investment firm has created a way to make homeownership affordable for Homeowners in Detroit and offer great returns for Investors through Land Contracts.

Bigger Pockets is a great way to connect with people in the Detroit area who can give you real information on specific properties.

If you have any questions ask away and I will do whatever I can to help.

I doubt Columbus is in any danger of being deserted.
The risk is not the town being deserted, though there are serious people advocating that very large swaths of Detroit be converted back to farm land.
All it takes is for your block to be deserted and your property value evaporates. That is happening in many sections of Detroit. I expect Jeremy tries to avoid those.

There is and always has been good money in being a slumlord (for lack of a better term).
That 10K house renting for $500 seems like a great deal if you simply look at the numbers. But it most likely is a piece of junk house you are providing to your tenant. It often has lots of "deferred maintenance" that the slumlord can continue to ignore to pull in the cash flow. To bring it up to a respectable standard would probably not be cost effective.
So can you live with yourself providing your tenants with crappy housing? Can you simply ignore the complaining phone calls and police visits and the notices of city violation, etc that are part of the slumlord business. Can you insulate yourself personally from the lawsuits and insurance claims that come from owning bunches of junk rentals?
Some can, some can't.

I am not at all saying all the houses or people in these places are slums or bad or anything like that. But it is generally a poor situation in these places and this is a very slippery slope you are on as an out of town investor looking at the cheapest properties in down and out cities.

You think you can pick the nice houses by looking at pictures on the internet and insulate yourself by hiring property managers to deal with the crap.
Of course, it is possible for that to work out handsomely. But I think alot of people fall into this trap. I am intimately aware of a few who have. The basketball player Antoine Walker for one. Made $100M+ and is basically ruined over bad RE deals that stemmed from being an absentee slumlord.
I would agree with Jeremy that having a solid team on the ground is absolutely essential to not losing your shirt.

I do not rent properties but I have purchased all the way down to $2K in Detroit for flips. I stopped in 07 in Detroit. Just getting too bad for me. Couldn't drive through anymore.
I don't know Columbus. If you don't think I sound like I know what I am talking about with Detroit, definitely ignore me. I don't care. I have no incentive to mislead you in any way.

You may be misunderstanding my advice, though. My main advice was to go and look for yourself rather than depend on what people are telling you. I assure you no video will accurately give you the feeling you will have driving through Detroit neighborhoods.

As I said, there is money to be made in those houses, so feel free to give it a try. I just find it interesting that you are looking at the lowest price point in the hardest hit cities and yet you don't think you will be a slumlord. There is a disconnect there. Who do you think your tenants will be? Nice solid blue collar families?
There are no "low end" areas in Detroit that are "good". Maybe Columbus but I doubt it. Low end is low end for a reason.
Definitely report back and let me know if I was steering you wrong.
Down the road when one of your tenants moves out and takes every appliance, every cabinet and every metal pipe and gutter with him, maybe you'll think of that guy on BP who didn't know what he was talking about.

No, I do appreciate all inputs, and you guys have way more experience than I do, so I am taking it all into consideration. Actually I am not so hung up on Detroit. I only have 14k right now and was tempted to buy something cash with it. But I think I might wait and save for a down payment on a duplex arounf 50 or 60k somewhere decent. I am not sure what city to invest in yet. I have a duplex in DFW but it's more expensive there. I am looking at Indianapolis maybe, I ll have to study some more, any suggestions of decent places, or neighborhoods in that price range?

I would hang onto that money for the time being. Any house you can buy for 5-10k is going to require extensive work to either get rent ready or ready for resale. I know a little about Columbus through a wholesaler that I provide transactional funding for. If you are going to invest out of state, that would not be a bad market, but as always, do you research.

My case for Detroit, rather, certain areas of Detroit is outlined in my blog very thoroughly. http://www.UrbanDetroitOnline.com

I would never recommend anyone buy in war zones where all of the $10,000 or less properties are located. They never work out and they always cost you more money.

There are areas of Detroit in the $30,000-$40,000 range that appraise between $55,000-$65,000 that rent well and sell well on land contracts.

The bottom line is that if it sounds to good to be true, it is. At least in Detroit, stay away from the cheap areas.

Jeremy Burgess
The Detroit Market Expert

Angie,
I have invested out of state 3 times before, and actually my first property was in Austin while I live in the bay area in california. Investing out of state is not a big deal, you just need a few things, first and foremost a few trusted people, like a realtor, or someone who knows the neighborhoods and what's going on, you need a trusted referral for a good property manager, You can do that by making phone calls and talk to people. I believe you can get a feel for people that you trust, you can check referrals.
I have some if you want to invest in DFW or Austin.
Lastly, you do need to fly there before looking at your potential properties. I fly there and in one day, look at 10 properties, you ll know which ones you want and which you don't.

Angie,
I have invested out of state 3 times before, and actually my first property was in Austin while I live in the bay area in california. Investing out of state is not a big deal, you just need a few things, first and foremost a few trusted people, like a realtor, or someone who knows the neighborhoods and what's going on, you need a trusted referral for a good property manager, You can do that by making phone calls and talk to people. I believe you can get a feel for people that you trust, you can check referrals.
I have some if you want to invest in DFW or Austin.
Lastly, you do need to fly there before looking at your potential properties. I fly there and in one day, look at 10 properties, you ll know which ones you want and which you don't.