{"id":185036,"date":"2025-10-03T11:52:22","date_gmt":"2025-10-03T17:52:22","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=185036"},"modified":"2025-10-03T11:52:25","modified_gmt":"2025-10-03T17:52:25","slug":"detroits-new-down-payment-policy-is-creating-rentvestors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/detroits-new-down-payment-policy-is-creating-rentvestors","title":{"rendered":"Detroit Doesn’t Want More Real Estate Investors\u2014But Their New Policy is Creating More"},"content":{"rendered":"\n

Detroit Rock City? More like Detroit “Rental City.” The Motor City’s emergence as a rental haven for investors after the<\/span> dark days of the 1980s, \u201890s, and early 2000s<\/span><\/a> is well known. Now the city is attempting to give its residents a better chance of homeownership. However, its new homebuying assistance program could also help new investors get on the property ladder.<\/span><\/p>\n\n\n\n

An exhaustive 2022 report by think tank <\/span>Detroit Future City<\/span><\/a> noted that there were over 42,000 landlords in Detroit. Landlords with five or more properties owned a third of the city’s rental housing. The attraction was clear: Low purchase prices, increasing rents, and urban renewal made Detroit a strong long-term bet for <\/span>cash flow<\/span><\/a> and <\/span>appreciation<\/span><\/a>. <\/span><\/p>\n\n\n\n

However, for any city to thrive, it needs a healthy mix of owner-occupants, as well as renters. So recently, Detroit has introduced a grant of up to $25,000 in <\/span>down payment<\/span><\/a> assistance to help tenants become homeowners and curb the rising tide of investor-owned properties.<\/span><\/p>\n\n\n\n

Detroit’s Play: Backing Buyers<\/span><\/h2>\n\n\n\n

To<\/span> qualify for Detroit’s $25,000 homebuying grant<\/span><\/a>, potential homeowners must prove that they have lived in the city for at least 12 months or lost a home in the <\/span>city<\/span> to foreclosure between 2010 and 2016.<\/span><\/p>\n\n\n\n

“It’s definitely changing people’s lives,” Shane Ouimet, a Detroit-based mortgage broker who works with buyers looking to qualify for the program, <\/span>told Realtor.com<\/span><\/a>. “There are a lot of people who just don’t have 5, 6, or 10 grand, whatever it might cost them to get into a house, but they come up with $1,000.”<\/span><\/p>\n\n\n\n

The additional $25,000 can be used for a down payment, closing costs, interest-rate buydowns, and even certain repairs when paired with a renovation mortgage, such as a 203(k) loan. <\/span><\/p>\n\n\n\n

Additionally, the Michigan State Housing Development Authority (MSHDA) is partnering with the Tobias Harris Homeownership Initiative to pilot a shared-appreciation program, offering potential buyers as much as<\/span> 40% of a home’s purchase price<\/span><\/a> that <\/span>can be used<\/span> toward a down payment. <\/span><\/p>\n\n\n\n

Homeowners do not make monthly payments. Instead, they repay the assistance to the lender when they sell or refinance, plus a share of market appreciation.<\/span><\/p>\n\n\n\n

“This new partnership will help make the dream of homeownership a reality for more Detroiters, offering the kind of affordable support that leads to long-term housing stability,” Amy Hovey, CEO and executive director of MSHDA, said in the organization\u2019s press release. “We’re moving quickly to identify new partners and programs that can help lower costs and unlock opportunities for Michigan families.\u201d <\/span><\/p>\n\n\n\n

\u201cHomeownership is one of the most powerful ways to build stability and generational wealth,” said Tobias Harris of the Detroit Pistons, who is championing the project, in the press release. “With this initiative, I’m focused on expanding access to homeownership so Detroiters can plant roots and build equity in the city they call home.”<\/span><\/p>\n\n\n\n

From Tenants to Homeowners to Investors<\/span><\/h2>\n\n\n\n

Almost 60% of Detroit tenants are cost-burdened, spending over 30% of their monthly income on rent. However, in the same way that the new housing initiatives help tenants become homeowners, it can also help new owners become investors by enabling them to save money for a down payment on another home, or renting rooms in their primary residence, (no minimum time period of primary home residency <\/span>is stipulated<\/span> to qualify for the grant), and moving into a rental and benefitting from the cash flow\u2014a process known as “Rentvesting,” which has proved popular in the city.<\/span><\/p>\n\n\n\n

“Detroit has become a prime city for rentvesters\u2014people who rent where they live, but own investment properties here,” Erica Collica, a Detroit-based real estate agent, <\/span>told Realtor.com<\/span><\/a>.<\/span><\/p>\n\n\n\n

Out-of-towners looking to take advantage of Detroit’s housing initiative to kick-start their investing career would need to rent in the city for a year before applying for a grant.<\/span><\/p>\n\n\n\n

Other Midwestern Cities Favorable to Investors<\/span><\/h2>\n\n\n\n

Other Midwestern cities offer an attractive mix of affordability and decent rents, according to <\/span>Zillow<\/span><\/a> and the U.S. Census, making them viable alternatives for investors considering Detroit. <\/span><\/p>\n\n\n\n

St. Louis, Missouri<\/span><\/h3>\n\n\n\n

Affordability and economic diversification across<\/span> healthcare and logistics<\/span><\/a> have helped St. Louis tick all the investment boxes for prospective landlords.<\/span><\/p>\n\n\n\n