My Strategy and My Thoughts

There is a lot I can tell. I am learning things about my own capabilities while making mistakes with others. I, naturally, want to start by telling the most recent events. But that would take away from the story approach to this. Like I said before, “I feel like there is a story to tell with a city like Detroit.”

Before arriving, my co-workers and I would joke about buying whole blocks in Detroit with a single paycheck. It was an absurd idea, knowing what I know now, but an opportunity nonetheless. Even if the timing was right to do this then, I’m glad I did not take the risk. Even today, I see deals pop up all the time and choose to look elsewhere. I feel like that Drake meme. I look at something that should be good and don’t want it. But something else that is just right.

So I started looking with a realtor. We went to some nice areas and not so nice areas in Detroit. Even when I wasn’t looking with a realtor, I partnered up with a fellow student to look at potential projects around the city. What I noticed was that everything was a project. Even if you could find a turn-key house, it was either overpriced or in a terrible neighborhood. I wasn’t looking to buy and hold. I didn’t have a job. I was a full time student living on a budget with family and trying not to spend my recent capital on stupid purchases.

Everything that was for sale in a “up and coming” neighborhood was in need of serious repair. And herein lies another problem. There is not a lot of good help when you’re working with limited funds. I did not know who I could trust for anything. As far as I knew, everyone was out to take my money and leave me with a half finished house. I know my own capabilities. I do not have the time to rehab a whole house by myself. That would take too much time and cost me more than just money.

Since money was the issue, I started to think of homes in terms of cash flow (CF). I knew that my next purchase wouls have to have a stable CF for me to build this business. Basic BRRRR strategy stuff. Except I don’t have the job to help accelerate this process. Regardless, it worked for me in California, it would work for me in Michigan. This time, I wouldn’t be so quick to sell.

I looked all over Detroit for CF. The numbers never made sense. Either rents were too low or expenses were too high. I felt that eventually, that would change but for right now I needed stable CF. I started to expand my search bubble to the metro Detroit area until finally ending up in my own backyard of Ypsilanti.

Ypsilanti in some ways resembles Detroit. It is a manufacturing town that took a huge hit during the last recession. There aren’t as many burnt out buildings but real estate values are all over the place. In the last few years, Ann Arbor the city next store has seen unparalell growth. I think of Ann Arbor as a bubble because there is no other market like it in the state. A friend told me that Ann Arbor is to Michigan what Austin is to Texas. While networking at school, I learned that it is a growing trend for people to move from Ann Arbor to Ypsilanti, where housing us much more affordable.

I only expect this trend to continue as Michigan continues to bring new business to the area. Ypsilanti is a great town because of its individualism. CF is good here but it’s a different market compared to Ann Arbor. People don’t expect luxury or even updated apartment living. As long as there is CF, I am the type of REI that will provide updated amenities in hopes of greater rents in the future.