Detroit Land Trust BRRRR?

Question

Hello!

I'm just starting to learn about rental investing, and this is my first post on the BP forums. I'm currently reading the BRRRR book and curious if anyone has experience using this method on Detroit Land Trust properties. I've delved into the stipulations of their purchases and watched some YouTube videos of Detroit contractors walking through some of their properties that have been purchased from the Land Trust. The price tag on the houses is nothing, but I'm curious what sort of all in costs this sort of property would incur. It seems like there are groups that are flipping them successfully, so I feel like there has to be a way to make it work, but curious if anyone has done it.

Leroy K. Williams · Answer

You can use the BRRRR strategy with DLBA properties as long as you approach the situation soberly.  You should be very realistic about the ARV for the property you aim to purchase to ensure that you have at minimum 20% cushion in your rehab budget.

These properties also tend to be in Class D areas so you should tailor your strategy toward Section 8 rentals. This is what works.

Elealeh Fulmaran · Answer

BRRRR can work on Detroit Land Bank/Land Trust houses, but only if you treat them like heavy rehabs with strict compliance: read every program stipulation, confirm deed restrictions and rehab timelines, and underwrite all‑in cost with big‑ticket items first (roof, sewer, foundation, electrical, HVAC) plus contingencies and holding time; many lenders won’t finance until work is complete, so plan cash, private, or bridge funds and expect permit oversight and inspections. Talk to an investor‑savvy GC and a local PM before offering, get written scope and milestone draws, and pressure‑test the exit with conservative ARV and rent comps. If you’re newer, start with a “hybrid BRRRR” approach on a lightly distressed rental in a stable block to prove your team, then level up to Land Bank projects once your process is tight.

Kari Rak · Answer

@Jonathan Greene Thanks for the advice! I had no idea

Drew Sygit · Answer

@Kari Rak you want to be REALLY careful buying anything from the Land Bank.

THe majority of the good stuff is sold before it hits the public.

I know three investors that bought from the Land Bank and they all went WAY over budget to finish the properties. The overruns weren't caused by the Land Bank or thir requirements, they were due to inevitable surprises when you do major renovations.

Rcommend NOT focusing on Land Bank properties, instead look at everything on the market and buy the best BRRR property you can find.

One last thing, many of the Land Bank properties are in Class D Neighborhoods:( VERY difficult to make these work as rentals or flip.

If you'd like to chat more, DM us and check out the Interactive Map of Metro Detroit with color-coded Classes on our website - to make better decisions:)

Kari Rak · Answer

@Al Bazzy I'd take any and all tips that you may have! Thanks for the insight

Al Bazzy · Answer

Hey Kari! The Land Bank and Land Trust properties in Detroit can look tempting because of the low prices, but in reality, the rehab costs can be pretty steep, sometimes higher than expected, especially with older homes needing full systems, roofs, and city inspections.

If you’re considering BRRRR in Detroit, it’s definitely doable, but you’ll want a solid local team (contractor, property manager, and someone who really understands city compliance).

We’ve seen many investors start there and later shift toward turnkey properties, which already come renovated and rented, still in Detroit, but with way fewer surprises and strong cash flow.

We work with several out-of-state investors who prefer that route since it gives them reliable returns without managing heavy rehabs.

Happy to share a few insights on what’s been working best in the Detroit market if you’d like!

Kari Rak · Answer

Thanks everyone for the input. This is very helpful.

Kari Rak · Answer

@Ryan Lonsway Thanks so much for the advice. I'll take a look at places like that and see what I can find! It seems like everyone has similar feelings so I'm glad I threw this out there.

Ryan Lonsway · Answer

I don't recommend any land bank purchases for new investors especially if they are out of state. These are always $60k+ projects and typically run overbudget when we start tearing out walls. I'd recommend focusing on brick homes on good streets that need $20k-$40k rehabs. You can typically purchase these homes for around $60k-$80k, rent them out for $1,200-$1,400 / month, and then they're usually worth $110k-$140k in the end.

Kari Rak · Answer

@Drew Sygit Thanks for the info. The unexpected things causing the budget to get blown up is what I was concerned about. I'd love to chat more. DMing you

Detroit Land Trust BRRRR?

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