Advice For Buying Rental Properties Near Detroit

25 Replies

Which are the top zip codes in the Detroit metro for Buy & Hold single family properties..both in terms of potential appreciation and for cash flow?

I am looking to purchase about a dozen properties up there within the next few months -- and being out-of-state, I am hoping for some guidance.

Thanks.

Hi Robert,

The "downriver" area is a good place for rentals. Lincoln Park 48146, Southgate 48195, Wyandotte 48192, these are all blue-collar communities south of the city with good school districts and no serious crime problem like is often associated with Detroit. The home prices here are still fairly low from the crash but they are bouncing back quite a bit in the last year or two and the property taxes aren't too terrible like they are in some cities here. The suburbs directly west of the city are a similar story, there are a lot of rentals in these areas and they do pretty well as far as cash-flow.

Depending on what price range of houses you are looking to buy...the northern suburbs, Oakland County, specifically northern Oakland county is a much more affluent white-collar area.

I hope that helps some!

Robert, I was just looking at some of the Foreclosure websites and wow there are tons of homes for 10K and under. Hudhomestore.com is one of them.

I am from Michigan (now in Texas)and I am considering going up there to look for myself. If I take 100k buy say 10 houses, rehab max 5k each the cash on cash return should be huge. Not to mention the appreciation. Buying houses at 1 to 5 sq foot NICE!

Plus Detroits bankruptcy with new conservative government for the state I think there is HUGE potential. Good Luck

I agree with Lincoln Park (although I might stay south of Southfield Road), Wyandotte, and Southgate. I would add Dearborn, especially 48126 and 48124. 48128 is a little more solid middle class (and more expensive) with professionals and teachers. I also would suggest Dearborn Heights (48125 and 48127). Westland, Garden City, and Redford might also be worth a look. Some of the Redford zip code are actually in Detroit, but I kind of like that area.

@ Engelo: Have you invested in Toldeo, OH? I am definitely open to areas for purchase.

@ Bryan: Thanks for those zip codes. I like buying houses under $60K after all repeairs are done for rentals in my portfolio - and was hoping to snap them up for much less than that in Detroit area. Is that do-able?

@ Gary: I was thinking the same thing -- and Iprefer buy and hold. What part of Texas are you in?

@Gary,

I am not from Detroit but your way of thinking on your strategy could lead you in the wrong directing. I can assure you they will all need more then $5k in rehab and if they are for sale for $10k, regardless of where in the US its a very bad area especially in Detroit. You will have tons of turn over, vacancies, theft!!! You would be better off buying 2 homes for $50k. Be careful, if Detroit was that good of a deal, those homes would not be available.

@Curt Davis Your advice is golden. I agree with the $50K-$60K max in good markets ($25-$30K in more speculative markets) per home strategy--but that is after all repair costs are built in. I also think the if you can buy $10K homes and fix them for $5K- investors would be snapping up 10-20 at a time.

Originally posted by Robert Piller:
@ Engelo: Have you invested in Toldeo, OH? I am definitely open to areas for purchase.

@ Bryan: Thanks for those zip codes. I like buying houses under $60K after all repeairs are done for rentals in my portfolio - and was hoping to snap them up for much less than that in Detroit area. Is that do-able?

@ Gary: I was thinking the same thing -- and Iprefer buy and hold. What part of Texas are you in?

Hi Robert,

Not as of yet but have been following the area very closely.

The team and myself have bought 35 houses this year in Kansas City.

Thanks

I am from Detroit, and Curt is exactly right!! These houses for 5k-10k (some are even <1k) need a lot of work, much more than 5k worth. And that is not the worst part, many of these houses are in neighborhoods that are practically abandoned.

That said, these houses are IN the city of Detroit! The suburbs are a different story entirely, no mass crime problems, no vacancy issues. There are actually places in the suburbs where population is rising, demand for rentals is increasing. Certain areas surrounding Detroit are experiencing an uptick despite all the problems with the city itself.

Originally posted by @Robert Piller :
Which are the top zip codes in the Detroit metro for Buy & Hold single family properties..both in terms of potential appreciation and for cash flow?
I am looking to purchase about a dozen properties up there within the next few months -- and being out-of-state, I am hoping for some guidance.

Thanks.

@Robert Piller , I canbhelp you with your venture in regards to costss, evaluations, ROI, and information on rentals in specific markets of Macomb and Oakland County.

I lf you are interested in working together let me know.

Originally posted by Robert Piller:
@Gary Hurst Looking forward to it.

@Aaron Yates Sounds good. I just sent you a note.

@Engelo Rumora Cash flow is king. Appreciation is just a guess-but you can bank on cash flow all day long!

I agree

Growth is based on predictions. I always recommend to base investment decision on the numbers in the particular deal and not on hopes that the property will go up in the value.

Hoping is not a strategy :)

Thanks

Hi @Robert Piller , I've been purchasing in south Oakland County for the past several years, specifically Royal Oak, Hazel Park & Ferndale. These areas are north of Wayne County. If there is anything I can do to help shed light in these areas I would be happy to share my business model. Your numbers are do-able in these areas, but probably not too much longer.

@Robert Pillar

Living in Toledo...I'm biased...but there are absolutely a range of deals, it depends on your strategy and scope of cashflow.

We have some nice suburb areas with $100k purchase prices and $800-1000 rent rates (Maumee/Perrysburg)...some higher prices to be had in the Slvania/Ottawa Hills area if that's your preference with a slightly higher rent rate.

Personally, I invest in the 43608 and 43612 zip codes...rule of thumb is the further north the better the neighborhood. In my area I realize $20k purchase/renovation cost and $700/mo for 3/1 houses. I also do a healthy business with Section 8, my seventh got approved Thursday morning.

Always happy to talk Toledo!

@Andrew Fidler I'll check out Toledo - but I prefer properties with a 1.2% -1.25% rent to purchase/repair price--not 1% or less.

So if I pay $50K, I expect $600-$625/m in rent.

Maybe that's why I always seem to stay in the $40K-$60K area?!?!?

I'm getting these returns on most of my properties-- so will only grab deals with similar ROI.

Originally posted by @Andrew Fidler :
@Robert Pillar
Living in Toledo...I'm biased...but there are absolutely a range of deals, it depends on your strategy and scope of cashflow. We have some nice suburb areas with $100k purchase prices and $800-1000 rent rates (Maumee/Perrysburg)...some higher prices to be had in the Slvania/Ottawa Hills area if that's your preference with a slightly higher rent rate.

Personally, I invest in the 43608 and 43612 zip codes...rule of thumb is the further north the better the neighborhood. In my area I realize $20k purchase/renovation cost and $700/mo for 3/1 houses. I also do a healthy business with Section 8, my seventh got approved Thursday morning.

Always happy to talk Toledo!

@Andrew Fidler

Hey mate,

I will give you a call next week. Ill be in Toledo on the 10th and 11th of November. It will be great to catch up.

Thanks and have a great weekend.

@Robert Piller

Rob- I buy my houses foreclosed for ~$10k and rehab the snot out of them for another ~$10k...so my total cost is $20k each.

$700 rent / $20,000 means my properties yield 3.5% on your scale...agreeing with you that dividing $700 by .012 (1.2%) you would be paying $58,333.00 for your target return.

I fully agree some folks prefer to hit the $100k cost and $800 monthly rent (0.8%)...I've just made a damned good portfolio getting into the border zones of Toledo...blue collar predominantly rental neighborhoods. It's not the area you flip in but it is the area you make cash in. :)

I've never tracked my properties based on monthly rent/building cost percentage...more along the lines of making 25% annually on my total investment per year $5000 net from $8400 gross on a $20k property since I buy my properties with cash.

I'd love to hear more about the basis the the percentage tracking methodology, first time I've used it.