Investor · Chicago, IL · Member since 2013 · 227 posts · 31 votes
I know some people on here have some opinions about detroit :::cough::: @Joshua D.
A 39 unit building in Palmer Park is selling for 350K+. Another 140 unit building is selling in the low million just outside of detroit. I just got offered an engineering job that is seeking talent to expand operations outside of the state so from that standpoint it seems that jobs are comming back.
For an investor from New England, the prices are outrageous... in a good way. To buy a building like these even at subpar rents and to hold it for a decade if industry is coming back to detroit would be a good long term play in my opinion if the socioeconomic factors are trending in the right direction.
While I am not from Detroit, there is no doubt in my mind that it will make a least a partial recovery. It is still located with an abundance of water and transportation options. I just do not know how long recovery will take. In addition, I do not know the real status of the infrastructure. However, even assuming a recovery occurs you are making a mistake if you try to evaluate property values in the Midwest and particularly Detroit based on values in the Northeast. So be careful and compare values and investments to others in the same area.
I don't have enough boots on the ground knowledge to know what's up with the Motor City. Watch out when it comes to assumptions and 10 year projections.
Out of state investing, when you don't really have a way to influence the area, might be best approached on a small scale.
140 units way too risky for me to deal with remotely.
While I am not from Detroit, there is no doubt in my mind that it will make a least a partial recovery. It is still located with an abundance of water and transportation options. I just do not know how long recovery will take. In addition, I do not know the real status of the infrastructure. However, even assuming a recovery occurs you are making a mistake if you try to evaluate property values in the Midwest and particularly Detroit based on values in the Northeast. So be careful and compare values and investments to others in the same area.
But to your comment, that can be said about basically anywhere in the country.
I understand that due diligence is in order but on purely a cash flow perspective at those prices and market rents any property would be a good deal if the vacancies are manageable. A 350K property is useless if there's no one to rent too. Or worse, I have to drop rents so low that I invite unsavory characters to my building.
You dont know what you dont know.
So can anyone tell me from personal experience in the area, what there thoughts are for Detroit. Vacancies, job growth, education, public grants or assistants to help propel economic prosperity. Things like that.
Without some "boots on the ground", I think its pure speculation that detroit would be a bad long term investment or a good for someone out of state.
I have no doubt there will be amazing deals in Detroit, but without local real estate wisdom on your team, you might as well put your money on red 34.
This is right on the money. If you have no knowledge of the local market and areas the "deals" you see probably aren't as good as you think. I've seen properties for sale that I've looked and I wouldn't take if offered to me for free. Cheap isn't always cheap, sometimes you buy yourself a huge problem that ends up being far more expensive than you can even imagine.
Are these buildings you're looking at mostly occupied or mostly vacant?
I know some people on here have some opinions about detroit :::cough::: @Joshua D.
A 39 unit building in Palmer Park is selling for 350K+. Another 140 unit building is selling in the low million just outside of detroit. I just got offered an engineering job that is seeking talent to expand operations outside of the state so from that standpoint it seems that jobs are comming back.
For an investor from New England, the prices are outrageous... in a good way. To buy a building like these even at subpar rents and to hold it for a decade if industry is coming back to detroit would be a good long term play in my opinion if the socioeconomic factors are trending in the right direction.
What do you guys think?
I don't think that complex is "in" Palmer Park. Detroit is block by block and the neighborhoods outside of Midtown and downtown are in rough shape.
You mentioned Lapeer. Lapeer is not even close to Detroit. Detroit is trending in a good direction around downtown but not elsewhere . In fact the outer ring neighborhoods are starting to get upset that their neighborhoods are being forgotten.
All those tenants in that apartment building will most likely be section 8 drugies.
I think you could find nice properties farther north in the area of lapeer
@Samson Kay
Being MAD Cheap doesn't mean its a deal.
I have no doubt there will be amazing deals in Detroit, but without local real estate wisdom on your team, you might as well put your money on red 34.
This is right on the money. If you have no knowledge of the local market and areas the "deals" you see probably aren't as good as you think. I've seen properties for sale that I've looked and I wouldn't take if offered to me for free. Cheap isn't always cheap, sometimes you buy yourself a huge problem that ends up being far more expensive than you can even imagine.
Are these buildings you're looking at mostly occupied or mostly vacant?
The listings I've seen have listed about 80%+ occupancy. Upside based on numbers. and rents seem low. BUT, theres a ton of competition. Anyone have an idea what the vacancy rate is?
There are a lot of apartment buildings in Palmer Park so it's possible that's where it is. Palmer Park is on the historic register, used to be the gay enclave until crime got bad. There's some serious renovation going on now so it seems to have some upward momentum.
There are other neighborhoods aside from the more well-known ones near downtown and midtown that are doing OK-ish. Good investment opportunities exist both in the city and the suburbs. So do bad opportunities.
It is really hard to give an overall reply to your request for "what there thoughts are for Detroit. Vacancies, job growth, education, public grants or assistants to help propel economic prosperity. Things like that." with out writing a lengthy dissertation.
If you're seriously considering investing in this area I think you need to do a lot of the general high-level research yourself, and then supplement it with more narrow, specific questions that we locals will be happy to answer. There are ample resources online to get you started.
I got family up that way. They love it. Romeo, Imlay City, Lapeer. Not sure how the rental values are up there. Not sure if there is a big demand either.
Auburn Hills is nice. Lake Orion, Oxford all nice places to live. I would move there in a heartbeat but the wife works far from those cities
There are a lot of apartment buildings in Palmer Park so it's possible that's where it is. Palmer Park is on the historic register, used to be the gay enclave until crime got bad. There's some serious renovation going on now so it seems to have some upward momentum.
There are other neighborhoods aside from the more well-known ones near downtown and midtown that are doing OK-ish. Good investment opportunities exist both in the city and the suburbs. So do bad opportunities.
It is really hard to give an overall reply to your request for "what there thoughts are for Detroit. Vacancies, job growth, education, public grants or assistants to help propel economic prosperity. Things like that." with out writing a lengthy dissertation.
If you're seriously considering investing in this area I think you need to do a lot of the general high-level research yourself, and then supplement it with more narrow, specific questions that we locals will be happy to answer. There are ample resources online to get you started.a
When I think of Palmer Park I think of the neighborhood with the private security and not those apartment buildings.
You'd have to come and see it on the ground. There are alot of apartment buildings for sale but alot of them are in drug areas and infested with criminals. I would be very careful investing in an apartment building in Detroit. You really have to know the area.
When I think of Palmer Park I think of the neighborhood with the private security and not those apartment buildings.
Are you thinking of Palmer Woods? It's north of 7 Mile, Palmer Park is south of 7 Mile. Palmer Woods has homes like these. Outstanding neighborhood. IMO the finest neighborhood in Detroit.
When I think of Palmer Park I think of the neighborhood with the private security and not those apartment buildings.
Are you thinking of Palmer Woods? It's north of 7 Mile, Palmer Park is south of 7 Mile. Palmer Woods has homes like these. Outstanding neighborhood. IMO the finest neighborhood in Detroit.
@Samson Kay - I was born in Flint, MI (abt an hr from Detroit) and have family in Detroit. I have zero confidence in it turning around anytime soon. The #1 thing I look at when evaluating markets is jobs and job diversity. Right now the unemployment rate is way too high, the city is bankrupt and they are actually tearing down more than building. As an out-of-state investor, I wouldn't touch it.
That said, if you live there and know the area I am aware of people who are making money by investing in the few pockets of Detroit that are doing well. However, the cheap deals you're seeing are likely not in those areas.