Revisiting Detroit: What is the TRUE situation?-Opinion Needed

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Revisiting Detroit: What is the TRUE situation?-Opinion Needed

Ndy Onyido
Toronto, Ontario · Member since 2014 · 615 posts · 172 votes

I know you will all say…..’not again!’. I know a lot have been written about Detroit; either on this site or elsewhere…I have read all the posts……..its went through the largest bankruptcy in the recent history; it’s a war zone, population is shrinking, it’s a single product economy-auto…Nothing else works there; it’s a ghetto etc…

While I agree with the gurus and RE wiz kids out there regarding above, I have a question? Is it really the situation now? Are things really stagnant in Detroit?

I read that it’s out of bankruptcy now and the city manager has handed over the city to the elected leaders?

Are we really reading the situation right? I know we all work by numbers, but will thing remain same forever?

I read from the papers that the Asians, specifically, China, are buying up the entire Detroit virtually for cents!

I know that these are savvy investors, is there something that we are all missing here?

Read these:

http://endoftheamericandream.com/archives/why-are-the-chinese-gobbling-up-real-estate-and-businesses-in-detroit

http://www.nbcnews.com/news/china/chinese-investors-snap-property-bankrupt-detroit-n253186

Few years down the line, we will all say, had I known, I would have invested in Detroit?

Is it really time to buy Detroit properties? How much time is required to wait out the recession?

Give me your candid opinions.

Thanks

Ndy

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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y

What is being talked about has nothing to do with Detroit.

There are areas all across America that are CHEAP and DEPRESSED. They also tend to be rougher areas with a lot of risk and crime.

The difference with 2008 and 2009 is there was a freeze period on values and a massive foreclosure wave. So you could pick up great properties in great areas and wait for the area to pick back up. These were already quality areas the growth just stopped.

The cheap properties being talked about TODAY in these type areas are rough.

If you have 50k and are buying 2 to 3 properties in the these areas you are rolling the dice and could lose it ALL. If you are someone sitting on 1 million and you are throwing 5% of your worth at it and you lose it's not usually all that bad.

If 50,000 is all you have and you gamble to cash in big or be broke if it goes bad I think that Is not a smart decision.

I know investors that buy this type of stuff but it just will never, ever be for me. I don't have to buy it and I don't want to buy it.

I find the best quality stuff that has upside in the great areas and go for that. If people have limited funds then they have to start somewhere and buy the junker properties, partner with someone else to pool cash for something nicer, or wait until they have more funds to go on their own for quality.   

People just need to be clear going in what the risks are. It seems like the mentality from many is "The area is bad but it is turning around or I hope it is does so how could I lose for buying stuff this cheap??" 

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    @Ndy Onyido Since the bankruptcy, and the new and improved leadership (business savvy...and not politicians), Detroit is on the rise...and fast.  6 months ago I wouldn't touch them...even though you could make a great return on your money.  I just didn't think it was worth it.  Now, it is...but I wouldn't recommend it to out of state investors unless they had a partner with boots on the ground.  

    Knowing your market is critical in any market for REI, but even more so in Detroit. If you know your market, you can make a killing (with boots on the ground). If you are making all of your decisions, and getting all of your info based on "what you read", you're going to go nuts...and probably broke.

    I guess my real answer is a definitive...maybe...with qualifications.

    3Reply
  • Ndy Onyido
    OP
    Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Joe Villeneuve 

    One thing I have always appreciated about your BP responses is that they are blunt and direct and I love it that way..

    That said, with boots on ground, either directly or in partnership, what area of Detroit will likely make the the fastest  recovery?. Have you seen any form of government encouragement to prospective investors that will likely turnaround the city? The city does need full injection of funds to rebuild the failed and failing infrastructure.

    Thank 

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y
    Originally posted by @Ndy Onyido:

    @Joe Villeneuve 

    One thing I have always appreciated about your BP responses is that they are blunt and direct and I love it that way..

    That said, with boots on ground, either directly or in partnership, what area of Detroit will likely make the the fastest  recovery?. Have you seen any form of government encouragement to prospective investors that will likely turnaround the city? The city does need full injection of funds to rebuild the failed and failing infrastructure.

    Thank 

     First, "what areas will make the fastest recovery" is hard to answer on a board like this.  Detroit is very much a checkerboard.  I'd have to have a map to answer this question.

    Second, two things government wise is a big boost. 1)  The feds poured megabucks into the city...and they're using it. 2) Their selling bulk packages to investors, but they are also making the investors pay the next two years of taxes ahead of time trying to eliminate the absentee landlords.

    1Reply
  • Joshua Woolls
    Investor · Grosse Pointe Park, MI · Member since 2015 · 164 posts · 64 votes
    11y

    Take this for what is worth, as I don't actively invest in Detroit, but I do invest in stable communities on the border. I have seriously considering moving into the city lately. I don't by any means know the exact areas that are worth investing in, but I can tell you for sure that some areas are much better than others. I also think it depends on the type of investing you want to do. Are you looking for solid rental returns in neighborhoods that are not going to turn into a warzone? Are you looking to buy and sell in 12 months? Or are you playing the long game where you are buying solely for appreciation?

    In my opinion, the general feel of the city and surrounding areas has changed a lot in the last three years (the time I have lived here) and things seem to be on a definite upswing. Maybe that is just me, the eternal optimist speaking...

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Ndy Onyido:

    @Joe Villeneuve 

    One thing I have always appreciated about your BP responses is that they are blunt and direct and I love it that way..

    That said, with boots on ground, either directly or in partnership, what area of Detroit will likely make the the fastest  recovery?. Have you seen any form of government encouragement to prospective investors that will likely turnaround the city? The city does need full injection of funds to rebuild the failed and failing infrastructure.

    Thank 

    you need to follow the young hipsters that have no children.  People with kids are leaving the city at a record pace.

    Corktown is kind of nice.  Hamtramak (sp) a city located in the City of Detroit is full of these types.  Lots of duplexes for sale in that area.

    Stop looking at all those bombed out 1k properties.  You will not make money with those.  Not with out being here 

    1Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Joshua Woolls:

    Take this for what is worth, as I don't actively invest in Detroit, but I do invest in stable communities on the border. I have seriously considering moving into the city lately. I don't by any means know the exact areas that are worth investing in, but I can tell you for sure that some areas are much better than others. I also think it depends on the type of investing you want to do. Are you looking for solid rental returns in neighborhoods that are not going to turn into a warzone? Are you looking to buy and sell in 12 months? Or are you playing the long game where you are buying solely for appreciation?

    In my opinion, the general feel of the city and surrounding areas has changed a lot in the last three years (the time I have lived here) and things seem to be on a definite upswing. Maybe that is just me, the eternal optimist speaking...

    you have a good thing going why would you want the risk?  I am also in the inner suburbs and like the stability of the neighborhoods.  I want and am rooting for Detroit but I still won't invest in the city.  It just cost more and more headaches.

    I stick to the burbs and get 3/1's allday long for 40k or so and rent for 850 with lower taxes

    0Reply
  • Joshua Woolls
    Investor · Grosse Pointe Park, MI · Member since 2015 · 164 posts · 64 votes
    11y
    Originally posted by @Scott K.:
    Originally posted by @Joshua Woolls:

    Take this for what is worth, as I don't actively invest in Detroit, but I do invest in stable communities on the border. I have seriously considering moving into the city lately. I don't by any means know the exact areas that are worth investing in, but I can tell you for sure that some areas are much better than others. I also think it depends on the type of investing you want to do. Are you looking for solid rental returns in neighborhoods that are not going to turn into a warzone? Are you looking to buy and sell in 12 months? Or are you playing the long game where you are buying solely for appreciation?

    In my opinion, the general feel of the city and surrounding areas has changed a lot in the last three years (the time I have lived here) and things seem to be on a definite upswing. Maybe that is just me, the eternal optimist speaking...

    you have a good thing going why would you want the risk?  I am also in the inner suburbs and like the stability of the neighborhoods.  I want and am rooting for Detroit but I still won't invest in the city.  It just cost more and more headaches.

    I stick to the burbs and get 3/1's allday long for 40k or so and rent for 850 with lower taxes

     I'm new here. What is a 3/1? I have been typically buying in the 50-60k range and look for 950-1100 in rents.

    0Reply
  • Linda Reynolds
    new york, NY · Member since 2014 · 15 posts · 1 vote
    11y

    Hi Joshua, welcome. A 3/1 is a three bedroom, one bath home. 

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Joshua Woolls:
    Originally posted by @Scott K.:
    Originally posted by @Joshua Woolls:

    Take this for what is worth, as I don't actively invest in Detroit, but I do invest in stable communities on the border. I have seriously considering moving into the city lately. I don't by any means know the exact areas that are worth investing in, but I can tell you for sure that some areas are much better than others. I also think it depends on the type of investing you want to do. Are you looking for solid rental returns in neighborhoods that are not going to turn into a warzone? Are you looking to buy and sell in 12 months? Or are you playing the long game where you are buying solely for appreciation?

    In my opinion, the general feel of the city and surrounding areas has changed a lot in the last three years (the time I have lived here) and things seem to be on a definite upswing. Maybe that is just me, the eternal optimist speaking...

    you have a good thing going why would you want the risk?  I am also in the inner suburbs and like the stability of the neighborhoods.  I want and am rooting for Detroit but I still won't invest in the city.  It just cost more and more headaches.

    I stick to the burbs and get 3/1's allday long for 40k or so and rent for 850 with lower taxes

     I'm new here. What is a 3/1? I have been typically buying in the 50-60k range and look for 950-1100 in rents.

    HAHAHAHAHA out of all my post that's the question you ask.  Have you ever read a add for a real estate posting?  You don't know what 3/1 means?

    Your numbers are good why would you even need to go in the city?  Why deal with the city and all the headaches that come with it.  It a tough business already why make it tougher.

    0Reply
  • Mark Forest
    Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
    11y

    Detroit has the potential to be a nice city with views of the river and some nice old houses.  However, crime is a large issue.  How are going to protect your job site and the people who work there?  Frequent break ins will ruin you fast. 

    1Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Mark Forest:

    Detroit has the potential to be a nice city with views of the river and some nice old houses.  However, crime is a large issue.  How are going to protect your job site and the people who work there?  Frequent break ins will ruin you fast. 

    yes crime is a huge problem.  You can always fix the properties but you can't fix the people that live there.   

    0Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    @Mark Forest That crime is only a problem based on how long it takes you to do rehab, and how you're set up.  I have partners that invest there and they have very little problems.  One of the reasons is they pay people in the neighborhood to watch the house.  They get paid based on how well they do their job.  You'd be amazed just how effective that is.

    1Reply
  • Joshua Woolls
    Investor · Grosse Pointe Park, MI · Member since 2015 · 164 posts · 64 votes
    11y
    Originally posted by @Scott K.:
    Originally posted by @Joshua Woolls:
    Originally posted by @Scott K.:
    Originally posted by @Joshua Woolls:

    Take this for what is worth, as I don't actively invest in Detroit, but I do invest in stable communities on the border. I have seriously considering moving into the city lately. I don't by any means know the exact areas that are worth investing in, but I can tell you for sure that some areas are much better than others. I also think it depends on the type of investing you want to do. Are you looking for solid rental returns in neighborhoods that are not going to turn into a warzone? Are you looking to buy and sell in 12 months? Or are you playing the long game where you are buying solely for appreciation?

    In my opinion, the general feel of the city and surrounding areas has changed a lot in the last three years (the time I have lived here) and things seem to be on a definite upswing. Maybe that is just me, the eternal optimist speaking...

    you have a good thing going why would you want the risk?  I am also in the inner suburbs and like the stability of the neighborhoods.  I want and am rooting for Detroit but I still won't invest in the city.  It just cost more and more headaches.

    I stick to the burbs and get 3/1's allday long for 40k or so and rent for 850 with lower taxes

     I'm new here. What is a 3/1? I have been typically buying in the 50-60k range and look for 950-1100 in rents.

    HAHAHAHAHA out of all my post that's the question you ask.  Have you ever read a add for a real estate posting?  You don't know what 3/1 means?

    Your numbers are good why would you even need to go in the city?  Why deal with the city and all the headaches that come with it.  It a tough business already why make it tougher.

    Yeah, I realized as soon as I left... I was thinking you were referring to a type of ARM or something.

    Not all areas of Detroit are the same. Yep, some are beyond help and won't be better until they are leveled. Others are not that bad and some are actually pretty nice. I am not looking to buy $1000 properties and try to be a slumlord. But I do believe that the city is going to be on an upswing, and some areas will see the benefits of this before others. The thought of investing in these areas is somewhat appealing. It is not like I would jump into it without research and thought though. I work hard for my money.

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Joshua Woolls:
    Originally posted by @Scott K.:
    Originally posted by @Joshua Woolls:
    Originally posted by @Scott K.:
    Originally posted by @Joshua Woolls:

    Take this for what is worth, as I don't actively invest in Detroit, but I do invest in stable communities on the border. I have seriously considering moving into the city lately. I don't by any means know the exact areas that are worth investing in, but I can tell you for sure that some areas are much better than others. I also think it depends on the type of investing you want to do. Are you looking for solid rental returns in neighborhoods that are not going to turn into a warzone? Are you looking to buy and sell in 12 months? Or are you playing the long game where you are buying solely for appreciation?

    In my opinion, the general feel of the city and surrounding areas has changed a lot in the last three years (the time I have lived here) and things seem to be on a definite upswing. Maybe that is just me, the eternal optimist speaking...

    you have a good thing going why would you want the risk?  I am also in the inner suburbs and like the stability of the neighborhoods.  I want and am rooting for Detroit but I still won't invest in the city.  It just cost more and more headaches.

    I stick to the burbs and get 3/1's allday long for 40k or so and rent for 850 with lower taxes

     I'm new here. What is a 3/1? I have been typically buying in the 50-60k range and look for 950-1100 in rents.

    HAHAHAHAHA out of all my post that's the question you ask.  Have you ever read a add for a real estate posting?  You don't know what 3/1 means?

    Your numbers are good why would you even need to go in the city?  Why deal with the city and all the headaches that come with it.  It a tough business already why make it tougher.

    Yeah, I realized as soon as I left... I was thinking you were referring to a type of ARM or something.

    Not all areas of Detroit are the same. Yep, some are beyond help and won't be better until they are leveled. Others are not that bad and some are actually pretty nice. I am not looking to buy $1000 properties and try to be a slumlord. But I do believe that the city is going to be on an upswing, and some areas will see the benefits of this before others. The thought of investing in these areas is somewhat appealing. It is not like I would jump into it without research and thought though. I work hard for my money.

    That's good to hear.  But do you plan on investing enough to make a difference?  Buying a house here and a house there is not going to cut it.  If you are looking to buy land and knock down properties and just sit on them I would look going behind the Motor City Casino and buying in the area.  I see that land getting completely cleared and rebuilt.  That would connect with the new Wings area that is getting built.  That keeps you close to downtown that should be cheap land.

    Most small investors just can't sink the money or have the time to wait it out for that type of investment.  You are doing great in the burbs.

    You like many of us are enjoying the high rent low cost properties that the burbs provide

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y

    Also the problem with Detroit is you just can't use a magic 8ball to figure out when a neighborhood goes to garbage.  What was just good 3 years ago are wastelands now.

    0Reply
  • Ndy Onyido
    OP
    Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Joshua Woolls 

    I tend to agree with you. The current city managers are doing all the can to revive and revamp the city. The incentive to investors and the condition of paying two years property taxes upfront is innovative. 

    0Reply
  • Ndy Onyido
    OP
    Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Scott K.

    You don't seem to see any light in Detroit in the near future as an investment opportunity. I think it will profit those with enough financial muscle to withstand the gestation period of the investment.....I really will not want to wake up in 2018-2020 with regrets...why didn't I but when it was 2015!!!!

    I have a friend who had some cash in 2008 and bought two 3/2 in Houston Texas for $25k (both). I was filled with envy when he told the current appraisal for the properties as at November 2014.

    0Reply
  • Ndy Onyido
    OP
    Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Joe Villeneuve

    Using neighborhood folks for security is wise strategy that works like magic......the become your eyes and protect your interest. But beyond that, security will become less of an issue as the city picks up economically and from the way things are going, it will not be long.

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Ndy Onyido:

    @Joe Villeneuve

    Using neighborhood folks for security is wise strategy that works like magic......the become your eyes and protect your interest. But beyond that, security will become less of an issue as the city picks up economically and from the way things are going, it will not be long.

    HAHAHAHAHAHAHAHA oh ok.  Yes people that are completely unemployable are all the sudden going to stop selling drugs, stealing, and carjacking.  Yeah ok.  You know that 50% of the people in the city are dumb as a box of rocks right.  I drive around the city all the time.  I have just given 4 tours of the city for out of town people.  They are thankful that I give them the full picture.

    The very same neighborhood folks you speak of are the ones helping you carry things in the front door and waiting for you to leave so they can take them out the back door.

    That's ok we need believers like you.  So you want to buy just a single property and think you are going to make money??????????????????/

    Hey you put your money into the city.  Tell me where these properties are so I can see for myself.  I already said where a good spot is going to be in the next 10 years.  But most people don't have the money or the time to wait for it to be

    You know how many people got shot this last week?

    0Reply
  • Ndy Onyido
    OP
    Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Scott K. 

    Well, I do not know and that's why I raised the question. But I still think that there must be something that our friends from China see that we don't see NOW...may be a few years down the line, we may.....

    Am not sure the whole Detroit is a war zone as you paint it? And the few good spot you see is in 10 years? well, that sounds rather gloomy..

    Anyways, you are on ground and should know better, but it looks like what you say you see there are different from what we read in the papers and watch on TV....

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Ndy Onyido:

    @Scott K. 

    Well, I do not know and that's why I raised the question. But I still think that there must be something that our friends from China see that we don't see NOW...may be a few years down the line, we may.....

    Am not sure the whole Detroit is a war zone as you paint it? And the few good spot you see is in 10 years? well, that sounds rather gloomy..

    Anyways, you are on ground and should know better, but it looks like what you say you see there are different from what we read in the papers and watch on TV....

    Do you think the Chinese are buying single properties?  Do you have 2 million to spend?  See this is my point the small investors can't do what the Chinese do.  You are trying to compare what we the average Joe blow can do compared to multi million corps can do.

    You Sir do not have the bigger pockets of the Chinese so please stop with that thought process its just silly.  Start buying the vacant land behind the Motor City Casino and wait 10 years.

    Stop telling me what Gilbert and the Chinese are doing.  You don't have the money or power to buy what they are buying.  Its near impossible getting in the downtown area.

    Detroit will get better in certain area's.  I am looking for the next Corktown.  I think that is going to be behind the Casino.  They need to connect that area to the new cass corridor Wings arena  That area is going to be great.  Connect Midtown to Downtown.  The rail system will be a big help connecting that area   

    1Reply
  • Alexander Merritt
    Investor · Baltimore, MD · Member since 2014 · 163 posts · 51 votes
    11y

    @Ndy Onyido I'm really glad you asked this question because I too have been wondering about Detroit. I'm thinking this might be one of those "Carnegie" moments to seize an opportunity. People talk about all the negatives; which are numerous and real. But, what about the positives. As you said foreign investors are investing there and I think now is the time to really keep an eye on Detroit and possibly be ready to invest there soon.

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y
    Originally posted by @Alexander Merritt:

    @Ndy Onyido I'm really glad you asked this question because I too have been wondering about Detroit. I'm thinking this might be one of those "Carnegie" moments to seize an opportunity. People talk about all the negatives; which are numerous and real. But, what about the positives. As you said foreign investors are investing there and I think now is the time to really keep an eye on Detroit and possibly be ready to invest there soon.

    How much money do you have?  You need big bucks to do what the Chineses are doing.

    WHY DO YOU PEOPLE KEEP SAYING THAT.  YOU DON'T HAVE 5 MILLION DO YOU

    A lot of Chinese have lost their asses in Detroit.

    Come for a visit and I will give you a real tour so you can see for yourself.

    Are you scared of guns?  Hope not because I carry when I go to the hood lol

    0Reply
  • Ndy Onyido
    OP
    Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
    11y

    @Alexander Merritt 

    Thanks for your thoughts and these resonate with what @Joe Villeneuve pointed out earlier.  He noted that he had that initial cold feet at investing in Detroit but now see the light at the end of the tunnel. The folks out there running the city are business-minded and want to move things forward......

    @Scott K.  keeps talking about millions and corporations but I do not agree with him....I have met retail investors from Canada here buying Detroit investment.  Even at that, when you see hedge funds going into a market, you ask yourself questions..

    I totally agree with @Joe Villeneuve  that Detroit is not for out-of staters but with partnership with boots on ground, its time to begin to look closely at what going on there.

    Do not let all the negativeness dampen your interest.....opportunities don't come dressed in ribbon!

    0Reply
  • Scott K.
    Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes
    11y

    So you think you are going to make money 1 property at a time.  Yeah ok.

    This thread ask for opinions.  I don't see it being worth it to try to buy in Detroit one property at a time.

    HAve you ever been here??????????????

    It sounds like you have not.

    LOL so you didn't mention the Chinese in that last post now you brought up hedge funds HAHAHAHAHAHA that's funny.

    Again do you have millions?  If not why would you bring up hedge funds.

    0Reply
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