Detroit

39 Replies

hello everyone I am looking to buy my frist rental property inDetroit and was wondering if there were any one else that plan or own rentals in Detroit that could give me some advice thanks

Originally posted by @Tora Miller :

hello everyone I am looking to buy my frist rental property inDetroit and was wondering if there were any one else that plan or own rentals in Detroit that could give me some advice thanks

Make a trip up here first.

I'm not keen on out-of-state investing in general, but unless you're talking about a suburb of Detroit, I would definitely not look at Detroit. If you really want to invest there, as Richard said, definitely make a trip up there first. 

@Tora Miller

Type "Detroit" into the search bar and read up on years of Detroit area conversations. 

I have been buying Detroit for about a year now.  PM me if you'd like. 

Originally posted by @Account Closed :

I have been buying Detroit for about a year now.  PM me if you'd like. 

 Talk to Dan.  Talk to someone that is successful at what you want to do...not someone who isn't successful.  Why would you follow someone who can't do it, or did it wrong, when someone who did it right is available to follow?

Originally posted by @Richard Dunlop :
Originally posted by @Tora Miller:

hello everyone I am looking to buy my frist rental property inDetroit and was wondering if there were any one else that plan or own rentals in Detroit that could give me some advice thanks

Make a trip up here first.

 Totally agree. A plane ticket will cost you 1% of what the rental house will cost you, and depending on the house, neighborhood, and supporting cast, the plane ticket may be the better investment.

Its a tough market from out of state...If you mean the City I would say take a trip, see it for yourself I would suggest your try an inner-ring suburb.  Easier to manage from a distance...

Anything you buy in an area in Detroit that you will get a quality tenant be ready to do a $40-$80K renovation paid out of pocket use cash and/or credit cards.

Only 200ish mortgages were written in Detroit in 2014.  Everything is cash.

I say this as someone who has a Detroit Property in a highly profitable and desired area. Its not for everyone.

Greetings @Tora I'm also a Detroit and Detroit area investor.  Feel free to message me with your initial thoughts or any questions.

@ Christian Hutchinson.   I would love to know which area(s) of Detroit you are currently investing in (highly profitable and desirable) . I just visited Detroit for the first time and am seriously considering investing here. Really impressed with Downtown. Have been told by many locals they are seeing changes that were not present a few years back. Planning a second trip in August. Any thoughts/ inputs really appreciated

Originally posted by @Tora Miller :

hello everyone I am looking to buy my frist rental property inDetroit and was wondering if there were any one else that plan or own rentals in Detroit that could give me some advice thanks

Type "Detroit" into the search bar at top of page and you'll find multiple years of conversations, data, etc. 

why is it so hard to get a good realtor in detroit either they are lazy or wanna make u buy what they feel you should have thats crazy 

Originally posted by @Tora Miller :

hello everyone I am looking to buy my frist rental property inDetroit and was wondering if there were any one else that plan or own rentals in Detroit that could give me some advice thanks

 Hello. Im an investor in Detroit as well. My phone lines are open to answer any questions you may have

Originally posted by @Bridget Smith-Osbourne :

@ Christian Hutchinson.   I would love to know which area(s) of Detroit you are currently investing in (highly profitable and desirable) . I just visited Detroit for the first time and am seriously considering investing here. Really impressed with Downtown. Have been told by many locals they are seeing changes that were not present a few years back. Planning a second trip in August. Any thoughts/ inputs really appreciated

Bridget I would advise on planning your 2nd trip, to seek out your team to work with that will be your boots on the ground here and REI meeting and BP are great start. This will give you a sense of what will work. Being in the hot area is possible, but you will be beat to the punch by the local investors and investors that have a strong teams. Alot of people ask on here where to go, than eventually start asking how do they do it.

Originally posted by @Mike Carino :
Originally posted by @Bridget Smith-Osbourne:

@ Christian Hutchinson.   I would love to know which area(s) of Detroit you are currently investing in (highly profitable and desirable) . I just visited Detroit for the first time and am seriously considering investing here. Really impressed with Downtown. Have been told by many locals they are seeing changes that were not present a few years back. Planning a second trip in August. Any thoughts/ inputs really appreciated

Bridget I would advise on planning your 2nd trip, to seek out your team to work with that will be your boots on the ground here and REI meeting and BP are great start. This will give you a sense of what will work. Being in the hot area is possible, but you will be beat to the punch by the local investors and investors that have a strong teams. Alot of people ask on here where to go, than eventually start asking how do they do it.

 @Bridget Smith-Osbourne Mike is very right...the areas that are "next" changes month to Month.  You are eyeing up Detroit because of a "Cheap House".  Yes its cheap, compared to other cities, but its very Cash Intensive, banks are not going to do you any favors.  For instance, Herman Kiefer's Medical Complex announced plans for redevelopment this week. Deals not done; but in the works(headed to City Council for approval).  So you would want an attached neighborhood(the closer the better) to this project. This area around Herman Kiefer, and Henry Ford Hospital has LOTS of brick duplex to quads, or even Multi-Family buildings with 6-12 units.  But realize these homes were built almost 100 years ago, and most likely have not have been updated with HVAC, Electrical, etc, and will be distressed. Be ready to open up your wallet to renovate, and spend time not earning any cash.

I found a really nice Duplex right behind Henry Ford Hospital, and it was completely updated, and reasonably priced(just short of turnkey but you could rent it as is no issue). But it was sandwich between two homes that were burnt out, and only 5 homes out of maybe 20 on the block were in livable condition.  Are you ready to dump say $85K into that even though you can get $800/month on each unit?  Remember, you can't mortgage this property because comps are non-existent, and you have tie up $85K of cold hard cash(or Home Equity Line/Loan).

But like all real estate deals, and especially those in Detroit, I don't trust its actually happening until I see Construction Equipment working. Lots of projects die in Detroit for numerous reasons. Its a tough market. So you could position yourself to feed off of Herman Kiefer, and now you are holding a real dud, hoping to get Downtown/Midtown spillover when they come.

I tell anyone the best bet is the Woodward Corridor.  If your feel more adventurous work Michigan Ave and Jefferson.  If you can score a deal within 4 blocks of these major streets, and within 3 miles of Downtown(lets just say Campus Martius) you will be able to get a tenant, and of course do well if the money lines up.

Once you come here you your network will direct you to areas you can dig into.  I urge you to pay attention to the calendar here.  Several Foundations, and Companies based in SE Michigan have special Internships specifically for people who are 20-25ish, college graduates, and willing to LIVE in Detroit.  These people don't make LOTS of money only $25-33K per year, but will pay 1K-2K+ a month in rent.

These groups descend on Detroit starting in Mid to Late June until about the 1st week of September. This has been going on about four years now. As you can imagine these Interns have huge networks. They have fellow Interns who end up in some not so desirable areas and they will do anything to move after a few weeks. I have rented to a couple of these groups. They are great tenants.

These "Interns or Fellows" have Ivy League Backgrounds, Top Public Universities, Masters Degrees from Local Public Universities in STEM Disciplines, did time in the Peace Corps, etc.  Why do they take these Internships? Want a job at DTE(Energy Company), GM, Blue Cross, etc. in a highly visible roll with direct access to the C-Suite Management, this is your golden ticket.  You aren't just an accountant pushing Payables through some morbid process in a cubicle trying to meet some Performance Metric.  Companies end up offering a Permanent Position to about 60% of the Interns after a year, and another portion extend them a year. Or these people find different employment.  Either way most have minimal ties to Michigan and Detroit, so them having a job, and desirable living area, they WILL stick around.  These programs don't provide housing, and the "Interns" must find it on their own.

@ Christian Hutchinson & @ Mike Carino. Great information guys. I have heard a lot about Woodward Corridor & Cass Corridor. These are definitely two areas I would like to explore. I came upon an article highlighting the plans to redevelopment Southwestern Highschool. Sakthi , an Indian based billion dollar company is planning on creating 650 jobs. Manufactoring jobs/campus and trainining center for new engineers.  It' s plans are to expand it's current Southwest Detroit facility. During my site visit I was able to tour this area and not the nicest area in town. I was able to validate that its current operation is up and functioning & next to  the abandoned school as the article stated. I  will keep a watch on this area to see if it's expansion will launch.                                          

  During my site visit to Detroit I also visited the Strather Academy and was very  impressed with his projects /expertise. Seriously considering taking his course and plugging into his 30 plus years of RE investing in Detroit. He is the mastermind behind demolishing the Jefferies Hsg Projects and developing Woodbridge Estates as well as Motor City. With his guidance, I am hoping to establish my boots on the ground in Detroit. Has anyone heard of him?

@Tora Miller

Welcome to Bigger Pockets community. You will find all kinds of useful information under “Learn.”

Originally posted by @Bridget Smith-Osbourne :

@ Christian Hutchinson & @ Mike Carino. Great information guys. I have heard a lot about Woodward Corridor & Cass Corridor. These are definitely two areas I would like to explore. I came upon an article highlighting the plans to redevelopment Southwestern Highschool. Sakthi , an Indian based billion dollar company is planning on creating 650 jobs. Manufactoring jobs/campus and trainining center for new engineers.  It' s plans are to expand it's current Southwest Detroit facility. During my site visit I was able to tour this area and not the nicest area in town. I was able to validate that its current operation is up and functioning & next to  the abandoned school as the article stated. I  will keep a watch on this area to see if it's expansion will launch.                                          

  During my site visit to Detroit I also visited the Strather Academy and was very  impressed with his projects /expertise. Seriously considering taking his course and plugging into his 30 plus years of RE investing in Detroit. He is the mastermind behind demolishing the Jefferies Hsg Projects and developing Woodbridge Estates as well as Motor City. With his guidance, I am hoping to establish my boots on the ground in Detroit. Has anyone heard of him?

Yes, I have heard of him. Take this whichever way you want, but guys like Strather are a whole different level than say someone like myself or Mike.  My operation is a family operation, all of us have FT jobs(IT, Medical, Engineering), and we are pinching pennies together leveraging via your standard 20%-30% down payment, Investor Mortgage, or paying cash for a place to add to the Portfolio of Properties.  Working on properties ourselves, or hiring people to do the work. Mike can speak for himself, but from what I understand his situation is similar or more advanced.

Strather gets OPM(Other People's Money), tax credits etc, engineers deals that sometimes do well(Motor City Casino) or others with so-so results(Woodbridge). He is a full-out developer.

If you have access to his deals, and you can ride his coattails, and learn from him that's an opportunity to take advantage of. Google Herb Strather, and you can get a full scope of his dealings and projects.

I don't know what type of Cash and Credit you are dealing with.  So whats happening or projected to happen over at old Detroit Southwestern High School, I wouldn't even know or understand how to profit off of something like that...But I can tell you in that part of town on the other side of I-75 there is Mexican Village aka Mexicantown that has lots of properties you can get fairly cheaply, rehab, and then rent them out for a nice return. 

Basically, meaning if you had maybe $100K in cash and another $100K in credit you could easily generate $3000-$7000 a month in rental income with moderate effort in 6-18 months. In terms of rentals I do not see people who are Engineers or someone in a White Collar/Gold Collar job living in SW Detroit in the next 5 years in even moderate numbers.  To put it in perspective those Interns I discussed.  They first will look in Mexican Village because its cheap its near Downtown, it has a density of bars and restaurants.  They just see $300-$700/month...They feel its worth a shot.  Some actually do decide to live in SW Detroit, but most live the "7.2".  Then after looking at a few places they circle back to the "7.2".  They pay $1000+ for a place, and they are happy to pay it.

You have to understand Dearborn Heights(New Rochelle), and the Pointes(similiar to Rye or Scarsdale) to place them similar to NY suburbs(I travel extensively for work) which are nice areas aren't far down I-94, nice schools, parks, extremely safe, lots of amenities.  Then if they chose the City of Detroit they wouldn't want to live in that section of town, there isn't even a grocery store, gas station or pharmacy within 2 miles of Southwestern HS.  Not to mention its surrounded by old industrial factories that are abandoned, warehouses, power plants, water treatment facilities, shipping docks.  They would move to Corktown(which is less than 3 miles from Old SW HS), Midtown, Boston-Edison, East Jefferson, or the Villages.  All these locations would be less than a 10 Minute drive to this place.  SW West Detroit has ALWAYS been a working class community even when Detroit had 2M people and had the highest standard of living in the country.

Again, if you are plugged in with guys like Strather and his deals you are in luck.  For people like myself, if $50K goes out the door, I need to start seeing some money in 60-90 days.

Here is the map of the "7.2" here. Thats 7.2 sq miles of Downtown Detroit, and the "Greater" Downtown Area.  Once you get outside of those boundaries life gets very interesting.  Of course being just on the other side of the street or one or two blocks outside of it is no big deal in some cases(New Center).  Then there are other places Woodbridge, and Eastern Market where you will discover why Detroit has the reputation it does.

Originally posted by @Christian Hutchinson :
Originally posted by @Bridget Smith-Osbourne:

@ Christian Hutchinson & @ Mike Carino. Great information guys. I have heard a lot about Woodward Corridor & Cass Corridor. These are definitely two areas I would like to explore. I came upon an article highlighting the plans to redevelopment Southwestern Highschool. Sakthi , an Indian based billion dollar company is planning on creating 650 jobs. Manufactoring jobs/campus and trainining center for new engineers.  It' s plans are to expand it's current Southwest Detroit facility. During my site visit I was able to tour this area and not the nicest area in town. I was able to validate that its current operation is up and functioning & next to  the abandoned school as the article stated. I  will keep a watch on this area to see if it's expansion will launch.                                          

Yes, I have heard of him. Take this whichever way you want, but guys like Strather are a whole different level than say someone like myself or Mike.  My operation is a family operation, all of us have FT jobs(IT, Medical, Engineering), and we are pinching pennies together leveraging via your standard 20%-30% down payment, Investor Mortgage, or paying cash for a place to add to the Portfolio of Properties.  Working on properties ourselves, or hiring people to do the work. Mike can speak for himself, but from what I understand his situation is similar or more advanced.

Strather gets OPM(Other People's Money), tax credits etc, engineers deals that sometimes do well(Motor City Casino) or others with so-so results(Woodbridge). He is a full-out developer.

If you have access to his deals, and you can ride his coattails, and learn from him that's an opportunity to take advantage of. Google Herb Strather, and you can get a full scope of his dealings and projects.

I don't know what type of Cash and Credit you are dealing with.  So whats happening or projected to happen over at old Detroit Southwestern High School, I wouldn't even know or understand how to profit off of something like that...But I can tell you in that part of town on the other side of I-75 there is Mexican Village aka Mexicantown that has lots of properties you can get fairly cheaply, rehab, and then rent them out for a nice return. 

Basically, meaning if you had maybe $100K in cash and another $100K in credit you could easily generate $3000-$7000 a month in rental income with moderate effort in 6-18 months. In terms of rentals I do not see people who are Engineers or someone in a White Collar/Gold Collar job living in SW Detroit in the next 5 years in even moderate numbers.  To put it in perspective those Interns I discussed.  They first will look in Mexican Village because its cheap its near Downtown, it has a density of bars and restaurants.  They just see $300-$700/month...They feel its worth a shot.  Some actually do decide to live in SW Detroit, but most live the "7.2".  Then after looking at a few places they circle back to the "7.2".  They pay $1000+ for a place, and they are happy to pay it.

You have to understand Dearborn Heights(New Rochelle), and the Pointes(similiar to Rye or Scarsdale) to place them similar to NY suburbs(I travel extensively for work) which are nice areas aren't far down I-94, nice schools, parks, extremely safe, lots of amenities.  Then if they chose the City of Detroit they wouldn't want to live in that section of town, there isn't even a grocery store, gas station or pharmacy within 2 miles of Southwestern HS.  Not to mention its surrounded by old industrial factories that are abandoned, warehouses, power plants, water treatment facilities, shipping docks.  They would move to Corktown(which is less than 3 miles from Old SW HS), Midtown, Boston-Edison, East Jefferson, or the Villages.  All these locations would be less than a 10 Minute drive to this place.  SW West Detroit has ALWAYS been a working class community even when Detroit had 2M people and had the highest standard of living in the country.

Again, if you are plugged in with guys like Strather and his deals you are in luck.  For people like myself, if $50K goes out the door, I need to start seeing some money in 60-90 days.

Here is the map of the "7.2" here. Thats 7.2 sq miles of Downtown Detroit, and the "Greater" Downtown Area.  Once you get outside of those boundaries life gets very interesting.  Of course being just on the other side of the street or one or two blocks outside of it is no big deal in some cases(New Center).  Then there are other places Woodbridge, and Eastern Market where you will discover why Detroit has the reputation it does.

One good question to really ask yourself on top of finding your team, is you really need to narrow down your target market here. That is literally the block to block difference downtown in these "spillover" areas @Christian Hutchinson is preaching.  Who do you really want to rent to? Students, Young professionals, hipsters, artist, low income families, section 8? This will help ask the right questions to the  "right boots on the ground" people, and will know what type of properties to get into, how much effort is needed on your end,  what type of rehab, and the cost it really takes to play ball. I am involved in the Southwest area, Mexicantown/Hubbard Farms/Corktown in which I am experiencing tenants  moving to more affordability and more space places, or want a better living condition that's affordable. But this is something your not going to find from headlines on  newspapers, looking at schools/crime rankings from the internet. I found this teaming and partnering with the right people.

To me it is exciting to be in Detroit investing and anyone can bash it. But  I am involved in the community board meetings, talk to non profit organizations, community service, and urge others to join me. It is a sense of doing something better for the city, and that's bigger than me. 

I do understand its easier to be in metro Detroit, so I am also involved in the downriver metro areas. And like many metro areas here that make it very easy for those out of state. Very good property managers will hold your hand and make it a turn key experience, and give you outstanding cash flow. Join one of many REIA meetings here and you will have a handful of people willing to help you.

@Tora Miller

Welcome to Bigger Pockets. Consider sending messages to other members which is my favorite part of the website.

Hi Tora,

One of the first things is to visit Detroit, explore the city and meet professional who can help you find the right property. Just buying online can be a disappointment ending up with a bad property in the wrong area. Also don't just believe when properties are advertised as rehabbed, you have to make sure that this is really done to protect your interests.

When you are in Detroit make up your mind what kind of investment you like. There are a a lot of choices such as, What kind of neighborhood, Do I want rehabbed, Must it be tenanted, etc. 

For a first time investor it might be a good idea to look for the turn key properties. Rehabbed and tenanted. This way you get your cash flow rolling the first month. Most of the times these sellers have experience with property managers so you can get in touch with them. Don't forget that property management is very very important to have a successful investment in Detroit.

If you like I can hook you up with our Detroit investment tours, just send me a message if you want to know more about this.

Have a great day!

I am a full time Realtor in Detroit, please check our inventory of homes www.reachrealtygroup.com and give me a call

Many opportunities to succeed in Detroit. Many people seem to be afraid of it for two reasons, their individual deals that went sour for whatever reason or more commonly, little to no experience dealing with a market as unique as Detroit. There are so many different scenarios in Detroit based in the Zip code. People who take the real time to understand the city and different geographical complexities will have better chances to prosper.

Detroit is a market that when handled properly it will provide good returns.  I have been in this market for over 3 years and have over 60 SFHs.  It is VITAL that you have people you can trust on the ground.  Especially if you are out of state.  Never take anything for face value as I have been burned several times from property managers.  Spend a few hundred dollars and do background checks.

Or go with professionals who are real property managers.  I have done flips, high end, low end, buy and hold, you name it and I've done it.  Use trades that are certified and follow up on their work.  Get a 3rd party to verify.  Again, trust no one.

I've had real estate agents pull fast ones on me.  They send photos of other homes representing the one I want to buy.  

There is a lot to navigate when investing in Detroit.  A small oversight will cost you.

I'll be happy to carry on but I don't want to start rambling.

check our site www.reachrealtygroup.com, I have some off market rentals as well. Feel free to give me a call 4042957877

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