Another post on how much Detroit sucks?
Residential Real Estate Agent · Rochester, MI · Member since 2012 · 152 posts · 52 votes
Another post on how much Detroit sucks?
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Realtor · Detroit, MI · Member since 2013 · 278 posts · 114 votes
11yI would suggest that anyone looking to invest in Detroit make a trip out to see the city for themselves. There is no one size fits all strategy for Detroit or any other market.
There are areas prime for redelopment but that depends on your pricepoint.
If you have the option to buy a $1,000 pair of shoes or house. Please buy the shoes. At least you can take them back if you change your mind.
56 Replies
- Flipper/Rehabber · Clinton Township, MI · Member since 2014 · 71 posts · 12 votes11y
@Matt Cramer, to answer your question, I live in Clinton Twp, on the East Side of that map in Macomb county and attend the Macomb REIA. So I'm more familiar with that area. But I know people are having success flipping in Macomb Twp, Shelby Twp, Troy, Clinton Twp, Sterling Hts, North Warren, St Clair Shores where prices are medium to high and having success renting in Sterling Hts, Warren, Oak Park, Roseville, St Clair Shores, where prices are medium to low but still in good areas (just to name a few). I'm sure many many people are having success in other areas but these are the areas I'm familiar with.
- Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes11y
Originally posted by @Richard C.:
I have never seen a Detroit booster answer this simple question:
Detroit has housing stock built to house 1.5 million people. Today, the population is half that, and falling. How is it possible for that market as a whole to "bounce back" without demolishing thousand and thousands of houses?
I recognize that hundreds of blighted properties have been demolished. But what is needed is to eliminate entire neighborhoods.
The surplus housing of the city of Detroit could house the entire population of Boston. Think about that.
I don't consider myself a Detroit Promoter.
I do consider myself a Metro Detroit Defender
But I'll answer your simple question. The national news media likes to show wide open spaces in Detroit. I'm sure you've seen some of these reports. Thousands and thousands of houses have been bulldozed down by the insurer on a burned building. Detroit City is clearing thousands more.
In the thread linked above I link to an article that says the apartment vacancy rate in Detroit is 3%. Far lower than most other large markets.
The Downtown occupancy rate is listed as more than 99%.
Metro Detroit has problems, Yes But it also has SFH that would sell for $10,000,000.00 in today's down market.
Metro Detroit and the city itself is very diverse and encompasses war zones AND luxury markets. They have built more than 100 new houses within 1 mile of my house within the last 4-5 years.
It takes more than a Property Manager to be successful in Detroit.
- Residential Real Estate Agent · Phoenix, AZ · Member since 2013 · 17 posts · 12 votes11y
How about this... if you don't own property in Detroit and / or have ever been to Detroit for real estate due diligence... shut your mouth! Keep your ignorant opinions to yourselves. As for the investors buying Detroit like myself... we will continue to enjoy 30+% returns and the rest of you can be happy with your 1-3% returns.
- Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes11y
I think the hope would be that certain areas prosper and the others become a kind of no mans land. You see this in other countries sometimes and even in the U.S. From what I have heard and it makes sense if you invest in an area that is being cleaned up people will move there for cheap housing, hipster types will build businesses and it will be good as long as you stay in that area and have some plan for keeping crime out. Businesses that value the cheapness and can take advantage of incentives will come there and you know have a nice little town within a city.
- Lender · All, Nationwide · Member since 2015 · 144 posts · 46 votes11y
I'm going out there in Early August for my class reunion and am staying in Midtown Detroit. Anyone want to do a field trip out there with me like on August 3rd-ish? We could get a realtor to show us areas and properties......I'm serious!
- Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes11y
Originally posted by @Matt Cramer:
Originally posted by @Account Closed:
Originally posted by @Matt Cramer:
I have been looking at a few places in the suburbs and checked the rents out, drove through the areas etc. They seem like some great properties. (auburn hills area) I obviously don't want the $5 houses, those area scary places and I value my life. However I wonder how someone might be able to make money with those types of properties? Do they buy up blocks and blocks and just wait the depression over there out?
No offense, but I think you need to do more research about the "area" you want to invest in. Auburn Hills is about 45 minutes out from Detroit, and is a completely different animal. Each city outside of Detroit's city limits is different from the next. Different demographics, medium income, school systems, crime rate, etc. Also, there is a huge difference between Wayne , Macomb, and Oakland County.
I was referring to Detroit Metro which encompasses most of the area you posted I believe.
I'm moving to the Rochester area and intend to invest in the area around Detroit within an hour or so. I'm still learning about the different areas, strategies etc. I'd love to hear what some of the people having success in the metro Detroit area are doing?
Well stop saying Detroit. You are not investing in Detroit. You are not even close to Detroit. I lived in Auburn Hills for 5 yrs. It is so much better now then when I lived there. That downtown was not there and all the new shops were just a dream.
I made a huge mistake when I could have bought my condo for 30k. Now its worth 60, oops
But when you say Detroit that means the city so saywa ht city you are going to be in and say its outside of Detroit.
- Residential Real Estate Agent · Rochester, MI · Member since 2012 · 152 posts · 52 votes11y
Originally posted by @Account Closed:
How about this... if you don't own property in Detroit and / or have ever been to Detroit for real estate due diligence... shut your mouth! Keep your ignorant opinions to yourselves. As for the investors buying Detroit like myself... we will continue to enjoy 30+% returns and the rest of you can be happy with your 1-3% returns.
You are clearly one of the people I'm asking the question too. What are you doing to see great returns in the area and from a distance none the less. Also have you found a way to do so in the $1000 houses area or are you in another part of metro area? What type of strategy are you employing as well?
- Investor · Detroit, MI · Member since 2015 · 58 posts · 7 votes11y
Hello Group. My name is Philecia. I am an investor in Metro Detroit Michigan. Its all in the strategy as someone mentioned previously. Its very beautiful areas in Detroit,, dont be fooled. However, there are not so great areas as well. Just like in every city right? Lets think about it, it has to be a reason China and others are buying up Detroit.
@Kathy Argento I would love to show you around Detroit and show you the areas that are very desirable. I can also give you a few techniques that I use to continuously get a piece of the "Detroit Pie" again and again.
- Investor · Detroit, MI · Member since 2015 · 58 posts · 7 votes11y
Originally posted by @Account Closed:
Hello Group. My name is Philecia. I am an investor in Metro Detroit Michigan. Its all in the strategy as someone mentioned previously. Its very beautiful areas in Detroit,, dont be fooled. However, there are not so great areas as well. Just like in every city right? Lets think about it, it has to be a reason China and others are buying up Detroit.
@Kathy Argento I would love to show you around Detroit and show you the areas that are very desirable. I can also give you a few techniques that I use to continuously get a piece of the "Detroit Pie" again and again.
- Corona, CA · Member since 2014 · 154 posts · 100 votes11y
@Scott K.
Coming from a 45 yr old guy thats probably alot older now, still working a 9 to 5 with 2 rental properties, "so you say"....Im not impressed nor interested in your Opinion.
The problem with people like you is you cant relate, because your life model is noting like mines. Im almost half your age, and Ive never worked a 9 to 5 i've found what you call freedom in real estate. So i would never expect someone like you to understand. And someone with over 600 post, with only 2 so called rentals, what in the world could you possibly be talking abut on here? You dont have much if any experience in this field..I hope your not giving advice.
Impossible
- Walled Lake, MI · Member since 2015 · 10 posts · 6 votes11y
Knowing your customer is my input on this post. Section 8 government housing is how I'd try to make money in the city of Detroit. I've considered it but just to new to attempt. Invest where demand is going not Detroit's historical past. Its like someone farted in the heart of the city, Detroiters are moving to the neighboring cities and the people from neighboring cities are moving to their neighboring cities. Until Detroit gets good leadership, has money to hire 4x the police force and crime decrease for about 5-8 consecutive years, its a speculative investment. The herd is moving to South Lyon that's where id put my money. For all the locals, drive west on 10 mile and you'll see what I mean. Also, everyone knows that Michigan and Detroit are to different things, right?
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I 'd like to add a little input into my experience in Detroit... No I don't own any rentals there currently.. But I was one of the first HML to go into Detroit in 2002 when the Turn Key craze got started...And it never stopped in Detroit. Still lots of foreign and US companies selling inner city Detroit as turn key SAFE investments. I did about 200 loans there.. travelled there many times... got out in the areas,, when through many rehabs spent time with the PM who was part of the group and the rehabber... Plus I funded another local there that was flipping houses.
What I found was lovely homes in areas that if you just took a picture of the house a absentee type buyer would be quite pleased.. the issues tho come when you actually are in situ and travel the streets. and I know they talk about its block to block etc. but the problem I was in my 3 years lending there was blocks turned for the worse I never saw any get better.. as stated above the renters moved in the owners moved out and the blocks deteriorated. Rehab needed arm security so as to not get everything you put in stolen the same night. And PM was behind bullet proof glass and razor wire at their office. So as a lender I knew this going in.. And the LA based investor by and large knew it as well they were getting quality homes with quality rehabs ( as the lender I made sure of it.) what none of us really realized was how fast things could go south.. And these people at the time were paying 80 to 120k for these exact same homes that can be bought today for 1k to 15k all day long... those are homes of failed landlords and owner occ's fleeing.
After all of this I ended up with 2 OREO of course by the time I got them they were stripped not wanting to lose my 50k I had invested in each one I then rehabbed them and tried to sell them to owner occ's on terms.. ( common method pre dodd frank for lenders to try to maximize bad assets) do I dumped 25k into each of those homes put the owner occ's in and they made it maybe 6 to 8 months before they failed. by the time I got the house back they were stripped once again... So not being an absolute idot and the fact that I made about 1.5 million in fee's in Detroit over the years.. I let those homes go for tax's... lost 150k and came to the conclusion that Detroit is one tough place to own property. Having personally owned over 500 of these types of SFR's in 4 different mid western towns.. Detroit had a number of very unfriendly investor situations.. from the danger of your block going to seed... to Devils night and your house gets torched. to Wayne county basically being totally dysfunctional as a county entity.. just better places to invest.. is better in the suburbs of Detroit and out of Wayne county I have no doubt its better and probably sustainable.
So in my mind If you live there and its your JOB to buy and run these assets then by all means give it a go.. Crap for 1 to 15k per house if you have to just abandon one because it did not work no biggee.. you have lost next to nothing monetarily. keep the ones that work throw away the garbage let them go for tax's.
If your sitting in CA or AU or GB or other foreign countries and you think these cheap homes are going to make you rich.. then your just perpetuating the greater fool theory in my mind... and the end of the day simple logic has to dictate.. if houses on the open market were any investor experienced or not can purchase them for 1 to 5k well then there is a reason.. and there is a reason that in LA or SF or PDX or SEA or New York or Boston or other prime markets that values are where they are at.. supply demand and ability to pay for the asset.
Detroit bottom line just needs to retrench.. if its only 700k pop now and declining and there were housing stock for double that.. it does not take a genius to understand there is a gross over supply and the better owners or tenants are not going to live in the roughest and most dangerous areas of the city they will flee to safer more stable environs because there are massive amounts of homes that can be bought in nice areas for 100k and under.
- Residential Real Estate Agent · Phoenix, AZ · Member since 2013 · 17 posts · 12 votes11y
Originally posted by @Matt Cramer:
Originally posted by @Account Closed:
How about this... if you don't own property in Detroit and / or have ever been to Detroit for real estate due diligence... shut your mouth! Keep your ignorant opinions to yourselves. As for the investors buying Detroit like myself... we will continue to enjoy 30+% returns and the rest of you can be happy with your 1-3% returns.
You are clearly one of the people I'm asking the question too. What are you doing to see great returns in the area and from a distance none the less. Also have you found a way to do so in the $1000 houses area or are you in another part of metro area? What type of strategy are you employing as well?
Matt,
OK, so I fly by the seat of my pants. I was down in the Caribbean drinking beers in a little beach bar and started to talk to the guy next to me. The topic turned to real estate. He grew up in Detroit and told me he just bought 2 properties for 2500 each and invested another 5 - 7k into each of them and was now renter them for $750 / month. So obviously I said tell me more.... Well in a nut shell... he gave me about 6 zip codes to look at. I came home, did some research, not enough in hindsight... Bought a package of 10 properties on the same street in NW Detroit for 19k. I then booked a flight and flew to Detroit to see what I bought. Well, as I drove the properties I got this sick feeling in my gut like what the hell did I do... But then I'm thought screw it... It was only 20k... I then came up with a game plan. I identified the best 2 of the 10, trashed them out, cleaned the yards and as I was doing this all the neighbor came out and offered to help me. They were happy to have my there fixing up the area. I then hired a contractor / pm manager who I just fired BTW... Over time / budget... All talk not enough action. I then got to fixing the first 2 units and here's what I discovered. The magic number in the area I'm buying is 20k. Regardless if you buy a house for 1k, 5k, or 10k once you are done remodeling it, past due taxes, water bills, stolen electricity and what ever else might come up you are into these units for roughly 20k. I am getting gross rent for each one between 650 - 800 per unit. Not bad huh? I'm currently selling some stuff I have in AZ and I intend on buying about 20 more of these little gems. So... What else would you like to know? I'm glad to share the good, bad and ugly of my real estate investment adventure...
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed
that's one way to do it, these are so cheap just throw away the ones that don't work after running cost your probably netting 350 to 400 a month over time. so in 50 months you have your initial capital back.. the proof in the pudding will be how you do in year 2 ,3 ,4 ,5 ... any market is sustainable in the first year of a new rehab.. I would be somewhat cautious if your AZ assets are working before I just went all in ...
Until you get 100% of your capital back your making no return as these houses are not liquid you can't look at it like the money is in the bank and I am making a 30% return. You could if they could easily be sold in 30 days on the open market.. but the locals they aren't going to over pay they are going to do what you did buy for 1 k and put 8k in them and have the same house for 9 to 10k... your all in 20k house is ( as us lenders like to say) bulk value or true wholesale value worth 10k maybe.
But again its fun playing monopoly,, lets get a report after you have owned them 24 months.. that's what will be the telling sign.. you will have half your money back.
Plus what most investors fail to put into their cash flow calculations is your cost to travel there and your time and effort to analyze this and then coordinate rehab.. and you have gone through what most do in Detroit ( already fired one PM) PM's that work in these low level areas are tough to find.. and many end up just walking away with the owners rent.. or lying about if they are rented or not... I have helped many a client over the years that the Detroit PM literally stole their rent... its a tough world there in Detroit..
- Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes11y
Originally posted by @Jason Farmer:
@Scott K.
Coming from a 45 yr old guy thats probably alot older now, still working a 9 to 5 with 2 rental properties, "so you say"....Im not impressed nor interested in your Opinion.
The problem with people like you is you cant relate, because your life model is noting like mines. Im almost half your age, and Ive never worked a 9 to 5 i've found what you call freedom in real estate. So i would never expect someone like you to understand. And someone with over 600 post, with only 2 so called rentals, what in the world could you possibly be talking abut on here? You dont have much if any experience in this field..I hope your not giving advice.
Impossible
Yeah Scott, the wholesaler from California knows the Metro Detroit market much better than an actual experienced professional from Metro Detroit!
I swear, some days I actually look forward to the next market crash. There were a whole lot of obnoxious kids who had it all figured out in 2008, too. Somehow they had all disappeared by 2010.
- Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes11y
@Account Closed
Good going! I have no dog in this. But reading Jay, Dan I'd say what we need to know is if you still have that same renter in 12 months and when you do have turn over, what are the re-fix up costs? Jay's point is not that you can rehab and put renters or even buyers in those houses. It how long will they stay and at what turn over cost. Making money as a landlord is not a one month equation. It's really a 5 year balance sheet. Or why buy and hold, just wholesale or fix and flip, in and out.
I've written alot about how to become a bored silly landlord. The key is to buy top high school districts, over fix, screen renters for school aged kids who will stay to run their entire family through the same schools. You'll keep these families for 5 yrs or more.
Here in Atlanta, there's the war zones too. And over supply (as Jay says). Landlords are competing on price, that's it. Use craigslist, rentals. Search, then count the number of subjects that are all caps, number of 1 month free rent, number of free washer driers. All sorts of examples of over supply training the renters to jump mid lease from one place ot the next. No one in that area is really making long term bank money. Just spread sheet money. :)
Buy on quality of renter, not on cheapness of the house if it's wealth you are after. JMHO. For example: income that you get to keep, as apposed to givng it all back on turn over, and house appreciation. War zones have no appreciation to speak of and turn over costs about eat up the rent income,,, am I right? Jay said so.
- Residential Real Estate Agent · Phoenix, AZ · Member since 2013 · 17 posts · 12 votes11y
Originally posted by @Jay Hinrichs:
@Account Closed
that's one way to do it, these are so cheap just throw away the ones that don't work after running cost your probably netting 350 to 400 a month over time. so in 50 months you have your initial capital back.. the proof in the pudding will be how you do in year 2 ,3 ,4 ,5 ... any market is sustainable in the first year of a new rehab.. I would be somewhat cautious if your AZ assets are working before I just went all in ...
Until you get 100% of your capital back your making no return as these houses are not liquid you can't look at it like the money is in the bank and I am making a 30% return. You could if they could easily be sold in 30 days on the open market.. but the locals they aren't going to over pay they are going to do what you did buy for 1 k and put 8k in them and have the same house for 9 to 10k... your all in 20k house is ( as us lenders like to say) bulk value or true wholesale value worth 10k maybe.
But again its fun playing monopoly,, lets get a report after you have owned them 24 months.. that's what will be the telling sign.. you will have half your money back.
Plus what most investors fail to put into their cash flow calculations is your cost to travel there and your time and effort to analyze this and then coordinate rehab.. and you have gone through what most do in Detroit ( already fired one PM) PM's that work in these low level areas are tough to find.. and many end up just walking away with the owners rent.. or lying about if they are rented or not... I have helped many a client over the years that the Detroit PM literally stole their rent... its a tough world there in Detroit..
Jay,
I fully understand the rental game. I own 28 units in Phoenix. I would never suggest anyone go into this world as a landlord with the goal of just 1 or 2 properties... Not worth it.
I deal with BS here the same way I will in Detroit... Tenants moving out in the middle of the night... Stealing whatever they can. Drawing a life sized portrait of me and shooting it with darts, babe guns and paint ball guns on my living room wall... Killing themselves with a shotgun to the chin cause their girlfriend is banging the guy next door... Overdosing and having their employers come looking for them 2 days later.... Whatever. I just hope they paid their rent prior to exiting...
Either you can stomach being a landlord or you can't.
As I travel back and forth to Detroit I see a city that is going through a major transition... First Downtown... Then into the surrounding areas. The people that live in the neighbors I'm buying for the most part want to be there, love their families and want a safe place to raise the same. All the haters need to actually get out into the neighborhoods and talk to the people who live there. Who cut the grass of the vacant burned out house next to their home. Who sweep the sidewalks and street in frontbof their homes. Who come over and offer to help a stranger (me) to clean up my property.
To each their own... As for me
It's game on in Detroit... I will be happy to sell you all my properties in a few years when they double in value and you all decide to join the feed frenzy then as the so called investors came into the Phoenix market in 05 and 06.
I buy when every one else is selling and I sell when the "investors" start buying. No different than buying Bank of America, Ford and AIG when the stock market crashed.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed
your the guy that makes it... the guy sitting in LA with a full time job and has no clue they get their lunch eaten.... your in the bizz your an agent so ... you know the score.
I already had a good run in Detroit from 02 to 05 made well over a million bucks as a hard money lender there... got out in time. leave the rental game to you younger dudes.. LOL
- Residential Real Estate Agent · Phoenix, AZ · Member since 2013 · 17 posts · 12 votes11y
@curt Smith
Not that I need to defend myself OR my investment strategy to anyone on this site... I will gladly.
I am 49 years old, for the most part I am retired and have been last 3 years with the exception that I like to collect rental properties. I have 28 properties and over 42 doors and a monthly cash flow that allows me to pay the mortgages on my 3 private properties, buy 10 units in Detroit, rehab them and increase my cash flow and travel roughly 3-4 months out of the year and a liquid net worth that exceeds 7 figures.
I have tenants that have been in my properties for 5-6 years and 1 for 16 years. I can generally command 150 - 200 dollars premium in rental rates because of the condition of my properties... my tenants refer their friends, co workers and family to me when they are looking for a rental.
Is that acceptable?
I think I'm doing OK.
Respectfully... You do what works for you and I will continue do the same.
- Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes11y
I've got Detroilet figured out. Here's how I'm going to make more money than all you fools...
- Corona, CA · Member since 2014 · 154 posts · 100 votes11y
@Aaron Mazzrillo Mentioned about following billionaires, well let’s just face the music clearly great minds think alike, and these guys don’t think about today or tomorrow they think about future generations, that’s why they are so successful. Dan gilbert probably won’t see this happen in his life time but he is building a foundation that one day “very soon” will bring life back into a failing city….But I would never expect you to understand what I’m saying. And im not just a wholesaler from Ca, ive no problem proving my authenticity to anyone.
- Corona, CA · Member since 2014 · 154 posts · 100 votes11y
This is my generation, and i want to be apart of that, its a goal i have so im sticking close to someone that can put me in a postion to be apart of the growth. Im passionate about change, so i apologize if i offended anyone...
- Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes11y
Those billionaires also don't need them money anytime soon, have money to lose and can buy enough to transform an area and do it right now buy a few hoping to ride the wave and have someone manage them for 10% of low rents.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
not only that they are not always right... :) I bought global crossing because Gates owned a big stake in the company... well it went out of business within a few years.
- Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes11y
Originally posted by @Jason Farmer:
This is my generation, and i want to be apart of that, its a goal i have so im sticking close to someone that can put me in a postion to be apart of the growth. Im passionate about change, so i apologize if i offended anyone...
You don't know anything at all about anyone else who is posting. For many of us, real estate is a small part of what we do, even a hobby. For all you know, Scott is the managing director of a large business consulting firm, or a partner at a major law firm. You certainly have no reason to think that you are "all that" and he is not.
Playing gopher to a successful guy can be a good way to get ahead, but it is not inherently impressive.
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