Investing in Detroit (Remotely)
Hi everyone!
I've listened to almost all of the podcasts and learned a ton from the site, which is why I get an uneasy feeling about my friend planning to invest in Detroit. He plans to buy single family homes for around 30k with cash, put up to 10k into rehabbing them and then thinks they'll rent for roughly $900/month. He said he's run the numbers and they will easily cash flow several hundred per month. He'll continue to live out of state and work with a property management company. Betting on appreciation is generally a bad idea, but if the properties are actually cash flowing, is there another reason to stay away?
He and I both bought multi-family house hacks recently, so we're excited about continuing to invest, but I know there have been several pro tips about why doing this exact strategy can cause problems. Any advice I can pass along to him would be great. Or if you think I should start working with him, I'd love to hear about that, too!
Thanks,
Mike
HI Mike,
So I lived In downtown Detroit for the past 3 years prior to moving to NJ. I have friends that flip homes their and a buddy of mine here in NJ owns 40 properties along with his father in Detroit as well. I can honestly say that I've first hand seen the growth and return in the real estate in Detroit and it's surrounding suburbs. Your friends analysis is probably a safe bet if he has done his research. If you read into what is going on in Detroit's economy and what Dan Gilbert ( Chairman of Quicken loans) is doing, people want to be in Detroit right now, especially investors. Foreign investors have also flocked to Detroit.
I don' know what down side you may run into house hacking to be honest. It's a domino affect to use the profits from one property to the next right? I have not done the research myself on house hacking as you have, so if you want please reply back with what you have learned and maybe I can find the common ground with you on that, I can further discuss your concerns
It can be a great strategy depending on where in Detroit and I know many people who invest in low income areas and had great results. However, you're just starting out I would suggest either going with a turn key company or partnering up with a local real estate investor.
Thanks so much for the help, everyone! I'm little surprised by the unanimously positive feedback. Is there anything you would completely stay away from in Detroit right now?
Also, we have a couple friends who live out there, but no one we could use for property management. Have any of you worked with property managers who stood out as better than others?
Thanks again!
Originally posted by @Mike S.:
Thanks so much for the help, everyone! I'm little surprised by the unanimously positive feedback. Is there anything you would completely stay away from in Detroit right now?
Also, we have a couple friends who live out there, but no one we could use for property management. Have any of you worked with property managers who stood out as better than others?
Thanks again!
Hey I invest and live in the city. I usually invest in the nice areas such as finnley, east english village, morning side these are some of the best neighborhoods usually have good tenants and decent rent.l Most of mine are SFR but im looking for more multifamily.