Investing in Detroit

6 Replies

Looking to buy a duplex or multifamily homes from wholesaler or auction in the areas surrounding downtown Detroit. I know we will have to put about $25k+ of renovations and I read that refinancing does not work well in the area. Would the "no and low money down" be the correct way to go and take a $30k rehab loan from a private lendor or pay cash for rehab costs. If pay cash how do we scale and invest in more properties from there with out refinancing? 

@Madison Loftis downtown will be impossible. Near Downtown will be difficult or pricey with probably no Rehab Needed. Certain pockets of Detroit and upcoming Neighborhoods as close as possible to Downtown,Universities, Historical Districts and Hospitals are the ideal areas for something you’re looking to do. In that case buy cash, finance the rehab if needed and Appraisal 6 months later to cash out.

The area you are targeting is quite difficult with that strategy in mind. If this is your first property I would target something easier than doing that much of a rehab. If its a duplex the property should be cash flowing quite well. I typically pay cash and then if I need more cash a HELOC has been quite convenient for me.

@Madison Loftis Unfortunately its extremely difficult to find a property with minimal rehab in those areas that Alex is mentioning you have to keep in mind that house flipping is really hot in those areas because investors come and buy a property for 60k put 30-40k into the home and sell for 150-180k. These are not light rehabs, they are quite heavy duty. Why not start in the suburbs and find something that only needs cosmetics or light rehab for your first property?

I'm quite aggressive with my numbers since we've been doing this for some time so it may not be a good comparison. If you ever have any questions please feel free to message me.

@Madison Loftis , the "up and coming" areas surrounding downtown are getting more expensive as we speak, most of the houses will be full rehabs, I have 2 in these areas, one in the North End and one by Henry Ford hospital, I love the potential of both! got them cheap (meaning cheaper than today but significantly MORE expensive than just 2 years ago) but will spend over 80+ on "each" to get them rehabbed. If you don't have a good person with boots on the ground or enough funds to cover the rehab don't even bother investing in the area, it will eat you alive; if you still want to invest make sure you find the boots in the ground first they can guide you to the right property, since it's your first property I will suggest VERY minimal rehab, significant rehab is very expensive and there are so many crooked contractors in the area that you will wish you never thought of Detroit; don't get me wrong there are good deals but only if you know how to maneuver Detroit otherwise Detroit will maneuver you! Send me a pm and I'll connect you with a local facebook group that can also help.

Hi Madison, 

I have some properties, including duplexes to consider in your desired and the recommended areas. As you know, Duplexes are becoming more and more rare. However, if you come across one, run your numbers and be ready to take the leap because they do go fast. Feel free to contact me directly anytime. Hopefully, I can help.