Any thoughts on Detroit, Mi and the surrounding Cities

Investor · FL · Member since 2022 · 26 posts · 9 votes

Hi all,

Was just in Michigan for an extended stay and was wondering if anyone had any thoughts on the Detroit and the surrounding cities for possible long-term rentals or flips? Someone I met while visiting runs a construction crew up there so was wondering if anyone could shed some light on the market up there and what they are seeing. Would it be worth taking a deeper dive?

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Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

It's absolutely worth taking a deeper dive.

I've been investing in Detroit proper since 2019 and have 12-doors there. I've done it all... buying tenant occupied, doing BRRRR's, section 8, doing full gut renovations, etc.

I also help clients do these things from out of state.

I lived in Troy (just outside Detroit) from 2017-2022 but I'm back in California now. Detroit is coming up big time, but it's still flying relatively under the radar.

Suburbs are getting increasingly expensive while the city is getting stronger and more attractive to move into. It all makes for an interesting dynamic that we've yet to see fully play out.

Detroit prices are up 2x in the last 5 years. And it's not slowing down. The Census came out and reported the first (modest) uptick in population in 2023 for the first time in nearly 70 years. So yes, it's still early here.

Happy to discuss more about the market with you or anyone else. I can also point you to a ton of resources if you'd like to do your own research.

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
2y
yes
1 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
It's absolutely worth taking a deeper dive.
I've been investing in Detroit proper since 2019 and have 12-doors there. I've done it all... buying tenant occupied, doing BRRRR's, section 8, doing full gut renovations, etc.
I also help clients do these things from out of state.
I lived in Troy (just outside Detroit) from 2017-2022 but I'm back in California now. Detroit is coming up big time, but it's still flying relatively under the radar.
Suburbs are getting increasingly expensive while the city is getting stronger and more attractive to move into. It all makes for an interesting dynamic that we've yet to see fully play out.
Detroit prices are up 2x in the last 5 years. And it's not slowing down. The Census came out and reported the first (modest) uptick in population in 2023 for the first time in nearly 70 years. So yes, it's still early here.
Happy to discuss more about the market with you or anyone else. I can also point you to a ton of resources if you'd like to do your own research.
3 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
@Vincent DeLucia check out our website where we have the entire Metro Detroit area listed by Property Class and the 183 Detroit Neighborhoods.
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

PM us if you’d like to discuss this logical approach in greater detail!
[email protected]248-209-6824
Logical Property Management4.9458 Reviews
Website View Page
2 Reply
Vincent DeLucia
OP
Investor · FL · Member since 2022 · 26 posts · 9 votes
2y
Quote from @Travis Biziorek:

It's absolutely worth taking a deeper dive.
I've been investing in Detroit proper since 2019 and have 12-doors there. I've done it all... buying tenant occupied, doing BRRRR's, section 8, doing full gut renovations, etc.
I also help clients do these things from out of state.
I lived in Troy (just outside Detroit) from 2017-2022 but I'm back in California now. Detroit is coming up big time, but it's still flying relatively under the radar.
Suburbs are getting increasingly expensive while the city is getting stronger and more attractive to move into. It all makes for an interesting dynamic that we've yet to see fully play out.
Detroit prices are up 2x in the last 5 years. And it's not slowing down. The Census came out and reported the first (modest) uptick in population in 2023 for the first time in nearly 70 years. So yes, it's still early here.
Happy to discuss more about the market with you or anyone else. I can also point you to a ton of resources if you'd like to do your own research.

Thanks for your feedback! Will absolutely take a deeper dive and see what I can find
0 Reply
Vincent DeLucia
OP
Investor · FL · Member since 2022 · 26 posts · 9 votes
2y
Quote from @Drew Sygit:

@Vincent DeLucia check out our website where we have the entire Metro Detroit area listed by Property Class and the 183 Detroit Neighborhoods.
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

PM us if you’d like to discuss this logical approach in greater detail!

Thanks for the information. I will take a look at your website today and start to take a deeper look into the area as a whole.
0 Reply
Otis Gathing
Investor · Detroit, MI · Member since 2019 · 38 posts · 7 votes
1y
Vincent,
Detroit is one of the best markets in the country but you have to understand how the market works. Zip codes like 48221, 48224 and 48204 provide a lot of great opportunities flip wise or rental wise. The suburbs also provide good opportunities as well but it's just more competition. My advice to you is to connect with someone who knows the market and is serious about there craft as a real estate professional!
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