Investing in Section 8 rentals in Detroit

Detroit, Michigan
General Real Estate Investing
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Investing in Section 8 rentals in Detroit

Nicholas Foy
Member since 2023 · 23 posts · 15 votes

Hello, I am looking at two currently Section 8 occupied rentals in the Eye Neighborhood in Detroit and Morningside. I’m an OOS investor and I’m sending my realtor over to inspect these properties to see if either one would be a solid addition to my portfolio. What should I have the realtor look for when he goes out to see the properties? This is my first time considering Section 8 so I’m doing my due diligence in making a decision. Thank you for your time. 

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y

@Nicholas Foy average sales price in The Eye was $87,944 in 2023.

We consider it a Class C- Nieghborhood.

So, tenants will probably have FICO scores under 580.

Means you may want to use a Vacancy/Tenant nonPerformance factor of 20%+ in your metrics

You'll also need a real good team on the ground to minimize losses.

[email protected]248-209-6824
Logical Property Management4.9460 Reviews
WebsiteView Page
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  • Derrick E.
    Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
    2y

    Same things you would on any other home. Tenants come and go, but the property is still yours to update/maintain etc. 

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    2y

    As an OoS investor investing in Michigan, you had better understand how property taxes work.

    They are capped during ownership but uncap upon sale.  Depending on how long the prior owner lived there they may change very little or they could more than double.  I've known investors to get burned because they didn't do the math. 

    Have your realtor pull the tax records and you can see the difference between the SEV and Taxable value to do the calculation.

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    2y

    @Nicholas Foy average sales price in The Eye was $87,944 in 2023.

    We consider it a Class C- Nieghborhood.

    So, tenants will probably have FICO scores under 580.

    Means you may want to use a Vacancy/Tenant nonPerformance factor of 20%+ in your metrics

    You'll also need a real good team on the ground to minimize losses.

    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
    WebsiteView Page
    2Reply
  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y

    Hey Nicholas, I know we texted the other day but happy to give some feedback here as well.

    Look at the general condition of the house itself like you would any other property.

    But in terms of tenant quality, take a look at how they're living. Is the house nicely kept and relatively orderly? Or are they complete slobs?

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  • Otis Gathing
    Investor · Detroit, MI · Member since 2019 · 38 posts · 7 votes
    1y

    Nicholas,

    I would be paying attention to 1) the overall condition of the property and 2) how much could I rent it out for and 3) How much would the property appreciate over time. Also I would make sure that I screen my tenants carefully

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