Detroit the Come Back Kid

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Detroit the Come Back Kid

Marisa R.
Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes

Hi All

Just thought I would share one of my recent deals.

Been playing in the Atlanta market since 2011, its been very kind, an amazing ride as the market has continued to soar. In fact very low inventory, surprise surprise...... its been tough of late.

My investment strategy has been buy and hold for cash flow and appreciation and the occasional flip and developing property.

Thanks to property I gave up my day job in 2007 and have just been continuing dabbling in property markets

I am now playing in the Detroit market, some will poo poo this, and I understand why. 

But..... "fortune favours the bold"" as they say

 I believe if you know what you are doing and have the right people on the ground, buy distressed, below market value properties you are on a winner. I know perhaps easier said than done, but I guess its persistence until you get it right.

One of my recent property purchases was in Aviation Sub, nice tree lined street.

This property is approximately 1400 sq foot.

Purchase Price - $36,000

Rehab - $5000  (rent ready)

Rehab (rent ready)  $975 per month

I am currently loading up. will be closing on a foreclosure in the next week or so. Will also post the numbers

Happy investing everyone

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Christine Johanns
Rental Property Investor · Jersey City, NJ · Member since 2017 · 74 posts · 18 votes
7y

@Gena Morris YAY FOR GROUP FLIP/JV Out of State Ladies club!!

3Reply
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  • Cedrick Layton
    Flipper/Rehabber · Atlanta, GA · Member since 2016 · 11 posts · 2 votes
    8y

    @Marisa R. Did you actually move to Detroit or are you investing from Atlanta? If you are still in Atlanta how are you finding deals?

    2Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    Hi Cedrick

    I have networked with a savvy investor in Detroit who has been sourcing the deals, well under market value

    He has around 40 properties, cash flow is excellent, of course there are challenges

    In the main he has been buying/sourcing foreclosures, distressed properties, and many deals that dont hit the market

    The competition is fierce and inventory is tightening

    I am loading up

    I see this as a market with great opportunities, the skys the limit

    Marisa

    7Reply
  • Diana Tian
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
    8y

    @Marisa R. Thank you!!! I started looking at the Detroit market. The deals look very attractive. I haven't done anything out of state. Not sure if they are enough room to outsource everything. After all the expenses, how much are you keeping? 

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    @Diana Tian

    This will give you an indication of expenses. 

    $36,000 - Property - Warranty Deed

    Rent - $11,700 pa

    Property Management - $1170 pa

    City taxes - $1200

    Insurance - $720

    Maintenance - $500

    Total Amount After Expenses - $8110


    The way I keep my maintenance down is simply having a maintenance crew on the ground. This is a market where you need to manage this carefully, there are ways of reducing costs here.

    2Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    Its a perfect storm at the moment.

    I am  not just chasing cash flow, I am after growth. Similar to what achieved in Atlanta in 2011, following the booming cycle.

    Just to give you an example. This property in first week had 14 offers on the table

    I secured this one at $35,000, its in sort after Rouge Park.

    I think its probably worth closer to $60,000 once rehabbed, but after all costs would not make sense to sell.

    The strategy here is its a rising market, houses are appreciating. The world is buying, my point is hold on to these assets you will make more money in 12 months time. Buy as many as you can and sit on them. They are cash flowing...… just don't buy in rubbish neighbourhoods.

    2Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    This is the property in Rouge Park

    0Reply
  • Rush Wall
    RE Investor · Newnan, GA · Member since 2015 · 309 posts · 132 votes
    8y
    @Marisa Rowe great looking property and the numbers are excellent as well. Have you been to Detroit or just going off numbers and locals?
    0Reply
  • Diana Tian
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
    8y

    @Marisa R. thank you for sharing! The numbers look really good even without factoring in the potential appreciation. I am trying to learn more about Detroit. I just looked at zillow and redfin. The housing prices vary a lot street by street. I checked a couple of houses on line in the east english village. The price is low but I don't know anything else about it. What is the best approach to study the area ?   

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    @Rush Wall

    Hi Rush

    The only variable may be maintenance costs? these are older homes, however, I have a strategy with regards to repairs, I have people on the ground, my own crew, and creative, using second hand where possible. This is Detroit, for me its not necessarily the cash flow I am after, its also the growth. 

    This is my recent purchase its a foreclosure, in Bagley a neighborhood which is up and coming/soaring, high demand.

    I am considering flipping this one. Comps around $140-150K. This is approximately 1600 sq ft home and I can add an additional bathroom to this

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    more photos


    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    more... photos

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    @Diana Tian

    This market  is  unique , unlike for example the  Atlanta market where its easy to work out comps.

    Price ranges vary significantly, a word of caution, if prices are very low beware of Quit Claim Deeds, (QCD) they will come with liens, back taxes and rehabs. 

    Warranty deed with title insurance is what you need, the market is at around $70-90K retail in decent location, and a whole sale deal perhaps $40-50K..... and rising.... ouch

    Banks are now lending to home owners, I see lots more upside.

    Marisa

    1Reply
  • Kenneth F.
    Member since 2018 · 11 posts · 11 votes
    8y

    It's great to see another member on Biggerpockets doing well in Detroit.  Having the right people on the ground will make or break you if you're an out of state investor.  I've been investing in Detroit as a buy and hold investor.  I agree there are neighborhoods that are thriving and neighborhoods that the city is allocating funds for. 

    3Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    @Kenneth F.

    Inventory is shrinking

    Yes, all about team on the ground

    Be interested on your experience in this market

    Thanks

    0Reply
  • Christian Hutchinson
    Investor · Detroit, MI · Member since 2014 · 360 posts · 354 votes
    8y

    I want to know what insurance company is insuring a property in Detroit for $720/yr? I would expect $1800/yr and thats on the cheap side.

    Thats cheaper than many suburbs for similar sized homes, unless you literally are only insuring your cash into the project and that still seems low.

    The property taxes also seem VERY low(esp non-Homestead). I would expect closer to $1700 or $1800.

    3Reply
  • Kenneth F.
    Member since 2018 · 11 posts · 11 votes
    8y

    Originally posted by @Marisa R.:

    @Kenneth F.

    I definitely agree that inventory is shrinking especially since Metro-Detroit has been getting a lot of positive exposure.  They just announced that Cadillac will be returning to Detroit after a four year stint in NYC and the recent Documentary on the History Channel "Detroit, Comeback city"

    Majority of my units are located on the Westside of Detroit. Some of the areas that I like focus on is Bagley, Fitzgerald and Grandmont/Rosedale.  Those areas have seen a lot of appreciation and has been harder for me to find deals.  When I can't find units directly in those neighborhood, I find other pockets that are thriving.  Neighborhoods that are well kept and not surrounded by Blight.  I was actually surprised when I first visited my units.  I saw that the areas my team advised on had were like any other working class neighborhood and the stigma of "Detroit being all burned out homes" wasn't true.  As you know, there are definitely neighborhoods that are burned out and its only a matter of time till the city takes care of that.    

    When I first started, I did everything wrong like any new investor does. Rushed right in and paid market rate for the property and took the word of the realtor. Lets say he no longer works for me. But any challenges are learning tools. After vetting out multiple realtors and finding my team, I've been able to accumulate a portfolio of ten SFHs. Now that I've had some time to season myself in the Detroit market, I buy distressed properties that may need a $15K to $20K rehab. I like to find units that need some of those big ticket items (CAPEX) like the roof and hot water heater/furnace. This way majority of my "Bones" are good for the next 15 to 25 years.

    Majority of my purchases range from $26,500 to $40,000. They have produced a Net ROI of 12% to 17.5%. The ones that produced a lower ROI were from my early purchases from that one realtor who only wanted a quick sale and not build a long term customer.

    2Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    Christian 

    Insurance is with NRIEG

    Competitive pricing compared to other insurers. On average $60 per month

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    @Kenneth F.

    Thanks for sharing. Great stuff

    Seems we are buying in similar neighborhoods

    Where in US would you get these cash flow returns??? Detroit is numero uno for cash flow

    Its also interesting to look at what prices these houses sold for prior to crash/peak 2007

    One of purchases was around $40,000 and yet in 2006 sold for $145,000

    Fingers crossed this market continues to boom..... its hot and fierce competion

    There were 14 offers on a property I purchased recently, highest and best

    0Reply
  • Wilburt KingPro Member
    Investor · Detroit, MI · Member since 2015 · 36 posts · 14 votes
    8y
    @Marisa Rowe Thank you for sharing...your numbers and market assessments are spot on for this market! Have you ever worked with GC Will Power in the Atlanta area?
    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    @Wilburt King

    Never heard of GC Will Power??

    My focus is now Detroit, I cant get this cash flow in Atlanta and am starting at a low base

    Only way is up

    I will post some links shortly on who the big players are pumping billions into this market

    0Reply
  • Michael O.
    Rental Property Investor · Detroit, MI · Member since 2017 · 55 posts · 53 votes
    8y
    Originally posted by @Christian Hutchinson:

    I want to know what insurance company is insuring a property in Detroit for $720/yr? I would expect $1800/yr and thats on the cheap side.

    Thats cheaper than many suburbs for similar sized homes, unless you literally are only insuring your cash into the project and that still seems low.

    The property taxes also seem VERY low(esp non-Homestead). I would expect closer to $1700 or $1800.

    If you're in the right neighborhoods, you can find insurance for under $1000/yr - which it seems like Marisa is. I used Michigan Basic and have a duplex in Bagley insured for $960/yr

    I do agree with you on the prop taxes, though, as mine are slightly over $2k/yr

    2Reply
  • Michael O.
    Rental Property Investor · Detroit, MI · Member since 2017 · 55 posts · 53 votes
    8y

    @Marisa R. great to hear out of state investors starting to look at Detroit again. You're correct, the market is really starting to heat up in certain neighborhoods. Bagley is one fire lately; I'm seeing people purchase 1,500sqft houses for ~$50k and flipping for ~$140-150k left and right with mediocre rehab jobs. 

    Will be interesting to see if this keeps up. Good luck with the investments!

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    8y

    Hey @Michael O.

    The Bagley foreclosure was purchased for $61,000, well located on border of University District, where prices are significantly higher

    I am actually now condering holding this property as the flip profits will be peanuts, as its a runaway market.....higher next year

    Loving Detroit market

    Will use this thread to post my deals 

    0Reply
  • Christian Hutchinson
    Investor · Detroit, MI · Member since 2014 · 360 posts · 354 votes
    8y
    Originally posted by @Marisa R.:

    Christian 

    Insurance is with NRIEG

    Competitive pricing compared to other insurers. On average $60 per month

    I use them also, and I double checked my rates. You are correct. All my stuff in Detroit is MFH or SFH that have been cut to MFH and are very large (4000+ sq ft) so thats why it seemed low.

    1Reply
  • Diana Tian
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
    8y

    @Kenneth F. what do you think about Jefferson Chalmers?  I just started looking at Detroit and wanted to understand the area before pulling the trigger. 

    2Reply
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