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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  • Michael Harris
    Rental Property Investor · Detroit, MI · Member since 2016 · 42 posts · 31 votes
    7y
    Originally posted by @Diana Tian:

    @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. 

    Diana, be careful with Jeff-Chalmers.  It was recently designated a historic neighborhood.  This means you can't just rehab it in any way you see fit.  For example, the city may require that the windows be wood (expensive) instead of vinyl (cheap).  This could be a nightmare if you're replacing most of them during your rehab, which is common.  If you really want to be in the Jefferson corridor, you might consider Islandview, East Village, or Conner Creek, as all are still affordable and will surely gentrify in the short term (relatively speaking, of course).

    1Reply
  • Kenneth F.
    Member since 2018 · 11 posts · 11 votes
    7y
    Originally posted by @Diana Tian:

    @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. 

    To be honest, I have never had my sights on that area.  From an overview regarding the price points, it seems to be a higher end.  It all depends on what you intend on doing, whether you are going to flip or buy and hold.  But I check out the areas I mentioned in my previous comment. 

    0Reply
  • Michael O.
    Rental Property Investor · Detroit, MI · Member since 2017 · 55 posts · 53 votes
    7y

    @Michael Harris I've been seeing East Village flips pop up more recently. Islandview is already mid-gentrification. 

    I like the Jefferson corridor, lots of interesting developments coming along. There's even been rumors of extending the Qline down Jefferson in the future (we'll see if that's just a pipe dream).

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Its all about keeping the costs down.

    Major expenses in Detroit is maintenance, as older homes. If you can keep this down and with the right property management in place you will be ahead of the crowd.


    Load up folds, this is now an appreciating market..

    1Reply
  • Matthew John
    Rental Property Investor · Metro Detroit, MI · Member since 2016 · 277 posts · 269 votes
    7y

    @Marisa R. Do you only focus on Detroit? I've had great success thus far in the suburbs. 

    I've been focusing on neighborhoods with Developmental Plans for a Walkable Downtown. Royal Oak did this and values have gone crazy! 

    Also, Cadillac is coming back to Warren and we have GM/Chrysler adding thousands of jobs through the next few years & pumping billions into their plants. 

    People keep talking about the Real Estate market bursting, I think it's just getting started here around Detroit! 

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Yes, that is brilliant.

    That's why I say Detroit is the Come Back Kid.

    You snooze you lose

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Here are some of my target neighborhoods, I really like

    Tier 1

    Palmer Woods

    Sherwood Forest

    Brush Park

    Cork Town

    Tier 2

    University District

    Rosedale Park

    North Rosedale

    Bagley

    Green Acres

    Malvern Hills

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Another consideration in this market......personally I believe you need to be buying multiple properties if you are planning to hold and rent

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Another consideration in this market......personally I believe you need to be buying multiple properties if you are planning to hold and rent

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Here is some interesting info on inventory for those interested

    https://www.crainsdetroit.com/article/20180614/news/663586/metro-detroit-home-buyers-face-lower-inventory-higher-prices

    0Reply
  • Alon Rokach
    Rental Property Investor · Toronto, Canada · Member since 2018 · 28 posts · 10 votes
    7y

    Great post and based on my research I think that Detroit is definitely making a comeback. I don't think it will happen overnight, but there is a lot of stuff in the pipeline for 2019 and the mayor seems to be on the right track...keeping corruption at bay. Detroit's future looks bright. 

    Can anyone recommend a good real estate agent in the Detroit area that knows about buy and hold...which is what I want to get into. 

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    Hi everyone

    For those keen on Detroit, though I would list some of the reasons why I am targeting Detroit

    1. Bankruptcy really helped city start over
    2. Since the current mayor (Michael Duggan) was elected, Detroit has had a major turnaround
    3. Demolished 3-5,000 houses per year
    4. The city has attracted lots of new businesses downtown
    5. Purchased $20 billion of real estate
    6. 2016, 100,000 new jobs created
    7. Pistons basketball team brought downtown
    8. Last few markets in the country where you can still buy inexpensive real estate
    9. $40-50,000 properties renting for $850
    10. Nowhere near the peak
    11. In suburbs of Detroit, home values are back to where they were in 2005-2006
    12. Can still get homes at $70,000 that will appraise at $100,000
    13. The city of Detroit has targeted 15-20 different parts of the city where they want to go in and clean-up and improve property values. Here are a few links to articles referencing some of the areas the city is targeting:
    14. Schools are improving
    15. Downtown is definitely happening, especially for upscale millennials

    2Reply
  • Kenneth F.
    Member since 2018 · 11 posts · 11 votes
    7y

    Marisa,

    All good points that show a growing City.  Not to forget some of the major players such as Ford, Cadillac with their choice on coming back into the city of Detroit and Flex and Gate (automotive manufacturing company) that just opened a new factory (October 2018) .  All good signs that jobs are coming back!  Not only manufacturing jobs but tech jobs since Ford is expanding their autonomous vehicle research in Corktown.  I'm sure many other companies are making the same move because of the tax incentive offered by the City.

    Unfortunately the reputation of a City that went bankrupt will always linger but hopefully time will fade that.  I do agree with Alon Rokach that it will not happen overnight but there is progress happening.  Below are some links to some of the growth in Detroit.

    https://www.detroitnews.com/story/business/columnists/daniel-howes/2018/10/17/trust-and-economics-fuel-fords-city-tax-incentive-plan/1672896002/

    https://www.detroitnews.com/story/news/local/detroit-city/2018/10/08/flex-n-gate-plant-opens-detroiters-half-workforce/1562635002/

    https://www.freep.com/story/money/cars/general-mot...

    3Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    @Kenneth F.

    Thanks for sharing the links.

    I agree... Detroit still has a stigma, but it heading in the right direction.... as they say "Fortune Favors The Bold"...... I am in.   

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    So its not too late...…

    https://rebusinessonline.com/its-not-too-late-to-invest-in-detroit-say-entrepreneurs-dan-gilbert-chris-ilitch/

    0Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    7y
    Originally posted by @Marisa R.:

    @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

    A house like this in Bagley 3 years ago was $40-50k

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    @Hai Loc

    Hi Hai

    I paid $61,000 foreclosure and there was competition. with a nice rehab hoping it could achieve $140,000-150,000. As this market is rising I will just rent it out for now

    Bagley is very hot at the moment. If you look at University District next door houses are selling for over $200,000. 

    0Reply
  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    7y
    Originally posted by @Marisa R.:

    @Hai Loc

    Hi Hai

    I paid $61,000 foreclosure and there was competition. with a nice rehab hoping it could achieve $140,000-150,000. As this market is rising I will just rent it out for now

    Bagley is very hot at the moment. If you look at University District next door houses are selling for over $200,000. 

    Bagley is crazy just as East English Village.. Can't make a good coin renting out with the asking prices..

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    @Hai Loc

    Yes, aspirational suburbs, where people want to live.  

    0Reply
  • Gena Morris
    Developer · CA · Member since 2018 · 15 posts · 11 votes
    7y

    Question - I am closing on my first property...EVER...in 2 weeks (flipping). I live in California, contractor is relocating to do the work, and I am tasked with understanding the permit/code/regulation process for Detroit. Any direction/advice is GREATLY appreciated. I am understanding there is a need for permits and inspections for each and every aspect of the rehab (electrical/basement/plumbing/flooring) - does anything ever get done?!

    Thank you all for sharing!

    Gena

    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    For those interested in Detroit market, here is a good read

    https://www.freep.com/story/money/business/john-gallagher/2019/01/17/detroit-neighborhoods-progress-is-complicated/2591870002/

    1Reply
  • Gena Morris
    Developer · CA · Member since 2018 · 15 posts · 11 votes
    7y

    As always - thank you, Marisa, for sharing for the better.

    Indeed, this is a positive article and for those of us investing in Detroit I would hope to meet up with you soon.

    Any interest in one-time mixer - handshake introductions, share, relax, ask/answer question, partner up?

    Gena Morris

    2Reply
  • Cassandra Sifford
    Rental Property Investor · New Castle, DE · Member since 2016 · 376 posts · 158 votes
    7y

    @Marisa R. ... You're just chock full of Detroit information!!  I'm glad I was advised to reach out to you as you have great market insight.  The articles you provide are informative and well appreciated!  Hoping to get my 1st local unit rented next month then increase my HELoC to fund my next buy and hold.  Hopefully it will be in Detroit!

    BTW ... do you have partners or are you solo on your most recent deals in Detroit?  I have friends who want to team up, but not sure if they're game for an out of state investment.  I walk to the beat of my own drum and don't want to miss out on the opportunities that Detroit may offer.  I'm ok with taking a risk, just as long as the risk is worth taking ;)

    1Reply
  • Jamiel Strickland
    Rental Property Investor · Detroit, MI · Member since 2018 · 380 posts · 244 votes
    7y

    @Gena Morris , Your contractor is moving to do work in Detroit is a blessing lol. One of many problems out of state investors has invested here in Detroit is the trust of contractors. Since your relationship with a contractor, you already in a good spot!

    @Cassandra Sifford , Yes buy and hold, the cash flow here is worth putting your money into! 

    2Reply
  • Gena Morris
    Developer · CA · Member since 2018 · 15 posts · 11 votes
    7y

    Hello, @Jamiel Strickland

    Yes, sir!! I know I am in excellent hands. Also, my three sons will work with him and I just found out I have a cousin who is a master handyman (does most everything) who lives a few miles from the house...all are in! I am so excited and looking forward to powering up this venture. 

    Everyone started work this past weekend...8 or 9 more weekends to go! :)

    I land tomorrow morning and will be there for 3 days.

    2Reply
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