I'm new to both investing and the Detroit market as I currently live out of state. I'm interested in trying the BRRRR strategy and when looking at recent sales in various neighborhoods, I'm seeing dramatically different values.
Has anyone attempted this approach in the Detroit metro area, either successfully or unsuccessfully? If so, in which neighborhoods and did you come across any appraisal or refinancing issues? I plan on visiting in a few months and driving several neighborhoods to get a better feel for where I may want to invest. Thanks in advance for any guidance given.
Detroit and Metro Detroit are very different when it comes to real estate. The reason you see dramatic value fluctuation because Detroit is a hard market to analyze and takes some walking around. Detroit is such a big city as well so you cannot be macro in your approach but micro because each neighborhood is vastly different. I mean you can literally be in a neighborhood where each and every house is filled and safe. Then turn to the next street and you roll your windows up. Metro Detroit is more like a typical suburb area so its easier to predict and you can take a macro approach. I would visit the Detroit Neighborhoods that are growing and have appreciation component Boston Edison, Midtown, New Center, Rosedale Park, its others on the Eastside as well.
Hope this helps some!
Thanks Jamiel, that information is definitely helpful. My plan is to focus on Detroit (as opposed to Metro Detroit) so I'll for sure look into the neighborhoods you mentioned and spend some time there next time I visit. As far as appraisals go, I'm going to operate under the conservative assumption that a rehabbed house will appraise for 80-90% of comparable homes in the immediate area for my initial analysis. Thanks again.
@Rassan Sampson Cool, if you ever have any questions while you are here or want to get lunch you can message me anytime love to connect with others.
The BRRRR strategy can be fantastic here. Just need to run good ARV Comps and an accurate Rehab estimate and the rest is going through the motions. Redford, Warren, Hazel Park, Westland, Taylor, Melvindale, etc.. The suburbs closely surrounding Detroit, have some really good numbers for this.
@Joe Hammel I should probably give an update on this, I got cold feet and couldn't bring myself to go through with the BRRRR strategy. I ended up going the traditional route with 20% down and a mortgage on a 3/2 in EEV last summer. Wanted to reduce risk and ease into the market. It's been a pretty bumpy ride so I'm not sure when but I think I'll eventually get up the nerve to give the BRRRR strategy a try.
@Rassan Sampson Well thanks for the update! What location did you end up buying in? Remember what Brandon Turner says, that first deal, it only matters that you took the leap, because now you're able to do another, and I'm sure you've learned a lot.
Trying to buy out of state in Detroit Metro can be difficult. Neighborhoods can an do vary greatly street to street. The volume of foreclosures, short sales and distressed sells make comps harder. One house may sell for half of the one next door, but it may be a total gut jobs vs a new bath. I'm from there and it can be hard for me to determine a deal until I have someone drive the block for me.
@Joe Hammel I bought in East English Village, seemed on the safer side with respect to home values. Yea I've learned a ton and hopefully that'll set me up for a more successful deal next time. Once it's stabilized I'm sure I'll have more confidence when I start looking to buy again.
@Rassan Sampson Nice. East English Village is definitely an up and coming area. Hopefully you will at least win, in the long run with appreciation.