Out of State Investors Detroit
Member since 2019 · 6 posts · 3 votes
Are there any OUT OF STATE Detroit investors? Detroit is obviously notorious for low cost, low risk, good rental income cash flow but for managing properties, managing fix and flips, how do you manage it all from out of state?
Has any out of state investor bought site unseen? How often do you travel (or have to travel) to Detroit to manage your properties?
See the agents BiggerPockets members work with in Detroit, MI.
See agentsI am an out of the country investor, and Detroit is my second market doing it remotely (after starting many years ago in south Florida that now is still hot market). I have traveled to Detroit in the last two years more than ever destination in my life (I must take 2 flights, 7 hr and 3 hr duration each EVERY MONTH). You have to be involved in the market, you MUST develop a local team (reliable and trustworthy) and the only way to doing that is investing, investing and investing. Network is key. Go to meetings, visit the neighborhoods, talk to people, ask for references, etc etc etc. I agree with many of the other members of BP in this post, Detroit is not an easy market, still many pockets in the city, poverty zones, local Detroiters codes that must be attended, but at the end of the day is a powerful and big American city that is coming back (see GPD/Capita increase, unemployment rate decrease -still high for U.S. 9% in comparison with a national average of 3.9%-, an improvement in the family household income) that can make SOME investment thesis work properly.
I have purchased 50+ properties in the last year (SFR), rehabbed them (rehab duration 10-15 days) and rented (takes no more than 2 weeks). I am expanding the business this 2019 and like @Marisa R. said you must have people on the ground being the guardians of every penny. In my personal case there is No vacancy, no late payments, no evictions (so far, evictions will appear for sure). Key here is focusing on neighborhoods that are coming back and have a relation homeowner/tenant 40%/60% (sometimes more). I have also established some criteria to my realtors and property managers in terms of areas to focus, type of tenant desired, etc.
I recommend a post created by @Rebekah Keller (https://www.biggerpockets.com/forums/697/topics/48...) where you can also find very interesting tips on those market challenges.
Enjoy the ride and let us know how your Detroit adventure goes!
Hello Misha, I am an out of state investor and have 3 properties in Detroit. I bought one in 2016 and 2 back to back in 2017. I bought them all site unseen, however, that does not mean I didn't do my due diligence. I have specific guidelines I devised and follow to the end. If it does not meet my criteria, I don't move forward. You have to be deciplined in this market. I bought them all off market, fixed and rented them. I have only visited Detroit twice since 2016 (most recently Nov. 2018). You have to have someone on the ground you can trust and have to know specifc areas to invest in. Going by zip code won't help you. I drill down to the census tract as part of my due diligence and know specifically where to buy depending on funding.
Let me know if you have any more questions and would be glad to help as much as I can.
Thank you Peter! So during renovation and rehab how did you “keep tabs” and project manage from afar? Did you just let a contractor “do their thing”and checked in periodically or did YOU buy the materials have them shipped and just paid for labor in phases as they competed?
I ultimately want to “fix and flip” and not rent but it’s not realistic or feasible for me to travel from California so often, and turnkey properties are less profitable overall but less headache and “ready to go” (and in most cases already tenant occupied) so this is also where I’m conflicted!
Hi Misha,
I live in Los Angeles and invest in Detroit. I viewed all my properties from the outside because I purchase in the annual tax sale. I did purchase 1 property sight unseen. Regardless of how you purchase due diligence is a must. I am originally from Detroit and invest in areas I know very well. I self manage all my properties from out of state. I invest for long term holding. I buy all my homes cash and find Detroit properties to have very good cash flow. I network and find contractors through word of mouth. My brother is on the ground and there when I need him to be. I visit Detroit about 1-2 times a year. As a woman I find that contractors try to charge me at a higher rate but there are so many ways around this. If seriously thinking about investing in Detroit securing the property is your first priority.
I have helped out of state investors buy properties in Detroit and none of them have ever visited here. They trust me and my team to guide them plus I send them 100 pictures of each property I have under contract. But they all had either a friend or relative that lived somewhere close to come to take a look at the property (during our showing) and just to have an extra eye on it.
When flipping they already have a team in place and a trusted person to communicate how the progress is going, I would not have the contractor be your only person to talk to because they can we the worse at responding and following up with, if possible find someone who can keep tabs on your contractor and the project . A friend, family, hired a realtor, trusted person, anyone you trust to oversee the contractors, I wouldn't trust them to be on schedule or do the right things I have seen contractors here do wrong things to investors.
Thank you Peter! So during renovation and rehab how did you “keep tabs” and project manage from afar? Did you just let a contractor “do their thing”and checked in periodically or did YOU buy the materials have them shipped and just paid for labor in phases as they competed?
I ultimately want to “fix and flip” and not rent but it’s not realistic or feasible for me to travel from California so often, and turnkey properties are less profitable overall but less headache and “ready to go” (and in most cases already tenant occupied) so this is also where I’m conflicted!
Misha, during renovation, you have to have someone on the ground you can trust, such as a realtor or perhaps an inspection company that you can negotiate terms with at each step of the way. I pay my manager and contractor via Zelle after seeing all invoices and estimates. I also receive pics for each repair item needed. I order the materials from Home Depot and have it ready for the contractor to pick up. in some cases, the contractor will buy it and just bill me. So far, the contractor prices have been reasonable and affordable. In my opinion, I would not buy any property in Detroit unless you have first secured a person of trust on the ground. This is the first step, and you can do this via networking. Perhaps all of us out of state investors can benefit from one network of a trusted individual(s) or company as we all have the same goal. I would not be opposed of investing into a project where we all can benefit under the right circumstances. Just a thought in mitigating risk and is just another option.
Thanks
Peter
Are there any OUT OF STATE Detroit investors? Detroit is obviously notorious for low cost, low risk, good rental income cash flow but for managing properties, managing fix and flips, how do you manage it all from out of state?
Has any out of state investor bought site unseen? How often do you travel (or have to travel) to Detroit to manage your properties?
Hi Misha
I have been doing this from out of country since 2011, started with Atlanta with great success, some hiccups along the way, however its worked out very well for me with good performing assets that I hold today for income stream.... goodbye day job. Now I have started doing this in Detroit. Chasing cash cows and markets that are appreciating.
The key here is to understand what you are buying, have a good handle on the comps, understand where to buy and product not to buy in terms of neighbourhoods, and without saying if it is a buy and hold you need good, reliable property management
You need people on the ground you can trust to manage the rehabs.
So how do you find these people??
It took me time, networking and making sure the people that are working with me know what they are doing and are talking the walk, walking the talk... as they say.
No need to rush, more important to get it right and continue networking until you find the right people that can help you achieve a great outcome
All the best
@Misha Taylor The key is locating and buying at the right price and location. Also having dependable people here to handle things is key to you success.
When out of state having a team you can trust is the most important thing you can do. A turn key provider might be your best option but be careful when choosing the right company. Use google and see other client reviews. There are 2 basic options with the turn key guys either buy a home that is tenant occupied or buy a vacant and have them manage the rehab. If you go tenant occupied there is typically some deferred maintenance with the deal. If you go with a vacant home get ready for 3-4 months for rehab and tenant placement (this is probably the best option since you can choose your tenant but also is not cash flowing for you right away). Also a good management company in Detroit is a dime a dozen there aren't many good property managers in Detroit, your local source should know the management company and have an established relationship with the good ones.
Can you guys send any recommendations of really good agents that you use in Detroit my way?
Thanks and greatly appreciated.
Are there any OUT OF STATE Detroit investors? Detroit is obviously notorious for low cost, low risk, good rental income cash flow but for managing properties, managing fix and flips, how do you manage it all from out of state?
Has any out of state investor bought site unseen? How often do you travel (or have to travel) to Detroit to manage your properties?
I don't doubt Detroit is a good market for rehabs, but i'd be cautious holding anything there for too long. This market is highly speculative and artificially pumped by out of state investors. While slowly improving, the local fundamentals remain weak and the level of poverty still one of the highest in the nation.
With the prospect of the massive tech bubble bursting anytime & consequent recession, i'd be anxious to hold RE in already high unemployment cities
I'm starting to look at this area. Despite population going down its hard to make Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other markets work.
I'm starting to look at this area. Despite population going down its hard to make Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other markets work.
Yes....this
why I started buying in Detroit
Atlanta - hard to make the numbers work, price of houses have skyrocked.
Good for those who got in at the early stages of the cycle, bad if trying to buy today
I'm dumping the majority of my portfolio Jefferson Chalmers area and a few 48224. Message me if interested or I'm going to put them on the market in a few weeks when I find a more competent Detroit Realtor that is actually IN THE AREA (no rookie (248)'s eager to take a listing and don't know what to do with it)
Misha,
I bought three single family homes and several vacant lots in Detroit in 2016. Two of the houses I bought sight unseen. I've acted as GC on the three rehabs from here in Los Angeles. As one would expect, it's not easy from 2,000 miles away. Unlike the others in this thread, I find myself traveling to Detroit much more frequently (5 to 6 times a year). Yes, life is easier when you have a good team on the ground. But I've learned the hard way that contractors come and go (and when some go, they go with your deposit and all your stuff). Good neighbors, however, are absolutely invaluable. I can tell you stories of neighbors defending my property against thieves, squatters, and even fire. Download the Nextdoor app and introduce yourself to your community. You'll find a lot of information about what's happening in your neighborhood. You can also get contractor recommendations. Thumbtack is also a valuable resource for contractors. Also, when you do visit, get to know the people in city government that you will deal with frequently. I bought two of my homes from the Detroit Land Bank, so I made sure to show up at their offices a few times in order to put faces with names.
Detroit is unlike any other market. Yes, there are negative indicators that might dissuade some from investing. That said, I don't think traditional real estate rules always apply in Detroit. I'm in it for the long haul and intend to double down if the market slumps later this year, as predicted. I like what Duggan is doing there. And if the state legislature fixes the auto insurance mess, that could be a major factor pulling young people from the suburbs into the city.
One caveat... the "two Detroits" narrative is quite real, despite what politicians will tell you. Greater downtown Detroit and a handful of neighborhoods outside of it will see all the investment and economic growth in the coming years. Unfortunately, the remaining neighborhoods will continue to suffer and will not see progression in our lifetimes, if ever.
Michael
I am an out of the country investor, and Detroit is my second market doing it remotely (after starting many years ago in south Florida that now is still hot market). I have traveled to Detroit in the last two years more than ever destination in my life (I must take 2 flights, 7 hr and 3 hr duration each EVERY MONTH). You have to be involved in the market, you MUST develop a local team (reliable and trustworthy) and the only way to doing that is investing, investing and investing. Network is key. Go to meetings, visit the neighborhoods, talk to people, ask for references, etc etc etc. I agree with many of the other members of BP in this post, Detroit is not an easy market, still many pockets in the city, poverty zones, local Detroiters codes that must be attended, but at the end of the day is a powerful and big American city that is coming back (see GPD/Capita increase, unemployment rate decrease -still high for U.S. 9% in comparison with a national average of 3.9%-, an improvement in the family household income) that can make SOME investment thesis work properly.
I have purchased 50+ properties in the last year (SFR), rehabbed them (rehab duration 10-15 days) and rented (takes no more than 2 weeks). I am expanding the business this 2019 and like @Marisa R. said you must have people on the ground being the guardians of every penny. In my personal case there is No vacancy, no late payments, no evictions (so far, evictions will appear for sure). Key here is focusing on neighborhoods that are coming back and have a relation homeowner/tenant 40%/60% (sometimes more). I have also established some criteria to my realtors and property managers in terms of areas to focus, type of tenant desired, etc.
I recommend a post created by @Rebekah Keller (https://www.biggerpockets.com/forums/697/topics/48...) where you can also find very interesting tips on those market challenges.
Enjoy the ride and let us know how your Detroit adventure goes!
Hi guys! For any out of state investors in this thread or those thinking about investing in Metro Detroit, I am here to assist you as your man on the ground! I am a native Detroiter with boots on the ground and I am available to facilitate and assist any needs you may have. Feel free to reach out or even refer an associate. Allow me to optimize your investments, you will not be disappointed.
I work with out of state investors and out of country investors. You must have a trusted person/team on the ground that provides you with the utmost transparency and security. My team and I do everything for our investors to make sure that they can rest easy at night knowing that their money are in good hands. We provide all the details before each investment to make them rest assured that their investments were picked up below replacement cost. We also provide updates to the project and investments as it goes on with pictures/videos. Remember it is the price at which you buy at and not at what you sell.