Anyone Successfully invesing in Detroit

Marisa R. · 2019-09-05T19:34:26-07:00

I have made no secret of the fact I am buying in Detroit, and a big fanI have seen the good the bad and the ugly.So what I learnt so far.......Understand your market, what you buying and true value of your property purchase. The comps don't always tell the full story. What's that saying...…"you make your money when you buy"Buy in areas where there is a good spread of owner occupiers.Stick to brick homes, prefer 3 beddersProperty management - will be a challenge, most will charge massive mark up fees on maintenance, so you need to know costs and compare to keep them honest. This requires homework.Sourcing good property management will break or make you. Its taken me a while to source good property management.Rent under market to attract larger tenant pool. Of course the numbers still need to stack up.If buying distressed properties to hold, make sure you have allowed funds to do a decent rehab, nothing worse than ongoing maintenance issues in this market. It wont go down too well with tenants, and I am not saying build a new home.Long term, good paying tenants is what will bring in the cash flow. I guess you could say this for any market. I outsource all my maintenance/repairs, I do not use property management, have built trust with a contractor. This will take time and homework but will also be key to making or breaking your investment in this market.Look at potential neighbours where there is upside, that you know you can flip down the track. There are a few that make sense.Please share your experience in this market

Christopher Grobbel

Rental Property Investor · Washington, DC · Member since 2016 · 46 posts · 6 votes

7y

Hi Marisa,

Great write up, really couldn't have said it any better, and it sounds like our experience is similar.

There is value to be had in Detroit but you have to be able to navigate the system and have patience. Good tenants will make you and anything else will break you. One other caveat is be prepared to deal with the regulatory process. The city is trying to get it right but dealing with a lot of legacy issues and it can be hard to find the right people to help your situation. They usually get it right in the end, but it takes time and a lot of calls.

2 Reply

DJ M.

Realtor · Southeast Michigan · Member since 2017 · 232 posts · 180 votes

7y

My friends that invest & I are getting good deals in the suburbs. Granted, I do usually have things pass my desk others wont have access to since I'm an agent, but even on the MLS you can find a gem every now and then. Just gotta be ready to pull the trigger, since they don't last.

1 Reply

Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

7y

Hey Marisa, as you know I've been relatively active in Detroit since about May. We've picked up 4 properties totaling 5 units (just one duplex). We have an accepted offer out on our fifth property right now, but I haven't walked it yet so we'll see if it pans out.

I'm self-managing so I don't have the issues most experience with PM's here. If you're considering investing in Detroit and not planning to self manage, understand this market is extremely complex and difficult. While home prices are cheap, rents are too. This makes it difficult for PM's to scale their business.

Consider a market where average rents are $1,500/mo compared to maybe $750/mo in Detroit (not meant to be accurate, just showing an example). A Detroit PM needs 2x more homes under management than that other market just do have the same gross rents coming through. That means at least 2x more headaches, service requests, etc. More employees, more overhead, etc. And in Detroit it's likely more than 2x because the homes are older, tenants are of poorer quality, yada yada.

I've had success overall, but it's because I'm extremely picky about what I buy. I'm not interested in buying homes for $10,000-$20,000 and doing the required rehab. There are too many unknowns, and I really don't have the time for it. I'm more attracted to the homes in the $40,000-$60,000 range that needs little work and are in locations I believe will see solid appreciation in the coming years.

It's working well so far, but it's also admittedly early in my journey.

7 Reply

Amanda Kessler

Member since 2019 · 111 posts · 36 votes

7y

Seems like you have a great plan and have done your research. There is plenty of money to be made as the market is ripe. Good luck!!

1 Reply

Marisa R.

OP

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

7y

Originally posted by @Travis Biziorek:

Hey Marisa, as you know I've been relatively active in Detroit since about May. We've picked up 4 properties totaling 5 units (just one duplex). We have an accepted offer out on our fifth property right now, but I haven't walked it yet so we'll see if it pans out.

I'm self-managing so I don't have the issues most experience with PM's here. If you're considering investing in Detroit and not planning to self manage, understand this market is extremely complex and difficult. While home prices are cheap, rents are too. This makes it difficult for PM's to scale their business.

Consider a market where average rents are $1,500/mo compared to maybe $750/mo in Detroit (not meant to be accurate, just showing an example). A Detroit PM needs 2x more homes under management than that other market just do have the same gross rents coming through. That means at least 2x more headaches, service requests, etc. More employees, more overhead, etc. And in Detroit it's likely more than 2x because the homes are older, tenants are of poorer quality, yada yada.

I've had success overall, but it's because I'm extremely picky about what I buy. I'm not interested in buying homes for $10,000-$20,000 and doing the required rehab. There are too many unknowns, and I really don't have the time for it. I'm more attracted to the homes in the $40,000-$60,000 range that needs little work and are in locations I believe will see solid appreciation in the coming years.

It's working well so far, but it's also admittedly early in my journey.

This is brilliant

As we are seeing markets rising I think its important to select good locations to maximize appreciation

I have a mixed bag

I like these numbers

$32,000 sfh, decent location, good long term tenant paying $800

On the flip side I am also holding properties in B grade locations. Where entry points are $60,000+

Detroit is not a passive investment, this is my conclusion but if uoi can work it there is money ti be made

2 Reply

Marisa R.

OP

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

7y

Originally posted by @DJ M.:

My friends that invest & I are getting good deals in the suburbs. Granted, I do usually have things pass my desk others wont have access to since I'm an agent, but even on the MLS you can find a gem every now and then. Just gotta be ready to pull the trigger, since they don't last.

And you need cash

I understand investors can source finance now but I believe $50000 each property??

Caveat, not been down this route what I have heard

1 Reply

Constance Kawa-Small

Rental Property Investor · Pittsburgh|Detroit · Member since 2019 · 75 posts · 39 votes

7y

Originally posted by @Travis Biziorek:

Hey Marisa, as you know I've been relatively active in Detroit since about May. We've picked up 4 properties totaling 5 units (just one duplex). We have an accepted offer out on our fifth property right now, but I haven't walked it yet so we'll see if it pans out.

I'm self-managing so I don't have the issues most experience with PM's here. If you're considering investing in Detroit and not planning to self manage, understand this market is extremely complex and difficult. While home prices are cheap, rents are too. This makes it difficult for PM's to scale their business.

Consider a market where average rents are $1,500/mo compared to maybe $750/mo in Detroit (not meant to be accurate, just showing an example). A Detroit PM needs 2x more homes under management than that other market just do have the same gross rents coming through. That means at least 2x more headaches, service requests, etc. More employees, more overhead, etc. And in Detroit it's likely more than 2x because the homes are older, tenants are of poorer quality, yada yada.

I've had success overall, but it's because I'm extremely picky about what I buy. I'm not interested in buying homes for $10,000-$20,000 and doing the required rehab. There are too many unknowns, and I really don't have the time for it. I'm more attracted to the homes in the $40,000-$60,000 range that needs little work and are in locations I believe will see solid appreciation in the coming years.

It's working well so far, but it's also admittedly early in my journey.

Thanks for sharing your experience thus far. I’m considering tapping into Detroit market but keep reading mixed reviews. I’m a newbie and also have in mind the same $ range and condition you are focusing on. Being out of state, I have no clue of the good areas to invest. Which do you suggest I keep my eyes on? And not to ask you to reveal your mine of gold, but what’s your approach to finding off-market $40K-$60K with minimal repairs?

1 Reply

Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

7y

Originally posted by @Constance Kawa-Small:

Originally posted by @Travis Biziorek:

Hey Marisa, as you know I've been relatively active in Detroit since about May. We've picked up 4 properties totaling 5 units (just one duplex). We have an accepted offer out on our fifth property right now, but I haven't walked it yet so we'll see if it pans out.

I'm self-managing so I don't have the issues most experience with PM's here. If you're considering investing in Detroit and not planning to self manage, understand this market is extremely complex and difficult. While home prices are cheap, rents are too. This makes it difficult for PM's to scale their business.

Consider a market where average rents are $1,500/mo compared to maybe $750/mo in Detroit (not meant to be accurate, just showing an example). A Detroit PM needs 2x more homes under management than that other market just do have the same gross rents coming through. That means at least 2x more headaches, service requests, etc. More employees, more overhead, etc. And in Detroit it's likely more than 2x because the homes are older, tenants are of poorer quality, yada yada.

I've had success overall, but it's because I'm extremely picky about what I buy. I'm not interested in buying homes for $10,000-$20,000 and doing the required rehab. There are too many unknowns, and I really don't have the time for it. I'm more attracted to the homes in the $40,000-$60,000 range that needs little work and are in locations I believe will see solid appreciation in the coming years.

It's working well so far, but it's also admittedly early in my journey.

Thanks for sharing your experience thus far. I’m considering tapping into Detroit market but keep reading mixed reviews. I’m a newbie and also have in mind the same $ range and condition you are focusing on. Being out of state, I have no clue of the good areas to invest. Which do you suggest I keep my eyes on? And not to ask you to reveal your mine of gold, but what’s your approach to finding off-market $40K-$60K with minimal repairs?

Hi Constance, it's really hard to suggest "good areas" because you can't describe areas by zip code in Detroit. It truly is block by block like most folks say. Even some of my favorite neighborhoods I wouldn't touch lots of spots in them. If you are considering investing from out of state I'd either plan on visiting initially to get a feel for things, and then spending time here in the future too. The other option is to find a partner you can trust/work with.

It's very easy to get burned in this market. So my advice is to not rush anything and really do your research.

4 Reply

Patrick Britton

Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes

7y

Seems like most people are saying it's block by block. How do the folks investing in detroit determine a good block?

1 Reply

Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

7y

Originally posted by @Patrick Britton:

Seems like most people are saying it's block by block. How do the folks investing in detroit determine a good block?

We walk it. There’s no substitute. Walk enough blocks in Detroit and you’ll be able to determine “good” and “bad”.

A good block isn’t quantitative but rather qualitative.

3 Reply

Patrick Britton

Ann Arbor, MI · Member since 2014 · 1k+ posts · 997 votes

7y

@Travis Biziorek But what do you "look" for when walking the areas? I assume few, if any, boarded up houses? No guys hustling on the corners, lol? Anything is helpful.

0 Reply

Travis Biziorek

Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes

7y

Originally posted by @Patrick Britton:

@Travis Biziorek But what do you "look" for when walking the areas? I assume few, if any, boarded up houses? No guys hustling on the corners, lol? Anything is helpful.

Yes, those are the obvious things. But the big one for me is vibe. Everywhere you go you get a feeling. Some homes I've looked at online/street view that have looked solid really didn't "feel" that way.

We could talk about it all day long, but you'll never start really figuring it out until you go walk different areas.

2 Reply

Gary Carver

Realtor · Detroit, MI · Member since 2018 · 387 posts · 129 votes

7y

@Constance Kawa-Small. My out of town/country investors mostly request Bagley,University District, Morningside,East English Village,Rosedale, Grandmont. Research these areas to start. Born and raised here. It’s important to get with good people who are familiar with the City. Some Realtors and Investors only know about the city from newspaper and news clips

3 Reply

Constance Kawa-Small

Rental Property Investor · Pittsburgh|Detroit · Member since 2019 · 75 posts · 39 votes

7y

Originally posted by @Gary Carver:

@Constance Kawa-Small. My out of town/country investors mostly request Bagley,University District, Morningside,East English Village,Rosedale, Grandmont. Research these areas to start. Born and raised here. It’s important to get with good people who are familiar with the City. Some Realtors and Investors only know about the city from newspaper and news clips

Thank you SO much for the insight! That will be a great starting point for research!

0 Reply

Michael Lionheart

Member since 2019 · 4 posts · 1 vote

7y

Hey Guys!!! Mike here, 32 and brand new to real estate investing!!!;) Considering leaving being a registered nurse in the SF bay area as I've hurt my back and am currently on worker's comp.

Currently have my own 1 bedroom condo in a very good neighborhood in the bay area worth about 400-450K, with about 25% equity in it.

Very excited about investing and from the research I've done so far, I want to build an empire in Detroit using the BRRR strategy. Ultimate goal: I want to have a net worth of 2.5 mill (today's dollars) at age 45 (3.7 mill in thirteen years). I have very little capital to start out with,5-10K, but am young, single, passionate, have a consistent work ethic and very mobile.

Am looking for any advice, to shadow/partner with someone that's done something similar!

Thank you all so much and best of luck to all of you in your real estate journey!!!;)

1 Reply

Alex KhanPro Member

Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes

7y

Originally posted by @Michael Lionheart:

Hey Guys!!! Mike here, 32 and brand new to real estate investing!!!;) Considering leaving being a registered nurse in the SF bay area as I've hurt my back and am currently on worker's comp.

Currently have my own 1 bedroom condo in a very good neighborhood in the bay area worth about 400-450K, with about 25% equity in it.

Very excited about investing and from the research I've done so far, I want to build an empire in Detroit using the BRRR strategy. Ultimate goal: I want to have a net worth of 2.5 mill (today's dollars) at age 45 (3.7 mill in thirteen years). I have very little capital to start out with,5-10K, but am young, single, passionate, have a consistent work ethic and very mobile.

Am looking for any advice, to shadow/partner with someone that's done something similar!

Thank you all so much and best of luck to all of you in your real estate journey!!!;)

Detroit is a great Market to invest in. Do your research, establish your boots on ground and get your resources in place all while keeping the day job and raising more capital.

The 5-10k houses are nearly impossible to come by. (Atleast anything worth investing in)

The last time I bought one for that price range came fully equipped with squatters. I still made out very well but doing this from Out of state may not be the best idea unless you know exactly what you’re doing.

What some people do is buy solid brick homes. Board them up wait a year or 2 and sell them as is condition.

248-979-8119

1 Reply

Michael Lionheart

Member since 2019 · 4 posts · 1 vote

7y

Wow, that is incredible!!!;)--board them and wait haha, I'm gonna wait some before I invest:)

0 Reply

Danielle E.

Rental Property Investor · Washington D.C. · Member since 2019 · 41 posts · 42 votes

7y

Originally posted by @Alex Khan: