Experience Investing in Detroit Metro Area?

36 Replies

Hi,

I'm a newbie living in the Detroit Metro area (Harper Woods specifically). I want to start to acquire rental properties in and around the area starting in the summer and sooner if possible. I am wondering if there is anyone here who has experience investing in and around Detroit. 

I specifically want to know how the experience has been for investors investing in the City of Detroit (as opposed to the surrounding communities) in terms of rentals and flips. Also, does anyone have experience in Saint Clair Shores, Grosse Pointe, Harper Woods, Eastpointe, Roseville, or Warren? (All surrounding communities of Detroit)

How has your investing experience been in the Detroit Metro area?

- Stewart Olney

Yes Stewart, there are a number of us in the Metro Detroit area here.

I have one in Roseville.  Behind the Macomb Mall.  Also Madison Heights and Lincoln Park.

I avoid Detroit unless you can buy massive amounts of land

I have a couple in SCS, Warren, GP Woods, and Clinton Twp. , I've done flips in Eastpointe, Clinton Twp, and Center Line. I too have stayed out of Detroit Proper thus far, no good reason other than the risk/reward factor. I find that I have a ton more issues getting rent payments on time along with increased repair costs in lower income areas. I have found it more profitable to pay a little more and receive higher rent returns and less hassles. There are still some decent deals to be had, you just have to look hard and be willing to do some renovations. 

Just my opinion...

There's a pretty good crew from MI here on BP.  Get at Tom Auterman to get added to the Metro Detroit investor meet up.  It's in different areas every month.  Great for meeting and networking with likeminded people. 

Haven't done any deals in those cities yet, but working on my first deal in St. Clair Shores and currently marketing for good deals in all those areas. 

PM me if you want to be added to my buyers list.  I come across some decent deals in Harper Woods and Roseville a lot.  

Good luck! 

Originally posted by @Thomas I. :

There's a pretty good crew from MI here on BP.  Get at Tom Auterman to get added to the Metro Detroit investor meet up.  It's in different areas every month.  Great for meeting and networking with likeminded people. 

Haven't done any deals in those cities yet, but working on my first deal in St. Clair Shores and currently marketing for good deals in all those areas. 

PM me if you want to be added to my buyers list.  I come across some decent deals in Harper Woods and Roseville a lot.  

Good luck! 

I would like to be added to your list please.  Roseville would be best for me.  I have a good relationship with the inspectors.

I have two properties in Detroit. My best advice run! Invest in the outskirts of Michigan.

Originally posted by @Anderson Durham :

I have two properties in Detroit. My best advice run! Invest in the outskirts of Michigan.

YOU  got sucked in all the way from Cali.  How did you come about these properties?  How long have you had these properties and where are they?  Did you come here and look at the properties before you bought them?

I will never understand how people out of state think its a good idea to buy in Detroit.  And buying 2 properties is not the way to go.  Buy land and just sit on them

@Mark Byrge  Thanks for the advice! Have you tried to set up automatic payments with those renters that you have trouble getting rent on time from?

@Thomas I.  I tried to get in contact with him already, but he hasn't gotten back to me yet. Are you a wholesaler or do you make other types of real estate investments as well? I particularly like the 3 bedroom bungalows that get Grosse Pointe Schools on the East side of I-94 in Harper Woods, although it seems like deals on those have dried up recently.

@Anderson Durham  What kind of things did you experience with your Detroit properties that made you come to this conclusion?

Thanks for your feedback everyone!

I did! I was attracted to the price of homes. I made impulsive decisions rather than intelligent ones. I found these properties on the mls. The sfh is located on the east side, and the duplex on the is on the west side. Even if I lived in Michigan I wouldn't accept a house for free. High taxes, high insurance rates, high tenant turnover, corrupt water company. The ingredients to disaster! @Scott K.  

@Stewart Olney   I am a wholesaler.  Those HW houses east of 94, west of Mack are definitely good rentals.  Be sure to screen well, however. My buddy has had a hell of time with bad tenants in that area. 

Try Aaron Yates.  He will be able to add you to the email list I think. 

All I can say is do your due diligence. There's no real appreciation in Detroit. It's a money pit. Only people that have something to gain,will tell you to invest in Detroit. I'm speaking from experience @Stewart Olney  

Originally posted by @Anderson Durham :

All I can say is do your due diligence. There's no real appreciation in Detroit. It's a money pit. Only people that have something to gain,will tell you to invest in Detroit. I'm speaking from experience @Stewart Olney  

 Wrong.  Detroit has one of the highest appreciations in the country.  Your experience is common though.  Distance investing can be a problem if you do it alone, or the person you partner with isn't very good.  Not everyone has the same experience.  All you are telling us is to not do it the way you did it.  What I'm saying is to do it the way my partner and I do it.

@Joe Villeneuve  What is your experience investing in Detroit? Do you rent or flip any properties in the city of Detroit itself?

Not according to this @Joe Villeneuve. The appreciation part was the only thing you addressed. What about the other factors?

Originally posted by @Stewart Olney :

@Joe Villeneuve What is your experience investing in Detroit? Do you rent or flip any properties in the city of Detroit itself?

 Stewart.  My partner has been very successful with a CA investor buying/rehab and renting..or quick flips.  You need someone local that knows what they are doing, and you need to move fast.  Personally, I find I would rather put my money elsewhere.  Less aggravation and better returns...but Detroit does work, and it is appreciating fast.

The City is getting a better handle on taxes and actually lowering them in some cases, but as all REI know, the SEV from the city has little to do with the actual sale price the property will sell for.

Originally posted by @Anderson Durham :

Not according to this @Joe Villeneuve. The appreciation part was the only thing you addressed. What about the other factors?

 Are you expecting that every property will appreciate the same...or at all...in every city?  The City of Detroit is appreciating.  Not every property is, but the majority is.  You just have to be involved with the right ones....and I'm still trying to figure out why you are disappointed that your taxes went down.

Are you flipping in Detroit?  Why would you do that?  There isn't enough profit in that since the spread isn't that large.  The % is, but a $10,000 cost (buy/rehab) can go up 50% and that only leaves a $5,000 profit.

You flip in CA, and you cash flow in Michigan...and I CF in the Detroit western suburbs...with the Cash Cows.

Hi Stewart, I am in the same boat as you, trying to start REI in metro Detroit. I have heard nothing but bad things about investing in Detroit but there seems to be some positive experiences investing in surrounding metro areas. My biggest hurdle right now is finding the right metro market to jump into. I'll probably post a separate question on the issue, but in the meantime, does anybody have any thoughts on what they see as up and coming markets in metro that maybe the general population hasn't picked up on yet?

@Brian Jurvelin  You're living in one of them.  Here is a short list of where I'm involved for cash flow, flips or both:

Livonia
Redford (south)
Ypsi (48197)
Wayne
Westland
GC
Saline
...and more

I live in Plymouth.  If you want more details I'd be happy to discuss it with you.

@Joe Villeneuve I have been hearing a lot of great things about Livonia and I like living here myself. My initial thoughts have been to pursue 2-4 unit MFHs to increase my buy and hold economies of scale and is the reason I haven't been seriously considering Livonia to this point because I can't find the inventory here. Do you focus on SFH?

@Joe Villeneuve  What is your favorite market right now? And which do you like best in it, flips or rentals?

@Brian Jurvelin  I am currently focused on SFHs because that all my limited case and credit will allow at this point. Basically I need to get an after income tax/employment tax/expenses cash flow of $500 a month with just $50,000. At this point I'm not entirely sure how to do it, but I'm hoping to learn enough here to find a path forward on that.

Originally posted by @Brian Jurvelin :

@Joe Villeneuve I have been hearing a lot of great things about Livonia and I like living here myself. My initial thoughts have been to pursue 2-4 unit MFHs to increase my buy and hold economies of scale and is the reason I haven't been seriously considering Livonia to this point because I can't find the inventory here. Do you focus on SFH?

Yes. I just got a 1500sf 3/1 under control for less than 80k. Rehab is less than 20k. ARV is over 135k. NCF is at 400/m with PM AND cashing out over 25k at refi in 6 months. I don't have any problems finding inventory. IT comes down to negotiations.

Originally posted by @Stewart Olney :

@Joe Villeneuve What is your favorite market right now? And which do you like best in it, flips or rentals?

 Right now, best for flips would be Livonia and Ypsi.  Best for CF would be Livonia, Redford and Ypsi.