Deciding on a niche area

5 Replies

Hey Guys!

I am a new investor looking to get started with my first purchase. I plan to have a buy and hold strategy. I am trying to figure out what I want to focus on. I am thinking single family or multi family properties. I live in the metro Detroit area. I can't decide where I want my niche to be. I am considering cities in the metro Detroit area such as, Ferndale, Royal Oak, Hazel Park, Oak Park, Birmingham, Southfield, Warren, ect. After looking into some of these area's I think Hazel Park seems pretty good. The price to buy a home versus the rent in this area is good and I believe these properties would cash flow well. I have heard Warren is good and could be a good cash flow area as well. Personally Ferndale and Royal Oak are my favorite area's to spend time, so investing there could be cool. However, I feel like the Ferndale market is currently very overpriced for what rent is there.  

I need to choose carefully and consider what kind of tenants I want to have and how much involvement will be required of me as a landlord. After looking at city data for some of these places. I still think Hazel Park is okay, even though its a lower income area. Its mostly blue collar working families. I wonder what this kind of demographic would mean for me as an investor. On the flip side, if I am investing in a nicer area such as Royal Oak, those properties might be a better pick to keep on my portfolio and they might also require less management work from me. 

What do you guys think about Hazel Park, Royal Oak and some of these other area's?

hi @Bryan Blancke welcome to BP!

I like the areas you've identified. I have houses in Royal Oak, Ferndale and Hazel Park. I started buying in 2010 and have been happy with the results as well as the tenants moving into the area. I originally planned to diversify, buying in: 

Royal Oak for ok cash flow but anticipated appreciation, 

Hazel Park for great cash flow but no anticipated appreciation,

Ferndale as a solid market in between.

They have all performed well with excellent cash flow and excellent appreciation. Anytime I have a vacancy I get 30-40 inquiries and have gotten great tenants as a result. I think if I were starting out acquiring now, I would lean towards Hazel Park simply because assessments are lower than Ferndale which in turn provides better cash flow and return on a lower all-in investment. 

Best of luck to you!

Birmingham and Royal Oak cash flow but have higher barriers to entry because of price. I like those areas because of the new construction and investment most of the other suburbs you mentioned lack. If you buy a SFR to hold and the property is in the path of growth for investment down the road you have some additional options in the future for building. Also, perhaps you could be one the few remaining hold outs in an otherwise newly developed part of town. Developing market intelligence in these suburbs is important as you seem to understand well based on the premise of your question-- developing a niche. There are very subtle differences in an already small footprint for these cities.
Originally posted by @Bryan Blancke :

Hey Guys!

I am a new investor looking to get started with my first purchase. I plan to have a buy and hold strategy. I am trying to figure out what I want to focus on. I am thinking single family or multi family properties. I live in the metro Detroit area. I can't decide where I want my niche to be. I am considering cities in the metro Detroit area such as, Ferndale, Royal Oak, Hazel Park, Oak Park, Birmingham, Southfield, Warren, ect. After looking into some of these area's I think Hazel Park seems pretty good. The price to buy a home versus the rent in this area is good and I believe these properties would cash flow well. I have heard Warren is good and could be a good cash flow area as well. Personally Ferndale and Royal Oak are my favorite area's to spend time, so investing there could be cool. However, I feel like the Ferndale market is currently very overpriced for what rent is there.  

I need to choose carefully and consider what kind of tenants I want to have and how much involvement will be required of me as a landlord. After looking at city data for some of these places. I still think Hazel Park is okay, even though its a lower income area. Its mostly blue collar working families. I wonder what this kind of demographic would mean for me as an investor. On the flip side, if I am investing in a nicer area such as Royal Oak, those properties might be a better pick to keep on my portfolio and they might also require less management work from me. 

What do you guys think about Hazel Park, Royal Oak and some of these other area's?

 Bryan hazel park and royal oak are hot right now and great investments. Your real niche is you spend a lot of time in the area and know the people first hand that want to live there and know where they are going to save alittle money on rents, for example the young professional crowd going to ferndale or hazel park.  Your real niche is knowing where they are and know where the wind is blowing. Invest in those areas and you will be ahead of everyone with your own niche.

Royal Oak and Ferndale are some great areas. The price points are high but you will have a great tenant pool.

@Bryan Blancke Check out Oak Park too.  Every time I drive through the city I am impressed by how nice it.  Brick homes, manicured lawns, mature tree lines streets...I am sure there are lesser areas of the city too but overall I think it is an excellent area to invest.

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