Looking into Detroit but SO scared

New to Real Estate · MI · Member since 2023 · 40 posts · 13 votes

Hello. I have been lookin into pulling the trigger on deals in Detroit that are already occupied. Seems like automatic cash flow. But seems too good to be true. And super risky. Anyone in Detroit with any info?

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Travis Biziorek

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

Hey Michael, looks like you've got a few uninformed responses here so I'll provide you one from someone that actually invests in Detroit.

I live in California now and have 12-doors in Detroit. I'm still actively investing but I help others get started there as well.

The city has been insanely good to me and my family, but yes... you do need to do a lot of due diligence and/or work with someone that REALLY understands the intricacies of the market. Happy to connect and see if I can be helpful.

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Rich Solano
Investor · Freehold, NJ · Member since 2017 · 51 posts · 12 votes
2y
Quote from @Travis Biziorek:

Quote from @Rich Solano:

Quote from @Travis Biziorek:

Hey Michael, looks like you've got a few uninformed responses here so I'll provide you one from someone that actually invests in Detroit.
I live in California now and have 12-doors in Detroit. I'm still actively investing but I help others get started there as well.
The city has been insanely good to me and my family, but yes... you do need to do a lot of due diligence and/or work with someone that REALLY understands the intricacies of the market. Happy to connect and see if I can be helpful.

How has your CapEx and turnover been in your experience with 12 units?

Better than you'd expect. Happy to share some data on it if you want. I'm quite public about performance numbers with my properties there.
That would be awesome!
0 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @Rich Solano:

Quote from @Travis Biziorek:

Quote from @Rich Solano:

Quote from @Travis Biziorek:

Hey Michael, looks like you've got a few uninformed responses here so I'll provide you one from someone that actually invests in Detroit.
I live in California now and have 12-doors in Detroit. I'm still actively investing but I help others get started there as well.
The city has been insanely good to me and my family, but yes... you do need to do a lot of due diligence and/or work with someone that REALLY understands the intricacies of the market. Happy to connect and see if I can be helpful.

How has your CapEx and turnover been in your experience with 12 units?

Better than you'd expect. Happy to share some data on it if you want. I'm quite public about performance numbers with my properties there.
That would be awesome!

My pleasure! Just sent you a DM.
0 Reply
Brian Jackson
Realtor · Akron, OH · Member since 2023 · 56 posts · 40 votes
2y
From listing investment properties in Akron and Cleveland I would do my homework to make sure tenants are indeed paying rent. If Section 8 figure out what percent the tenant is responsible for. Also ask the seller for the last S8 inspection report. Best of luck on your investing!
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
@Maz Pardhan why aren't you disclosing that you're a paid strategic advisor for this turnkey provider you want to share, as you disclosed in the thread below?

Planning to start investing in Detroit - any one use Upside investments? (biggerpockets.com)

[email protected]248-209-6824
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Maz Pardhan
Member since 2021 · 47 posts · 27 votes
2y
Quote from @Drew Sygit:

@Maz Pardhan why aren't you disclosing that you're a paid strategic advisor for this turnkey provider you want to share, as you disclosed in the thread below?

Planning to start investing in Detroit - any one use Upside investments? (biggerpockets.com)

Thanks Drew, as you mentioned I have disclosed it in previous posts, but perhaps should do so more regularly.

happy to see others such as yourself advising potential investors on the benefits of investing in Detroit.
1 Reply
Sara Emmanuelle Dube
Member since 2024 · 33 posts · 18 votes
2y
Hi Michael, Ive just bought 2 duplexes in Detroit and im going to post here how its going on a more regular basis. You can follow along.
One thing I realize now is that i received the tenant rolls with names addresses etc so I have tenants in place, with leases however only 1 tenant out of 4 is actually paying. The others feel like they were props temporarily put in place to show "cash flow".
The 2 side by side duplexes were purchased in February 2024. March we signed with a Property Manager and May 21st, today, they are still there enjoying free rent.
Something to consider when thinking of cash flow....
We are also renovating the units to 1) bring them up to date to get the Detroit’s Rental Property Certificate of Compliance, and 2) Raise the rent. That process has been a struggle. It is very hard to get a bid from contractors, according to PM. Just a little work has been done.
Have a great day!
Sara
3 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Sara Emmanuelle Dube too often, sellers of "turnkey" properties do this:(
The way to address it is by having the seller personally sign reps & warrants, making them liable for this. Can still be difficult to sue though.
A decent percentage of the time this can also be due to low-demographic tenants trying to take advantage of ownership change by claiming, "they don't know who to pay rent to". Our standard practice is to show tenants copy of deed, showing new owner, and a copy of our management contract to show them that new owner legally hired us - so, we're their new PMC.
--Even this sometimes doesn't work and we have to start the eviction process to get in front of a judge who rules the tenant owes the rent to us (as agent for the owner). Unfortunately, most of the time this happens, the tenants have spent the rent money already and they end up moving:(
Just some of the challenges of investing in gentrifying, Class C areas and why proper management is so important to minimize these challenges.
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Sara Emmanuelle Dube
Member since 2024 · 33 posts · 18 votes
2y
Quote from @Michael Smythe:

@Sara Emmanuelle Dube too often, sellers of "turnkey" properties do this:(
The way to address it is by having the seller personally sign reps & warrants, making them liable for this. Can still be difficult to sue though.
A decent percentage of the time this can also be due to low-demographic tenants trying to take advantage of ownership change by claiming, "they don't know who to pay rent to". Our standard practice is to show tenants copy of deed, showing new owner, and a copy of our management contract to show them that new owner legally hired us - so, we're their new PMC.
--Even this sometimes doesn't work and we have to start the eviction process to get in front of a judge who rules the tenant owes the rent to us (as agent for the owner). Unfortunately, most of the time this happens, the tenants have spent the rent money already and they end up moving:(
Just some of the challenges of investing in gentrifying, Class C areas and why proper management is so important to minimize these challenges.
Thanks for the response. Good to know for the next investment - Hopefully eviction procedures have started on my side. It would make the process of bringing the units up to code easier.
What do you think of cash for keys ?
I also was told that tenants can come back and squat. Any way to secure the property?

Thank you in advance, this advice is great,

Sara
0 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Sara Emmanuelle Dube we have a very specific cash-for-keys (CFK) process!
Several owners have posted here on BP, that they made the mistake of paying the CFK funds to the nonpaying tenant, usually duped because that tenant claimed they needed the money to move, and then the tenant did NOT move out:(
So, our CFK process requires them to sign acknowledgement forms about the process, which we've actually been able to use in court against the tenant when they don't follow thru on the process.
SECURITY: always a challenge in Class C & D areas!
We have several options to minimize squatters and breakins to steal mechanicals:
1) Remove Mechanicals (so can't be stolen), install ArmorGuard doorjamb reinforcement to make it harder to kick in doors and use double-key deadbolts so entry thru a window still doesn't allow opening of a door for greater access.
2) Install DAWGS which are metal screens that replace doors and cover windows to deter entry. Somewhat expensive and we have had a couple of persistent thieves still break in, it is rare.
3) Turn Off Utilities to deter squatters. Can make it challenging to RentReady prep.
House-sitters we tried in the past, but after 2 of them were thieves, we stopped.
Alarms work in the suburbs, but not really in City of Detroit. Nonviolent crimes are low priority for the police, so they take hours to respond, and we're not paid enough to respond and chance getting shot confronting an intruder.
Let us know what other questions you have!
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3 Reply
Maz Pardhan
Member since 2021 · 47 posts · 27 votes
2y
Quote from @Sara Emmanuelle Dube:

Hi Michael, Ive just bought 2 duplexes in Detroit and im going to post here how its going on a more regular basis. You can follow along.
One thing I realize now is that i received the tenant rolls with names addresses etc so I have tenants in place, with leases however only 1 tenant out of 4 is actually paying. The others feel like they were props temporarily put in place to show "cash flow".
The 2 side by side duplexes were purchased in February 2024. March we signed with a Property Manager and May 21st, today, they are still there enjoying free rent.
Something to consider when thinking of cash flow....
We are also renovating the units to 1) bring them up to date to get the Detroit’s Rental Property Certificate of Compliance, and 2) Raise the rent. That process has been a struggle. It is very hard to get a bid from contractors, according to PM. Just a little work has been done.
Have a great day!
Sara

I've seen this happen several times as well. It's better to have empty units if possible, that way you can decide who to place after vetting them. You can also ensure you have market rates. there is such a strong demand for housing in Detroit, units are renting at top dollar in less than 5 weeks.
1 Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y
@Maz Pardhan thanks for your info about properties in Detroit only "taking 5 weeks to rent at top dollar."
What data do you have to support your opinion please?
Here's what we base what we tell our clients on: a graph showing it's taking 36% longer to place tenants than it did 2 years ago:
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0 Reply
Kass Farran
Member since 2023 · 46 posts · 29 votes
2y
Quote from @Travis Biziorek:

Quote from @Rich Solano:

Quote from @Travis Biziorek:

Quote from @Rich Solano:

Quote from @Travis Biziorek:

Hey Michael, looks like you've got a few uninformed responses here so I'll provide you one from someone that actually invests in Detroit.
I live in California now and have 12-doors in Detroit. I'm still actively investing but I help others get started there as well.
The city has been insanely good to me and my family, but yes... you do need to do a lot of due diligence and/or work with someone that REALLY understands the intricacies of the market. Happy to connect and see if I can be helpful.

How has your CapEx and turnover been in your experience with 12 units?

Better than you'd expect. Happy to share some data on it if you want. I'm quite public about performance numbers with my properties there.
That would be awesome!

My pleasure! Just sent you a DM.
Hey Travis, I'm interested in seeing this data as well.
0 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
2y
Quote from @Kass Farran:

Quote from @Travis Biziorek:

Quote from @Rich Solano:

Quote from @Travis Biziorek:

Quote from @Rich Solano:

Quote from @Travis Biziorek:

Hey Michael, looks like you've got a few uninformed responses here so I'll provide you one from someone that actually invests in Detroit.
I live in California now and have 12-doors in Detroit. I'm still actively investing but I help others get started there as well.
The city has been insanely good to me and my family, but yes... you do need to do a lot of due diligence and/or work with someone that REALLY understands the intricacies of the market. Happy to connect and see if I can be helpful.

How has your CapEx and turnover been in your experience with 12 units?

Better than you'd expect. Happy to share some data on it if you want. I'm quite public about performance numbers with my properties there.
That would be awesome!

My pleasure! Just sent you a DM.
Hey Travis, I'm interested in seeing this data as well.

Sure, just sent you a DM.
0 Reply
Allen Zhu
Rental Property Investor · Member since 2021 · 52 posts · 29 votes
2y
Quote from @Joe Hammel:

Quote from @Chris Morris:

Quote from @Joe Hammel:

Quote from @Account Closed:

@Joe Hammel I would like to see a breakdown as well if I am not too late to the post!

would love to look at the breakdown!

Sure I can send you something, Clare. I'll send you a direct message!

Hey, Joe Mind if I take a look at that breakdown -Thanks

Sure Chris, sending you a direct message now.

0 Reply
Ben Nelson
Real Estate Broker · Fraser, MI · Member since 2024 · 3 posts · 1 vote
2y
Hello Michael, I help people find these deals ALL the time. These things can be risky if you don't know what to look for. Feel free to reach out to me sometime!
1 Reply
Bennie Smith
Member since 2024 · 6 posts · 2 votes
2y
My advice would be to contact a property management company and see what owners are look to sell their properties. Reason is the property has been maintained, it has a tenant and cash flowing and it's a good way to get your feet wet without starting from square one, and you may walk into a situation where you have equity.
0 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
@Bennie Smith we get calls from investors all the time looking to "help us" with clients looking to offload their rentals.
Funny thing is, most of the time these investors are:
1) Wholesalers that will just waste everyone's time with lowball offers
2) Flippers also with lowball offers
3) Newbies that have no clue of value or have no funds
4) Savvy investors looking to fleece our clients
Rarely do we get contacted by someone actually looking to "help us".
[email protected]248-209-6824
Logical Property Management4.9459 Reviews
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3 Reply
Maz Pardhan
Member since 2021 · 47 posts · 27 votes
2y
Quote from @Michael Smythe:

@Maz Pardhan thanks for your info about properties in Detroit only "taking 5 weeks to rent at top dollar."
What data do you have to support your opinion please?
Here's what we base what we tell our clients on: a graph showing it's taking 36% longer to place tenants than it did 2 years ago:
The data is based on my rentals being posted and rented within 4-5 weeks. Your data may be valid for you depending on where you post, what the properties are like, what rents you are trying to obtain, the time you react and close on a potential tenant etc.. If you are taking 42 days to place a tenant, that's far too long based on the volume and interest i've seen.
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y
@Maz Pardhan great news for you!
How many doors do you have in Detroit?
[email protected]248-209-6824
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0 Reply
Steven Herrera
Member since 2018 · 2 posts · 0 votes
2y
Quote from @Joe Hammel:

@Michael Oliver
Metro Detroit has what nearly every single investor wants.
Couple hundred bucks a door (after PITI and budget expenses) , double digit ROI, and yes, the prices appreciate and you build equity.
You just have to know how to recognize it.
I cash flow $100k a year off 20 doors. Happy to send a screen shot of the break down to anyone who reaches out. It won’t allow me to attach a pic here.

Hey, I would love to see this as well.
0 Reply
Joe HammelBusiness Member
Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
2y
Quote from @Steven Herrera:

Quote from @Joe Hammel:

@Michael Oliver
Metro Detroit has what nearly every single investor wants.
Couple hundred bucks a door (after PITI and budget expenses) , double digit ROI, and yes, the prices appreciate and you build equity.
You just have to know how to recognize it.
I cash flow $100k a year off 20 doors. Happy to send a screen shot of the break down to anyone who reaches out. It won’t allow me to attach a pic here.

Hey, I would love to see this as well.

Sure, sending you a DM now Steven
[email protected]248-422-1685
FIRE Realty Team - Keller Williams5379 Reviews
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