Investor · Detroit, MI · Member since 2023 · 33 posts · 13 votes
I've been researching Detroit for the past several months to add to my existing portfolio. The numbers make sense, for example $70k homes getting $900ish a month in rent, etc. But is the population still going down in these sub-burbs outside of downtown Detriot? Any feedback would be greatly appreciated.
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
3y
@Jose N. Most of the suburbs have stable populations and many have new construction projects.
You might want to follow the "Deep Dive" series we're doing on our BiggerPockets blog about Metro Detroit cities, City of Detroit Neighborhoods and comparing Metro Detroit to other hotspots investors usually consider:
Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
3y
Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, double digit ROI, and yes the prices appreciate and you build equity.
The population data is skewed because the city of Detroit previously had a declining population. However, with many of them moving into the suburbs those areas have increasing population and strong appreciation.
Anyone who disagrees, is simply missing out. I cash flow $100k a year off 20 doors and have built a ton of equity in a short amount of time. Happy to send a screen shot of the portfolio to anyone who wants to see, it just won’t allow me to attach pics to a reply.
Purchase: $80k-$130k
Rent: $1100-$1500 (no rent control in MI)
1% rule: 1%-1.4% rule deals
ROI: 10-14%
Cash flow: $250-$350/door (after all expenses and budgeting for maint, capex, vacancy)
Appreciation: 3-10%+ (has been double digit for a decade)
Location: C+, B-
These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.
We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.
The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties. We don’t buy those. We have found what works and repeat it as much as funds allow. Detroit is known as the highest rent to price ratio in the country…and we’ve found the perfect balance of price/location within the area.
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
3y
Hey Jose, there's a TON to unpack here in this question.
First, Detroit suburbs and Detroit proper are two different beasts.
Regarding population, the census claims the population in Detroit proper has been declining still. I personally find that hard to believe and there's a lot of controversy around how the population was counted.
For example, there are more households in Detroit with active DTE (electricity) accounts than were counted in the census. Odd, right?
Some of the suburbs are seeing population increases. I lived in Troy, just outside of Detroit, from 2017-2022 (I'm now back in California). The population in Troy has been steadily increasing for decades.
Regardless, I personally don't look at population trends all that much in Detroit. I believe it to be a lazy heuristic as to whether invest in an area or not. There's so much else going on below the surface in Detroit. And those that simply look at population trends and dismiss it are missing out.
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