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User Stats

21
Posts
9
Votes
Hamidou Keita
Pro Member
9
Votes |
21
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Newbie with questions about other newbies experience in Detroit real estate market

Hamidou Keita
Pro Member
Posted

I'm seriously considering investing in Detroit within the next 90 days. I've already spoken with a property manager and agents, but I'd like to hear firsthand experiences from other new investors in the Detroit market, especially within the first year or two of their initial investment. Did you encounter any issues with property management, tenants, or agents? Are you cash flowing? Did you buy and renovate? I'm looking for both good and bad experiences to help me decide if I should proceed or stay away as a beginner in Detroit. Any insights would be greatly appreciated.

User Stats

133
Posts
87
Votes
Jeff Roth
  • Real Estate Consultant
  • Ann Arbor, MI
87
Votes |
133
Posts
Jeff Roth
  • Real Estate Consultant
  • Ann Arbor, MI
Replied

Great question Hamidou!

Should you consider investing in Detroit from out of state?

Personally, I think the taxes are high and the services you get for your taxes low there.

I know people that invest in Detroit but you must know the area down to the street and have excellent property management.

However, I just talked to my CPA today about a referral he was sending me who is a client of his that has 30 rental properties in Detroit and selling them all because the City doesn't really help, charges for everything, and they never have given a security deposit back to a tenant after they stayed because of their behavior or lack of payment. Certainly this is not the case for everyone but a cautionary tale nonetheless-especially being out of State.

My CPA is referring this investor to me because he knows I like the Lansing, MI area where prices are similar but taxes are lower, labor cost lower, and lots of economic development because it is the State capital.

To your success!

User Stats

3,881
Posts
2,221
Votes
Michael Smythe
Property Manager
  • Property Manager
  • Metro Detroit
2,221
Votes |
3,881
Posts
Michael Smythe
Property Manager
  • Property Manager
  • Metro Detroit
Replied

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?

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User Stats

133
Posts
87
Votes
Jeff Roth
  • Real Estate Consultant
  • Ann Arbor, MI
87
Votes |
133
Posts
Jeff Roth
  • Real Estate Consultant
  • Ann Arbor, MI
Replied
Quote from @Michael Smythe:

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?


 Let me ask my CPA.

User Stats

41
Posts
27
Votes
Kenneth Jenkins
Property Manager
27
Votes |
41
Posts
Kenneth Jenkins
Property Manager
Replied
Quote from @Jeff Roth:
Quote from @Michael Smythe:

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?


 Let me ask my CPA.


 I'd love to know as well.

User Stats

41
Posts
27
Votes
Kenneth Jenkins
Property Manager
27
Votes |
41
Posts
Kenneth Jenkins
Property Manager
Replied
Quote from @Hamidou Keita:

I'm seriously considering investing in Detroit within the next 90 days. I've already spoken with a property manager and agents, but I'd like to hear firsthand experiences from other new investors in the Detroit market, especially within the first year or two of their initial investment. Did you encounter any issues with property management, tenants, or agents? Are you cash flowing? Did you buy and renovate? I'm looking for both good and bad experiences to help me decide if I should proceed or stay away as a beginner in Detroit. Any insights would be greatly appreciated.


 The number one thing I tell fellow investors is that in the city proper you will deal with 36th district court and that has a material impact on the speed with which the court process will proceed if you need to evict.  It can take 2-3x longer than in the suburbs and that does impact economic vacancy.  Not everyone starting off gets hit with this, and if you can buy a portfolio it can "de-risk" the issue to some extent, but if you have one property and experience an 8-9 month fight to collect rent prior to eviction with a large repair bill after that it can be very painful.

ALWAYS use a licensed PM in Detroit.  Otherwise prepare to cry and wonder if your money is being stolen.  

To answer your questions, yes we have encountered issues with property managment. That's the reason we self manage today.

Yes, our properties are cash flowing, but to varying degrees.  Our best property may be 20% coc and the worst is around 2%.  The average is in the low double digits.

Yes, we typically buy and renovate.  See my other posts for typical renovation costs in Metro Detroit, and how to build a portfolio in Metro Detroit if you don't live locally.

User Stats

1,603
Posts
1,748
Votes
Travis Biziorek
  • Investor
  • Arroyo Grande, CA
1,748
Votes |
1,603
Posts
Travis Biziorek
  • Investor
  • Arroyo Grande, CA
Replied

Hey Hamidou, I have a ton of experience in Detroit. I've been investing there since 2019 and have done a bit of everything... Section 8, BRRRR's, tax auctions, self-management, buying with tenants, dealing with bad contractors, PM's, you name it.

I'm very open about my journey and happy to share resources with you before you invest.

User Stats

21
Posts
9
Votes
Hamidou Keita
Pro Member
9
Votes |
21
Posts
Hamidou Keita
Pro Member
Replied

@Travis Biziorek Let's connect

User Stats

238
Posts
173
Votes
Joseph Bui
  • Rental Property Investor
  • Midwest
173
Votes |
238
Posts
Joseph Bui
  • Rental Property Investor
  • Midwest
Replied

I've scaled to 7 doors in Detroit, working on a flip as well. Overall a great market, but lots a gotchas that can get you if you aren't ready. Happy to connect and knowledge share if you are interested.

User Stats

21
Posts
9
Votes
Hamidou Keita
Pro Member
9
Votes |
21
Posts
Hamidou Keita
Pro Member
Replied
Quote from @Joseph Bui:

I've scaled to 7 doors in Detroit, working on a flip as well. Overall a great market, but lots a gotchas that can get you if you aren't ready. Happy to connect and knowledge share if you are interested.


 I would love to connect

User Stats

48
Posts
85
Votes
Replied

Check out my posts. I've invested over $2M in Detroit and have shared my journey on here. Happy to answer any questions you have. 

At a minimum, dm your property management group and I'll tell you if you should stay away from them. I've chatted with a lot of them and fired 2 of them :)

User Stats

21
Posts
9
Votes
Hamidou Keita
Pro Member
9
Votes |
21
Posts
Hamidou Keita
Pro Member
Replied
Quote from @Jonathan Weinberger:

Check out my posts. I've invested over $2M in Detroit and have shared my journey on here. Happy to answer any questions you have. 

At a minimum, dm your property management group and I'll tell you if you should stay away from them. I've chatted with a lot of them and fired 2 of them :)

I DM you