New Detroit Rental Investor

Investor · Mililani, HI · Member since 2023 · 3 posts · 3 votes

Hello everyone!

I'm new to the forum (been lurking for a while) and wanted to post about my experience to allow others to follow my journey. I've been in real estate for 18 years, am a licensed Realtor and have owned several rental and flip properties in Texas & Hawaii. I'm currently living in Hawaii and I'm excited to enter the Detroit market and keep everyone updated along the way. I just bought a SF rental from a wholesaler in Detroit (just north of Bagley and south of Ferndale) and have another on market deal under contract in the Morningside area. I'm in Detroit now for inspections on one and to generate the scope of repairs on the other. Happy to answer any questions and always open to any advice local experts are willing to share.

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Joseph Bui

Lender · Nationwide · Member since 2023 · 362 posts · 237 votes

Hey Jason, I'm located in Ewa Beach and also a Detroit investor. I have soon to be 7 doors there now. We should meet up sometime and knowledge share.

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Max Ferguson
Real Estate Broker · Denver/Castle Pines/Colorado Springs, CO · Member since 2021 · 248 posts · 136 votes
1y
Curious as to how the inspections go!

Let us know numbers now or when the deal closes. Tightening restrictions in Colorado have deterred my acquisition strategy here. I'm originally from Nebraska (Omaha/Lincoln) where most rentals still pencil out, so I have been looking there. Although the St. Louis and Detroit prospects have always been tempting, I just don't know anything about them.

Good luck and keep us updated!
1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y
@Jason Mitchell two of the better Neighborhoods of Detroit's 183 that we've ranked.
Are you planning to rent or flip these?
Will be two different Scopes Of Work (SOW).
How will you find, vett and manage contractors remotely?
[email protected]248-209-6824
Logical Property Management4.9458 Reviews
Website View Page
1 Reply
Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
1y
Quote from @Jason Mitchell:

Hello everyone!
I'm new to the forum (been lurking for a while) and wanted to post about my experience to allow others to follow my journey. I've been in real estate for 18 years, am a licensed Realtor and have owned several rental and flip properties in Texas & Hawaii. I'm currently living in Hawaii and I'm excited to enter the Detroit market and keep everyone updated along the way. I just bought a SF rental from a wholesaler in Detroit (just north of Bagley and south of Ferndale) and have another on market deal under contract in the Morningside area. I'm in Detroit now for inspections on one and to generate the scope of repairs on the other. Happy to answer any questions and always open to any advice local experts are willing to share.

Hey Jason, let me know if you need anything :-)
1 Reply
Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
1y
welcome! Detroit seems popular for cash flow!
0 Reply
Joseph Bui
Lender · Nationwide · Member since 2023 · 362 posts · 237 votes
1y
Hey Jason, I'm located in Ewa Beach and also a Detroit investor. I have soon to be 7 doors there now. We should meet up sometime and knowledge share.
2 Reply
Jason Mitchell
OP
Investor · Mililani, HI · Member since 2023 · 3 posts · 3 votes
1y
Quote from @Joseph Bui:

Hey Jason, I'm located in Ewa Beach and also a Detroit investor. I have soon to be 7 doors there now. We should meet up sometime and knowledge share.

Yessah, howzit braddah Joseph!! Just sent you a private message, let's get together soon
0 Reply
Hiyun Park
New to Real Estate · Member since 2024 · 16 posts · 16 votes
1y
Quote from @Jason Mitchell:

Hello everyone!
I'm new to the forum (been lurking for a while) and wanted to post about my experience to allow others to follow my journey. I've been in real estate for 18 years, am a licensed Realtor and have owned several rental and flip properties in Texas & Hawaii. I'm currently living in Hawaii and I'm excited to enter the Detroit market and keep everyone updated along the way. I just bought a SF rental from a wholesaler in Detroit (just north of Bagley and south of Ferndale) and have another on market deal under contract in the Morningside area. I'm in Detroit now for inspections on one and to generate the scope of repairs on the other. Happy to answer any questions and always open to any advice local experts are willing to share.

Hi Jason - thanks for sharing your journey with us. Detroit it hyperlocal and can differ st by st. How did you decide on which area to purchase? I'm interested in OOS investing but deterred away from Detroit due to that reason. thanks!
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y
@Hiyun Park only experienced investors can DIY everything in Class C Midwest areas like Detroit, Cleveland, St Louis, etc.
Hopefully the info below will help you:
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Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we’ve analyzed.

DM us if you’d like to discuss this logical approach in greater detail!
[email protected]248-209-6824
Logical Property Management4.9458 Reviews
Website View Page
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Rohmah Ismael
Member since 2025 · 8 posts · 6 votes
1y
Hi Jason, I am new to real estate investing and also looking into the Detroit market to begin my journey. Currently, I'm in WA but due to the lack of good reasonable priced inventory for BRRRR, I'm drawn to out-of-state investing. Would love to connect and hear more on updates you have regarding the Morningside area.
1 Reply
Account Closed
Real Estate Agent · Detroit, MI · Member since 2024 · 32 posts · 12 votes
1y
@Jason Mitchell 48224 is my hood! i love the east side.
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Account Closed
Real Estate Agent · Detroit, MI · Member since 2024 · 32 posts · 12 votes
1y
@Rohmah Ismael maybe this map will help you get your bearings in the detroit mkt.

the more established areas in detroit, where the city is encouraging investment, are called "Traditional Main Street Overlay Areas." it's a term of art from our zoning code, that basically means that there's existing (probably vacant) commercial corridors that are being revitalized and re-tenanted in these areas.
so if you look at the map of the Overlay Areas, the orange are the original areas and then the purple are the newer, up-and-coming areas.
so the orange is like midtown, corktown, bagley (investors love bagley). it even sounds like the post author, jason, is investing around bagley.
and the purple areas are like van dyke and 8 mile and the e warren Overlay Area, which is the 48224 zip code (which also includes morningside, another area that our post author is investing in)!
i really like the 48224 zip code (the whole zip code, both north and south of i-94). the house sizes are rarely over 2,000 sqft (most are 700-1,600 sqft). there are some duplexes, lots are sfh, and owner-occs, and the neighborhoods aren't bombed out (like there aren't any vacant lots mixed in with the houses. rather, the streets are lined with little brick bungalows built between 1920-1950).
the entry point in 48224 is a little lower than bagley for instance. but the ARVs are climbing and demand is there. i just leased half a duplex in 48224 for $1,450. it basically has original everything, but landlord painted and added new butcher block counter and dishwasher. last thing about 48224, it has some of the highest rated schools in detroit (in eev). and to be fair, so does bagley.
i'm not saying these are the only areas to invest in, but they are the established areas where the city is pushing investment. so if you strictly stick to the Overlay Areas, you'll miss out on some of the up-and-coming areas, like islandview (east side, around van dyke and kercheval) for instance, but will be investing in more established detroit neighborhoods.
i hope this helps give you some confidence in our 140 square mile city!
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