Metro Detroit Cities Deep Dive: Hazel Park
There’s no doubt that Metro Detroit is a green pasture for those interested in buy-and-hold investment opportunities. The area is popular for its strong rental market with affordable housing stock.
However, it’s also notorious for being overwhelmingly confusing, with its 185 cities and 290 neighborhoods that vary widely from each other. Many new investors want simple and straightforward advice about which area of Metro Detroit to invest in… and which to avoid.
Because of this, we decided to use our lifetime of experience as local residents and property managers to create a “Deep Dive into Metro Detroit Neighborhoods” series. Through these articles, you’ll familiarize yourself with the strengths and weaknesses of each Metro Detroit area—one neighborhood at a time.
We developed criteria that will help you evaluate the rental investment potential of each neighborhood. We paid special attention to the factors that most influence your ROI and what type of managing your property will require.
This time, we’re diving into Hazel Park in Oakland County, Michigan—a Ring City that’s becoming more hip, diverse, and expensive in recent years.
Hazel Park is a small suburb of Detroit, covering an area of just 2.82 square miles, with a population of around 16,592. Living in Hazel Park gives a dense suburban feel—nothing too flashy, but it is a safe and convenient place to live. It’s almost an even split between renters and homeowners, and the majority of residents are families who tend to lean liberal and enjoy weekends in bars and parks.
Hazel Park was a blue-collar area for decades. But because the cities immediately north are getting more expensive, an increasing number of white-collar people are moving in, in search of more affordable housing. They are proud of living in a “cool suburb” with a diverse community of service providers, office professionals, and college-aged kids.
The city just recently did addition and renovation to the City Hall office building and redid the 2 major crossroads in town, John R and 9 Mile Roads, so there are lots of improvements taking place. There’s even a brewery in the area, which speaks to its up-and-coming vibe.
So, is Hazel Park a good place to invest in? Here’s what you should consider:
Rent & Rent-To-Price Ratio (The 1% Rule)
According to Zumper, the average rent (as of October 2020) for a one-bedroom apartment in Hazel Park was $825—a flat growth compared to last year. A 3 br/1 ba house in the same here rents for an average of $1,340 per month, according to BestPlaces. This is higher than the greater Metro Detroit area average of $1,125.
BestPlaces gives an overview of how each housing size/type compares in terms of price:
Using the monthly average for a house, Hazel Park’s average price-to-rent ratio is 1.0%, which is similar to most rates in the Ring Cities (the cities which border Detroit directly).
The ratio is important because it roughly indicates the quality of cash flow you’ll get from your rentals. You want the percentage of your monthly rent/house price to be at least 1%, if not higher—hence, the 1% rule. Areas with rent-to-price ratios of 1.0-1.5% make for strong cash-flow generating properties, and Hazel Park is no exception.
House Value and Appreciation
According to Zillow.com, the average house value in Hazel Park is $122,118. It has grown 7.9% in the past year and is predicted to grow 4.4% over the next 12 months.Source: Zillow.com
Redfin also shows us that, with a median sale price of $128,450, the YOY home value growth of Hazel Park is at a healthy +14.2%—making it a competitive real estate market.Source: Redfin.com
The majority of these homes are mostly SFH properties (85.9%) with several small apartment buildings (9.3%). Many of these properties get multiple offers, waive contingencies, and sell faster than the average Oakland County neighborhood. Houses that sell at 3% above list price go pending in around just four days, showing how competitive this property market can be.
In terms of appreciation, the future of Hazel Park’s real estate market is looking bright. Home values continue to increase, making it an attractive option to those looking to invest for both equity gains and cash flow.
Quality of Tenants, Properties, and Living
We score each area based on the tenants, properties, and quality of living you can expect to find in Metro Detroit areas. All of these factors heavily influence the success of a rental investment.
These scores (A to F) are based on a variety of data points and our own local knowledge. Keep in mind that these scores are only meant to help newcomers assess and understand individual Metro Detroit neighborhoods, and are not a definitive measure.
Average Property Class and Condition: B
Average property age: 66 years
According to Niche.com, more than half of Hazel Park residents say that there is a good variety of homes in the area.
NeighborhoodScout says that the majority of the houses are single-family homes with 2-3 bedrooms, built sometime from 1940-1969, although roughly 200-300 new homes have been built in the area in recent years. This means that you may run into some older homes that require more rigorous maintenance and potentially costly fixes, but also some Class A-type properties. This is something that investors definitely need to account for when analyzing a deal.
Quality of Life in the Neighborhood: B+
Your neighborhood class will determine the types of tenants you get, and the type of tenants you get will impact your rental’s profitability more than any other factor. This is why it’s essential to understand the type of area you’re buying into.
Ideally, you want neighborhoods that are in demand amongst high-quality applicants. The higher the quality of life in an area, the better your chances of attracting quality tenants.
Here’s a glimpse of how life in Hazel Park is:
Even though Hazel Park was hit harder than nearly any other local area by the property value crash of 2008, it’s been bouncing back just as hard. Thanks to the hard-working attitude of the community, the city’s finances are now “carefully stable,” as described by the City Manager, Ed Klobucher.
Three years ago, the Tri-County Commerce Center opened in Hazel Park. Companies like Amazon and LG Electronics established their businesses there, providing 200+ jobs to the area. The center greatly contributed to Hazel Park’s economic turnaround, making the city increasingly attractive for residents and investors alike.
There are no private or charter schools in Hazel Park, but there are notable public schools, like Hazel Park High School—known for being particularly good for athletics. This makes Hazel Park a good choice for families with high school-age children.
Crime and Safety
A large majority of residents feel somewhat safe, with more than half saying that their local police are responsive and visible. However, since Hazel Park neighborhoods vary a lot from each other, safety and crime aren’t as consistent here as in other cities.
In terms of overall livability, Areavibes.com ranks Hazel Park as the #462 city in the state of Michigan and #17,711 in the entire country, which is better than 39% of areas. The cost of living is also 15% lower than the national average.
The lifestyle in Hazel Park is attractive to younger tenants who want affordable housing near downtown areas, but has been priced out of nearby Royal Oak, Madison, Berkley, and Ferndale. They can enjoy plenty of amenities, fantastic nightlife, commute to work easily and do most of their local travel on foot, but Hazel Park is still more affordable than these other trendy neighborhoods.
Tenant Class and Demographics: B+
The quality of tenants plays a big part in the performance of any rental investment property. So it’s important to know what kind of tenants live in an area before buying.
We’ve assessed the tenant pool of Hazel Park-based on these key factors, using data from Niche.com. Keep in mind that some factors—like poverty and unemployment—might still be affected by the pandemic situation:
Income - When compared to national averages, Hazel Park has a lower household income and slightly lower individual income. However, these stats are 10 years old and don’t appear to reflect the current demographics, given the white-collar increase in recent years.
Unemployment - Unemployment in Hazel Park is slightly lower than the national average.
Education - There are more people with a bachelor’s or associate’s degree in Hazel Park compared to the national average.
Diversity - See below
Based on this, you can expect the tenant class to be on the higher end of the spectrum, compared to Metro Detroit as a whole. This means tenants are generally of good quality and won’t be too hard to manage, making Hazel Park a relatively low-risk investment area for landlords.
Overall Score: A
We gave Hazel Park an overall rental investment score of A. The area has affordable purchase prices, consistent value appreciation, strong cash flow opportunities, and hip, diverse communities.
Money is at the root of every investment, which is why we put more emphasis on the financials when calculating our overall scores. However, it should be said that every property scoring system is somewhat subjective.
In the end, rental investing is all about finding the balance between cash flow and appreciation. A Class A property is something with both, while Class D is something with no appreciation and unreliable cash flow. Hazel Park sits at the high end of the spectrum on both counts.
Based on our knowledge and experience of the area, Hazel Park is an impressive investment neighborhood, which gives a great bang for your buck as a landlord. If you’re looking to buy, rent, or invest in the Metro Detroit area, Hazel Park should definitely be a consideration.
We’ll be taking a closer look at other Metro Detroit areas in the weeks to come until we’ve covered them all. Check back soon for the next deep dive!
Any specific places in the Metro Detroit area that you’d like to know about? Leave a comment below, and we’ll be sure to cover it in one of our next installments.