Deep Dive into Detroit Neighborhoods: Russell Woods

Source: Russell Woods Sullivan website

Out of all the cities in Michigan, the City of Detroit is most known for its affordable housing market. Yet, with 105 neighborhoods, the city tends to get overwhelming for investors.

It’s important that out-of-state and out-of-country investors know what they’re getting into when buying properties here. In other words, you need niche knowledge about specific parts of the city for the best decisions, knowing that there may be high risk/high reward potential, depending on which Detroit area you invest in.

Not to worry, this is another installment of our Deep Dive series that has all the information you need.

Using our experience as local residents and property managers in Metro Detroit, we’ve fleshed out the real estate potential and risk of neighborhoods in the city, helping you evaluate the strengths and weaknesses that contribute the most to your success as an investor.

This way, you can make informed decisions when choosing where to invest in the City of Detroit—the rental property hotspot that’s both lucrative and sometimes tricky to navigate.

City of Detroit

So, let’s first look at the bigger picture. The City of Detroit is divided into different regions: Downtown, Midtown, New Center, North, East (Upper, Central, and Lower), West (Upper and Central), Southwest or Near West, and Historic Districts (Residential and Mixed-Use):

Source: Wikipedia.com

These areas have their own personality that sets them apart. Here are a few examples:

• 1. Downtown Detroit is the main business area
• 2. Midtown is a mix of residential, business, and university areas
• 3. North is basically the Detroit Golf Club and the main campus of the University of Detroit Mercy
• 4. West is primarily a residential area with historic homes

Our featured area Russell Woods is part of the Upper West area, along with other areas like Bagley, Grandmont-Rosedale, and Brightmoor. If you’re not sure where Russell Woods is, see the map below to locate it in the city. You can also tap any of the hyperlinked names to read previous Deep Dives:

Source: Loveland’s Detroit Neighborhoods Map

Russell Woods Neighborhood

Russell Woods is a neighborhood in Wayne County, being part of Detroit, Michigan. It covers 0.437 square miles with a population of 2,340. The population density comes out as 5,360 per square mile, which is 11% denser than the average of the city. It is bounded by W Davison Street to the north, Dexter Ave on the east, Livernois in the west, and Cortland Street to the south.

Source: Google Maps

Russell Woods, also known as Russell Woods-Sullivan, prides itself on its historical diversity.

In the early 20th century, the neighborhood rejected discriminatory covenants and became a safe place for the Jewish community of the City of Detroit. They settled in and built beautiful synagogues and community centers.

By the 1970s, middle-class black families moved in as well, being attracted to beautiful homes and egalitarian housing policies. It was also because of them that Russell Woods is now associated with Motown and the struggle for civil rights.

Even though the City of Detroit has experienced decades of disinvestment, Russell Woods always had multi-generational homeowners in the friendly community. Driving down its roads, you’ll see a thousand historic homes ranging from Tudor Revival, Moderne, Colonial Revival, and Craftsman Bungalow styles.

Today, Russell Woods is the city’s largest historic district. There are over a thousand historic homes in the area, all built with the same artisan construction methods just like the mansions in Palmer Woods and Boston Edison. The main difference is that the homes in Russell Woods have 3 to 4 bedrooms and are built for middle-class families.

So is Russell Woods a good place to find rental property deals? Is it an up-and-coming neighborhood where you can find financially-sound opportunities? Let’s take a look.

Investment Opportunity

While there are multiple factors to consider when evaluating opportunities, the most important factor is the financial viability of your investment. Factors such as property condition, average rent, and home values in Russell Woods’ housing market are all key measures that impact the success of your investment, in addition to the quality of your eventual tenants.

Property Condition

Similar to the rest of the city, the majority of properties in Russell Woods were built in 1939 or earlier. Here’s a breakdown from City-data for you to visualize:

Source: City-data.com

Taking into consideration that the average household income in Russell Woods according to Niche is $31,969 per month and the median rent is $964, the rent-to-income ratio in the neighborhood is around 30%. In other words, most renters will set aside roughly a third of their income for rent payments, which is perfectly in line with the industry standard.

Home Value, Price, and Appreciation

Based on Zillow, the average home values in Russell Woods are $119,037. It’s seasonally adjusted and only includes middle-priced homes, but it’s an accurate estimate of the property prices in the neighborhood.

The value is also on an impressive uptrend, as we can see in the chart below:

Source: Zillow

You won’t just want a property with a good sales price, however. As a rental investor, you want one that also has a strong rent-to-price ratio (RTP).

The rule of thumb is to ensure that the ratio of your monthly rent divided by the house value (purchase price plus repairs) hovers around 1%, if not higher. This is also called the 1% Rule and is a simple calculation to evaluate the potential cash flow of an investment opportunity.

The City of Detroit is known for having rent-to-price ratios that provide the best cash flow generation potential for rental property investors, and Russell Woods is no exception, with an RTP of .8%., just shy of the standard (although you’ll find many properties here which DO meet or exceed the 1% rule).

Potential Tenant Pool

Next to financial viability, tenant quality and neighborhood livability are two of the most important factors in your investment. Tenant quality says a lot about the people you’ll have to manage and entrust your property to, while neighborhood livability relates to how attractive it is to quality renters.

The scores we give are based on many data points, including our 2 decades worth of local experience and knowledge operating as a property management company in Metro Detroit. The scores aren’t “official” by any means, but serve as a guide for you to evaluate the area.

Tenant Demographic: C+

Your renters will either make or break your success. They will either pay rent and maintain the home or struggle to make payments and barely take care of the property—directly affecting your rental profitability.

Here are the two key factors that determine the tenant demographic in Russell Woods:

Average Income: According to Areavibes, Russell Woods’s average income per capita is $15,029 which is slightly lower than the city’s average of $15,562. But the area’s median household income is higher than the city, coming in at $33,192 compared to $26,249.

Unemployment rate: Russell Woods has an unemployment rate of 12.4%, which is higher than the city’s 11.9% and significantly higher than the nation’s 5.2%. Nevertheless, there might be some pandemic-related reasons for this drop in unemployment for now.

Source: Areavibes.com

Neighborhood Livability: C

You need to invest in a neighborhood that is in demand by high-quality tenants. This way, your property will attract people who’ll be responsible for paying rent and maintaining your rental property.

Here is a glimpse into the kind of neighborhood Russell Woods is, and the kind of tenants that the area generally attracts:

Diversity: Here’s a breakdown of the population in Russell Woods in terms of diversity:

Source: Areavibes.com

School Rankings: Families in Russell Woods can send their kids to elementary schools like Bates Academy, a middle school like Spain Elementary-Middle School, and high schools like Cass Technical High School. All these schools are rated average based on GreatSchools’ Rating.

Crime and Safety: According to Areavibes, crime in Russell Woods is nearly twice as high as the rest of the city, where total crime in the neighborhood is 10,355 compared to 5,389. Nevertheless, there are certain areas in Russell Woods that are safer than others, and will be attractive to prospective renters:

Source: Trulia with data from SpotCrime and CrimeReports

Transportation and Walkability: There are more locals in Russell Woods that drive to work (74.2%) compared to the City of Detroit (68.8%), and also more who walk (5.8%) than in the greater area (3.7%). There are only a few who take public transit compared to the rest of the city.

Overall score: C

Based on our research and hands-on knowledge, Russell Woods is an up-and-coming area and is well-deserving of a solid score of B. Here are the primary reasons that drove the score:

1. Properties tend to be older, but certainly have historical charm and styles that are worth the extra care and renovations. They’ll attract tenants seeking a home with more personality.

2. Average rent is healthy and has a rent-to-price ratio that meets the industry standard. You can be confident that your tenants will afford the monthly rent, which means stable cash flow for you.

3. Home values are increasing and will likely grow for the foreseeable future. This means you can enjoy appreciation gains in the long run, but you’ll have to buy Russell Woods properties before the property prices pick up too fast.

As you may have noticed, we focused on the financial viability of the investment opportunities in Russell Woods for the final scoring. After all, money is the root of all investments, and we’ll want to ensure that the properties you buy will generate good cash flow and equity gains down the road.

Still, every property scoring system will be somewhat subjective. So we advise you to take this deep dive as a mere guide to kickstart your own research into Russell Woods—possibly even visiting the neighborhood yourself to see all the data come to life.

We hope that this comprehensive report shows you the potential of Russell Woods as an investment neighborhood in the City of Detroit. Should you have more questions, feel free to reach out to us!

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This is only one of the many deep dives we’ve created and are creating for the City of Detroit. If you have other neighborhoods you’d like us to prioritize, kindly drop your suggestions in the comment section below. We won’t stop until we’ve covered them all!