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Posted almost 2 years ago

Deep Dive into Metro Detroit Cities: Center Line

3-bedroom single-family residence in Center Line, MichiganSource: Recently sold properties in Center Line via Zillow


And we’re back with another analysis into the cities surrounding the City of Detroit in Metro Detroit, Michigan. This is part of our ongoing series that dives into the investment potential of each city and neighborhood here, so investors like you will know if this is a good place to acquire rental properties in.

The metropolitan area of Macomb, Oakland, and Wayne counties or Metro Detroit has always attracted investors with its affordable housing market. In fact, you can buy homes here for below $100k. But it’s also been ridiculously complex and difficult to find lucrative opportunities in—challenging even to the most seasoned investors in the game.

Because of this, we’ve whipped up these ultimate guides for you to gain more knowledge of the diverse market, learning where to invest and where to avoid. We have over 2 decades of experience as a property management company here in Metro Detroit, so we know the ins and outs of the market well enough to guide investors in the investment hotspot.

Read on to learn about our featured area today: Center Line in Macomb County. By the time you finish this article, you’ll know all its strengths, weaknesses, the type of property management required, the kind of tenant pool to expect, and the potential for earning great returns.

Contain 800x800Source: Google Maps


Center Line

The City of Center Line is in Macomb County, Michigan. It has a population of 8,260 in the total area of 1.74 square miles (4.51 square kilometers), resulting in a density of 4,747 people per square mile.

The city is surrounded completely by the City of Warren, so none of its land is touching the City of Detroit. Because of this, it’s not considered a Ring City in our books, which refers to the cities circling the City of Detroit that have high rental demand and affordable properties. Still, you won’t find many of the typical investment risks associated with the Detroit market in Center Line.

Here’s a map that shows where Center Line is for your visualization:

Contain 800x800Map showing Tri-County Metro Detroit Cities



Should you want to have a closer look, here is a list of all the cities in Metro Detroit. The ones highlighted in green are Ring Cities—best spots for rental investments—while the ones with hyperlinks will take you to previously published Deep Dives:


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Center Line in a Nutshell

The area that Center Line occupies now used to be a swamp until the early nineteenth century when the people realized that they needed more land. Up until this time,

travelers detoured around it, going miles out of the way to steer clear of the snake-infested waters.

Seeking to find a better way to traverse the area, the French, German, Belgian, and Irish immigrants cleared the forest and drained the swamps, creating Kunrod’s Corner in the mid-nineteenth century.

They eventually renamed it to Center Line because it’s in the middle of the three Potowatomi trails from Fort Detroit to the northern trading posts. Through the center of two of these trails, the Indians created a new trail that followed the “center line” used by the French.

Eventually, the primitive trail became the main road that connects the City of Detroit and Utica (present day Sherwood Avenue). From there, the area embraced its new name, Center Line.

The community began when Catholics built a church there so they don’t have to walk all the way to St. Mary’s in the City of Detroit for Sunday mass. The church was named St. Clement’s and attracted increasingly more Catholics to the area. Later on, Joeseph Buechel established the first general store, Hieronymous Engelmann became the first postmaster, and roads were built for cars.

Slowly but surely, Center Line transitioned from a small, isolated neighborhood with horses and buggies to a flourishing community with automotive transportation. It wasn’t long before the area was incorporated in Warren Township in 1925 (present day City of Warren) and became a city in 1936. It’s also known for being a development-friendly community, where they are prepared to assist in facilitating any economic projects in the area.

With all of its rich history and support in future developments, is Center Line a good place to invest in rental properties today? Let’s discuss the city in more detail.

Rent & Rent-To-Price Ratio (The 1% Rule)

According to Niche, Center Line’s median rent is $681 across all home types. If we were to break this number into the different bedroom sizes, Bestplaces gives us a chart that compares Center Line’s average rent versus the rest of Metro Detroit, Michigan, and the country:

Contain 800x800Source: Bestplaces



You’ll notice that rent in Center Line is lower than its surrounding areas. This means that you might have a lower rent income stream compared to investing elsewhere in Metro Detroit, but we’ll still have to take property prices into consideration later on.

Let’s see if the numbers Niche and Bestplaces gave us are accurate by pulling up listings on Zillow.

Contain 800x800Source: Current listings on Zillow as of April 2022



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Looking at the estimated rent of these Zillow listings, we can see that some are charging higher than the average rent estimates of Bestplaces (notably for the 3-bedroom and 4-bedroom homes). This is probably because Bestplaces’ figures are based on historical data, while the listings on Zillow already took current market shifts into account.

Still, let’s use the rent-to-price ratio to determine if current properties in Center Line will generate positive cash flow. The industry standard is to ensure that the monthly rent is equal or higher than 1% of the property’s total purchase price, which includes the cost of repairs, closing, and more.

We’ll go ahead and use the 3-bedroom listing on Zillow to calculate.

Contain 800x800Source: Listing on Zillow as of April 2022



With a rent estimate of $1,148 and an average property price of $147,007, the resulting ratio is 0.78%. This figure is slightly lower than the average of Metro Detroit cities, where the range is 1.0% to 1.5%.

Basically, this means there’s a lower chance of finding properties that’ll generate positive cash flow in Center Line. So, you might need to put in more effort to find a quality home where you can charge a decent amount for rent.

House Value and Appreciation

Based on Niche’s data, the median home value in Center Line is $87,700. This may be significantly understated, however, as Zillow reports Center Line properties to be worth $147,007 on average instead.

Its figure is seasonally adjusted and only includes the middle-price tier of Center Line homes, but you can see that the values have gone up 18.2% over the past 12 months:



Contain 800x800Source: Zillow


Plus, Redfin reported that the median sales price in Center Line is $137,000 and has been increasing by 4.4% year-over-year. Finally, the homes are also getting more popular as the number of homes sold has grown 66.7% year-over-year and the median days on the market is reflecting the demand.

So much so, that Redfin deems Center Line housing market as “very competitive” based on their Compete Score. Many of the homes in Center Line get multiple offers (often with waived contingencies), and “hot homes” can sell for 1% above asking price.

Contain 800x800Source: Redfin



If we were to look at NeighborhoodScout, the most common housing type in Center Line is a single-family residence, taking up 62.8% of all homes in the city. Next to this are apartment complexes (21.3%), townhomes (11.6%), small apartment buildings (3.7%), and mobile homes (0.6%).

Center Line properties are generally evenly priced across the city, but the homes do get slightly more affordable the closer you get to the City of Detroit. In other words, they tend to be cheaper in the lower half of the city. It’s a good location to take advantage of Detroit’s affordable housing stock while completely avoiding all the typical risks associated with the real estate market, so you find a sweet spot:

Contain 800x800Source: Current listings on Zillow as of March 2022



In terms of appreciation, Center Line properties saw some of the best home appreciation rates in the country. Its land appreciated 119.29% in the last decade, which equates to an average annual home appreciation rate of 8.17%. This puts Center Line in the top 10% nationally for property appreciation. In other words, investors can certainly see a ton of equity gains with Center Line homes.

Even short-term investors can enjoy Center Line’s appreciation rate, where NeighborhoodScout further informs us that Center Line’s properties appreciated 14.36% in the past year and 4.94% in the past quarter—slightly above the national average for real estate appreciation.

NeighborhoodScout also shows us that the properties on the left half of Center Line have appreciated higher than the right, so you’ll definitely want to focus on the better half of the city:

Contain 800x800Source: NeighborhoodScout




Quality of Tenants, Properties, and Living

Now that we’ve discussed the financial viability of Center Line properties, let’s get into the other crucial factors that rental property investors should consider.

We’ll look at the tenant quality, property conditions, and overall neighborhood appeal. These elements determine the type of tenants you have to manage, the property maintenance you have to deal with, and the number of new residents that'll enter the city.

Let’s see what it’s like to invest and live in Center Line.

Average Property Class and Condition: B-

Average property age: 63 years

Bestplaces reports that the average property age in Center Line is 63 years old. This is 13 years older than what the industry deems as “old homes,” which means that Center Line homes are skewed towards the older end of the spectrum. You can also see in the chart below that Center Line has older properties than the rest of Metro Detroit and Michigan:

Contain 800x800Source: Bestplaces





You need to prepare yourself for the usual problems that come with aged homes. Here’s a non-exhaustive list that can get you started, or so that you have an idea of what to expect before making a purchase:

- Lead-based paint concerns

- Outdated outlets & electrical systems

- Obsolete plumbing systems

- Old windows & poor insulation

- Pest infestations lurking within the walls

    Take your time to inspect the home and budget properly. We also recommend that you work with a professional inspector, then you’ll know exactly how much it’ll cost to bring the property up to rental standards.

    Quality of Life in the Neighborhood: A-

    You want to know what kind of tenants the city will attract, and that means determining the appeal of the neighborhood. Choosing a quality neighborhood increases your chances of securing good tenants who’ll take care of your rental and pay rent on time, among many other things that impact your profits.

    Here’s a glimpse of the life in Center Line:

    Local Economy

    As mentioned earlier, Center Line prioritizes economic development in its community. They have everything one would need to begin a business venture, such as the following:

    Site Selection: Center Line assists any local looking for available land or buildings to expand their business. They can assess your requirements and provide you with a list of options.

    Development Guide: Center Line has comprehensive guides for residents, developers, and investors to brief themselves on the city’s development approval process.

    Business Retention and Expansion: Center Line has an economic development strategy for business retention and expansion, proactively connecting with existing businesses to understand and address their needs. Its staff even makes “retention visits” to local businesses to see if they need employee training, more capital, or help with entering new markets. Simultaneously, they learn about any current issue that’ll affect the larger business community.

    Programs & Resources: Center Line stays updated to inform companies of programs and incentives available for them to attain, covering aspects such as financing, workforce recruitment, tax incentives, gateways to other markets, etc. The city helps identify and connect businesses with resources through partner organizations, listening to all its needs, challenges, and goals.

      You can tell from these alone that Center Line is doing what it can to encourage and grow its local economy. It’s without a doubt that the city will only grow in the years to come.

      School Rankings

      As an investor, you want the area you choose to have good schools that attract families to nearby rental properties. Fortunately, Center Line has just that, with a total of 5 schools in the city. These top-rated schools from GreatSchools were judged based on academic performance, equity, and a variety of other measures:

      - May V Peck Elementary School

      - Wolfe Middle School

       -Center Line High School

      - Academy 21

      - Rising Stars Academy

        The highest rated school out of these is the first one—Mary V Elementary School. Any Center Line properties that are near this school will likely attract families with younger children in elementary school. But overall, all of them are good for you if they’re nearby.

        Crime and Safety

        According to NeighborhoodScout, Center Line is actually safer than 40% of all cities nationwide. It’s certainly not the safest city out there, but it’s also definitely not the most dangerous community. We also see that the city is generally safer on the right side compared to the left:

        Contain 800x800Source: NeighborhoodScout



        Plus, unlike other areas, Center Line is part of the very diverse and dynamic Metro Detroit where the crime rate can differ from one block to another. You’ll have to remember that crime rates will change from one street to the next. You need to be careful and visit the area yourself if you can. There’s a high chance that you’ll find a perfectly safe home just a short walk away from one that’s deemed “unsafe.”

        Livability

        Niche awarded Center Line for being one of the most diverse suburbs and places to live in, as well as having one of the lowest costs of living in Michigan. Both diversity and affordability are good factors that’ll attract new residents:



        Contain 800x800Source: Niche

        Based on Areavibes’ livability score, Center Line gets a 69/100 which means it has an “average livability score,” primarily driven by great amenities, affordable cost of living, low crime rates, and many housing options for owning or renting a place.

        Here is a breakdown from Bestplaces that shows you just how ideal Center Line is to live and to invest in:

        Contain 800x800Source: Bestplaces



        Tenant Class and Demographics: B

        Last on the list is the tenant pool in Center Line. As a rental investor, you want to check if the area you’re investing in has a large number of quality tenants who’ll help you retain the value of your property while paying their dues every month for stable cash flow. The better their demographics, the higher your chances of boosting your investment returns.

        We’ve listed the highest contributing factors below using data from Bestplaces:

        1. Income: Unfortunately, the average income per capita of Center Line residents is lower than the average of Metro Detroit, Michigan, and the US. This means that you can’t realistically earn as much rental income here as you probably would in other areas nearby:

          Contain 800x800Source: Bestplaces


          2. Unemployment:While the unemployment rate in Center Line is also lower than the rest, it’s not too far away from the average of Metro Detroit. Plus, Center Line might even see better job growth in the future compared to Metro Detroit, Michigan, and the US.

            Contain 800x800Source: Bestplaces

            This means that your tenants will have relatively stable jobs that will strengthen your income stability, and it’ll only get better in the years to come.

            3. Education: Fewer people have accomplished a degree in Center Line compared to its greater areas, but there are a lot of people here that have completed high school and some college. Nevertheless, with the future job growth posting significant improvement, even high school graduates in Center Line will likely be able to find well-paying jobs in the city:

              Contain 800x800Source: Bestplaces



              • 4. Diversity: Niche provides us with a breakdown of the racial diversity in Center Line:
              Contain 800x800Source: Niche

              In a nutshell, Center Line residents have lower income, better future job opportunities, high-school education, and are a mix of mostly White and African-American when compared to other areas in Metro Detroit and Michigan.

              Though you might not find quality tenants everywhere, so you’ll have to be diligent in conducting thorough tenant screening to ensure that the tenants you choose have a stable job that earns them an income of at least 3x the rent.

              Contain 800x800Source: Google Maps




              Overall Score: B-

              After going through all the information we’ve found and combining it with our personal experience as a local property management company, we gave Center Line an overall score of B-. This score is based on a number of factors that can be summarized into 3 points:

              - Center Line properties have an lower rent-to-price ratio of 0.78%, which means that it’s not going to earn your money back quickly.

              - Center Line properties are increasing in price and appreciation while offering affordable options in the areas closer to the City of Detroit, making it an ideal place to invest for equity gains.

              - Center Line properties are within a vibrant local economy that will provide massive job opportunities in the future, it has great schools that’ll attract families with younger children, and has a relatively low crime rate compared to its nearby areas. It’ll continue to attract new residents in the years to come, increasing your tenant pool and chances to secure quality renters.

                Still, we might be a tad bit biased when it comes to Metro Detroit cities. After all, we’ve been working in this area for over 2 decades and are quite familiar with the location.

                So, we recommend that you take the time to visit Center Line for yourself to see the investment opportunities in real life. You’ll be pleasantly surprised with how many Center Line properties offer the ideal balance of cash flow and equity gains, creating the perfect way for you to come out successful with your rental property investments.

                *Please keep in mind that all comments & grades are relative to Detroit and are subjective.

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                Our series isn’t stopping here—we plan to cover every nook and cranny of Metro Detroit so it’s easy for beginner and expert investors to get a slice of Detroit real estate.

                Is there another place in Metro Detroit that you’d like us to analyze? Drop your requests in the comments section below and we’ll prioritize them in our upcoming installments!







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