Detroit or Cleveland? Or any other?

Question

Hi,

Foreign buyer, first time home buyer in USA. My price range is $10,000 to $15,000 and looking for consistent rental income properties, and appreciation being second on my list. As this is my first property, so want to take chances with just the above price range mentioned. So is Detroit or Cleveland good for rental income purpose? As I can see there are many properties around that price range in Zillow and Trulia.

Timothy Murphy III · Answer

@Tushar Shetty

There's entirely too many sub-markets within Cleveland (and I presume Detroit) to answer your questions in any meaningful way. There are some $10-$15k houses in Cleveland, that with aggressive local management, can yield nice returns. There are also, however, plenty of $10-$15k houses that you should steer clear from. Without having local first hand knowledge of the cities, it's going to be hard to know the difference.

I'd second the recommendation that you contact @James Wise. He probably won't sell you a $10k house since he mostly deals with areas that are a little more stable, but he can sure tell you what's worked for his company and his investors.

Matt Motil · Answer

Hi Tushar,

You could buy loads of properties in most of the mid-western USA markets for around that price, but you might not be happy with what you end up with. My recommendation would be to get in touch with a reputable property manager in these markets and have them help you locate a property that would meet your needs and budget. In the Cleveland market, Holton Wise Property Group and @James Wise is a good source for the central part of town. I predominately focus west and south of their target markets, and would be willing to help too. I can't help you with Detroit, as I don't operate there.

Hope that helps.

Matt

Timothy Murphy III · Answer

I think Cleveland is much better, but I'm here so I'm clearly biased.

Jonathan Mednick · Answer

@Tushar Shetty You may want to consider Birmingham where you can get several for under $15K but with renovations and fees, you would be all in about $35K per property with rents in the $650 - $725 range. Net returns would be 14%+. Let me know if I can be of assistance.

James Wise · Answer

@Tushar Shetty

Welcome to the site.

The reality is there is no such thing as consistent rental income in the 10-15k price point. Cleveland and Detroit are just like any other low barrier to entry market such as Indy, Atlanta, Birmingham, Pittsburgh etc..

In Cleveland your going to need to spend at least 30k to get $700 or so in rent.

Here is a comprehensive map and grading scale of the Cleveland neighborhoods.

Tushar Shetty · Answer

Thank you very much for the help. I am definitely taking help from agents and property managements for Detroit market, but didn't know much about whom to contact for the Cleveland market. My aims aren't high as such, and as I said I am looking around that price range to test the waters first and then as I gain more confidence I can invest more. Still I would like to know which is better Cleveland or Detroit?

Detroit or Cleveland? Or any other?

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