All Forum Posts by: Ane Deys

Hey Ane, there's a ton to unpack here.

For starters, you reference Detroit and then ask about cities in the area. There's a big difference between Detroit proper and the suburbs. 

Crimes data, etc. does not come even close to telling the real story about reality on the ground. I own 12-doors there. One is worth $300k+ and I operate it as a STR. If you looked at a crime map you'd probably steer clear. But it's a very nice, safe neighborhood. I had a group of teenage girls rent the home when Taylor Swift was in town.

If you want to discuss Detroit, I'm happy to do it. I have a ton of experience and knowledge on the market. I'm also extremely active there. 

@Ane Deys

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding locations to invest in.

Here’s our OPINION for the Metro Detroit market (always verify each area for yourself!) 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+, 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, 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, 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 zero or 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, 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.

We've also classified Metro Detroit Cities & Detroit Neighborhoods, PM us for more info.

What else can we assist you with?

Hey Maryam, I own 12-doors in Detroit and 3 of them are rented to S8 tenants.

The best areas are C Class neighborhoods. D Class stuff and you'll run into lots of trouble and fall into what I call the "return trap". 

In the A and B Class areas the market rents are higher than S8 fair market rents and it won't make sense.

My advice is to be open to S8 but do not use it as your primary/only strategy. It's a tool, and you'll be doing yourself a disservice by thinking it's right for every property.

Finally, S8 tenants are becoming much harder to find. It seems everyone and their mom want to do S8 now. My last property, which should have been very attractive to voucher holders, had 100+ inquiries, 20+ applicants, and... 1 was a S8 voucher holder.

I chose a cash paying tenant and she's amazing

@Ane Deys I think its different.  I personally prefer public REITs.  Certainly you have less "control," but there are many advantages.  They can access better financing generally especailly financial instruments, have the scale, and its pretty much completely passive to you.

Its certainly much easier to invest via a REIT into various commercial spaces, especially also when the investment isnt' near you. I know at least there are public REITs provide yields from 4% to ~10%.

Good luck.

@Ane Deys

I would not generalize all REITs as being equal and there are also a lot of private funds who did not go the REIT route as a reit, while having specific tax benefits is also required to be passive.

thanks Chris, working on DD/researching. hopefully will acquire a better understanding 

in the next few months.

There are several groups that also discuss passive investing options here on BP as well.

My recommendation is to do your own due diligence and make sure you diversify