Investing in Detroit Real Estate: Would You Invest There?


Detroit sure seems to be an on-going hot topic. The “hot” part of it being- the debate on whether investing there is a good idea or not. Different than most markets, I think Detroit is definitely a love or hate market. I’ve never heard anyone claim to be in the middle of the road on this one. Investors are either avidly against buying property there or they are so gung-ho about buying there that they will shout from the rooftop defending the opportunity.

Me personally? I have had no interest in investing in Detroit. Why? Two major reasons:

  1. I’ve heard too many horror stories from big name investors I know personally about how (and why) they have lost so much money there.
  2. Detroit has been much too unstable in terms of industry and population for my liking.

With that said, I do understand there are a lot of investors who swear they are making great money in Detroit and they also defend the industry growth there which suggests Detroit is bouncing back.

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So? Buy There or Don’t?

I won’t tell you what to do, because quite frankly where you buy or don’t buy has no effect on me. All you can do is decide on your goals and what you are comfortable with and what you aren’t comfortable with. I can’t give the reasons as to why you should buy in Detroit because I don’t know them. I will leave that to the readers to comment and give their reasons why Detroit is excellent for investing. I have no worry that there won’t be quite a few defenders ready and willing to tell you why you should buy there!

All I can do is elaborate on my personal opinions on Detroit as a buying market. I consider myself a very high-level (not high-level as in status, but high-level as in viewpoint), big-picture person. The 10,000-foot view, if you will. My opinions are mostly based on buy-and-hold investing, not so much on flipping specifically. But the points can go towards either in some way at least. Here are my 10,000-foot view thoughts on Detroit, which you could also consider to be a “cons” list.

  • Population Decline. Detroit has had a constant decline in population since at least 1970. One of biggest things I look for in any market I’m evaluating is population trends. I only want to buy where there has been constant population growth because it means people want to move there, which means there will be people either wanting to rent or buy my property. It also means a market is much more likely to appreciate, again because people want to move there. Growth is a huge factor in investing of any kind. Maybe Detroit will have a steady population increase from here on out, and if that’s the case, great! But I want to invest in a market with a more solid history of growth than one that may or may not happen, starting today.

Potential counterargument- With all the money being allocated to rebuilding Detroit and some industry jobs coming back, population may only go up from here! It certainly can’t get worse, can it?

  • Tenant quality. Yes, it’s true, all cities have tenants who build meth labs, destroy properties, and don’t pay their rent. No doubt about it. However, Detroit seems to really rank up there in terms of bad tenant quality. Not every neighborhood in Detroit is a ghetto, I totally agree. But it continuously seems like there are more ghetto areas in Detroit than not versus most cities where the ghettos are not the majority. Just because you buy a property in Detroit doesn’t mean you will definitely have bad tenants, but the chance of bad tenants is higher than the majority of big cities. Bad tenants are the fastest way to lose money on a buy-and-hold investment. Relating this to the population decline, the question comes down to who wants to move to Detroit? Are those people tenants you will want?

Potential counterargument- There are plenty of great, high-quality people moving to Detroit! Screen tenants like you would in any other city and you will be fine.

  • Michigan is a tenant-friendly state. I hesitate to mention this one because there are ways now to deal with tenant-friendly states, and I do promote a lot of tenant-friendly states, but in this case it is just another checkmark in the “cons” column for me. The deals in Detroit are not so fabulous that I want to consider dealing with the tenant-friendly issue. For anyone not familiar with the term, a tenant-friendly state’s laws heavily support tenant rights, more than landlord rights. What this causes for landlords is difficulty in getting rid of tenants from their properties. If a landlord has a bad tenant, these laws prevent the landlord from getting rid of the tenant in an efficient timeframe. Likely during that time, the bad tenant is possibly not paying rent and could be causing damage to the property which is just costing the owner more and more in expenses.

Potential counterargument- Get rental insurance like you would in any other tenant-friendly state and you’ll be fine.

  • Industry shakiness. I get that a lot of people are preaching about how well business is picking up in Detroit and industry growth is back, but I prefer markets that are and have been much steadier with industry and jobs. Same with population, immediate numbers aren’t my interest… long-term trends are.

Potential counterargument- We have every reason to believe Detroit is on the up & up for jobs! Look at the statistics!

Funny enough, I started writing this article last night and I got to the gym this morning only to see “Detroit Woes” being blasted on CNN. It was talking about all of Detroit’s hardships and the money that is now being allocated towards rebuilding the city. If you are an appreciation investor, maybe Detroit is the perfect buy? The news blip was talking about $3M getting dumped into the city to help rebuild it. Appreciation investors’ paradise? Who knows.

I won’t say I will never buy in Detroit. Who knows what could happen. But now you know my reasons why I haven’t bought there so far. One last thought about Detroit investing, and we’ll see if it pans out when the comments start it- Detroit is the only market where it seems like the investors there get extremely defensive if anyone has a bad word to say about the city. My thought is, even if no one wants to touch the market I’m buying in with a 10-foot pole, I could seriously care less because whether anyone else buys there or not has no effect on me, as I mentioned before. So I would love to know why pro-Detroit investors feel so inclined to get so outwardly defensive when someone says they don’t want to buy there? You can’t really contest the history of Detroit (just Google Image “Detroit” and see what comes up!), so it shouldn’t be such sticker shock to here that someone doesn’t want to buy there. Even if it is, what do you care where people buy or don’t want to buy?

So, what are your reasons for buying or not buying in Detroit?

Photo Credit: ifmuth

About Author

Ali Boone

Ali Boone(G+) left her corporate job as an Aeronautical Engineer to work full-time in Real Estate Investing. She began as an investor in 2011 and managed to buy 5 properties in her first 18 months using only creative financing methods. Her focus is on rental properties, specifically turnkey rental properties, and has also invested out of the country in Nicaragua.


  1. Lots of good conversation topics in here Ali. I commend you for bringing this conversation to the table. In my mind, I guess you’d have to define what “Detroit” means. To some people – they consider Detroit to be all of Eastern Michigan, others consider it to be Macomb, Wayne and Oakland County, and others hear “Detroit” and think of ONLY the slums and bad parts of the city itself.

    I can tell you that the three counties of Detroit (Macomb, Wayne & Oakland) represent a MASSIVE market with a lot of very healthy and growing areas with some great long-term opportunities to be had. Casting this entire area in a negative light would be a huge misconception – and I would get defensive about it too (because it’s just not true).

    Within the actual city limits of the City of Detroit however… that is a different story. Detroit does have a lot of baggage and issues to steer clear of (enough to scare me off as well). There is certainly opportunity to be had there… but given all the other opportunities I know about outside of Detroit, it just doesn’t make sense for me to pursue something in an area with so many question marks.

    That being said, I do understand some of the defensive responses that come from “Detroit-bashing”. The media has had a field day with pigeon-holing the city as a bad place to be (and let’s be honest, it’s an easy target). There may be a seed of truth to it, but it’s along the same vein as stereotyping anything in life – slapping a label on an entire city is just short-sighted, and often times untrue. I’ve spent a lot of time in Detroit and like any city, it has areas that are great and areas that are really scary. I guess if you’re going to label anything, you’ll just want to do it justice by including a lot of footnotes to clarify what you actually mean (similar to your post above).

    • Great put Seth! I agree completely with all of your opinions. At the end of the day, I am like you where you said why invest in a city with so many question marks when you can get equal deals elsewhere. That’s a big part of my stance on it. By the time I spend the money to buy in one of the nicer growing areas around Detroit, I might as well spend the same amount of money and buy in a micromarket around a more stable and growing macromarket.

  2. Jeff Brown

    Hey Ali — What you’ve done here, and well, is to underline the importance of doing the ‘macro’ analysis BEFORE the micro analysis. Investing in a region/state where capital is something to be molested, landlords to be seen and not heard, and capitalism something to be manipulated, is not something that fires me up to go any further in my investigation. Who cares about the micro data, i.e., specific neighborhoods, etc., when overall you’ve already learned you and your capital are the designated prey?

    • I totally agree Jeff. I just responded to Seth in the same terms… why fight through finding the micromarkets when the macro side is so off? I’m sure there are some grassy green parks on the outskirts, but there are nice grassy green parks in every other market too.

    • Hi Karen. I haven’t personally bought in Chicago but am a huge advocate. No, the pension crisis doesn’t scare me there because Chicago is one of the world’s biggest economic powerhouses. One crisis, and one that is around way more than just Chicago, isn’t going to break that city anytime soon. Chicago is one of the leading growth markets right now, at least for home prices, coming in 2nd only to Atlanta (3.3% vs 3.4%). That is Case Shiller data from June, but a great perspective on who is growing right now. Rock on Chicago.

    • That is very possible Gabe. Like I said, maybe with all of this government money getting dumped into Detroit, maybe now is the time to buy to get solid bank out of mega appreciation. Who knows!

      I very much agree with your thought about weighing what everyone else is saying. One of my favorite Warren Buffet quotes is the one where he says “Be greedy when everyone else is fearful and be fearful when everyone else is greedy”. The only catch to that quote though, in my opinion, is to know who the crowd is you are watching. Who is being fearful in this case? It’s the big boy investors. Not the average Joe Blow next door. If it were the Joe Blows being fearful, I’d say jump all over it and go! But it’s the experienced investors, many of which who have lost a ton in Detroit personally, so that makes me re-think going against the crowd.

  3. Nice write up. It is quite the topic lately, no doubt… As a 30 year resident of Metro Detroit and a guy who was a telephone technician thre for a decade, I’d like to throw a few thoughts in…

    1) Population Decline – it’s very regional in Detroit. You have to know the big picture there to understand. While in the C of D the population has dropped from 2 Million to 800k since the 1950’s, much of that population has stayed in the metro area in the suburban counties. Detroit is a very provincial town, divided quite deeply on lines of class and race, and it has been -by design- for 75 years. Those divisions are carried over to the cities geography as well. See here:

    Detroit is very much a mosaic, not a melting pot. That said, it makes it very hard to generalize and one neEds to differentiate between talking about “Detroit” and talking about the metro Detroit area. If you want to know more about what I mean about “by design”, you really should find a copy of “Origins of the Urban Crisis” by Thomas Sugrue. The cities divisions were largely created by racial covenants and insurance redlining of african american neighborhoods in the 40’s and 50’s, and even perpetuated by the FHA in their residential loan policies.

    2) Stiff defenders of Detroit – Ali, it’s not just the investors! Detroiters are tough people, they have seen a lot and they know their city is a very unique place, birthplace to both Motown records and Devils Night arson. We get back up when beat down. We are Lions fans, for pete’s sake 🙂 !

    3) Seths comments about the metro area are right on – the metro Detroit area is home to many fortune 500 companies and many areas that rival the wealth of places like Los Angeles and New York. I read a report that said before the recent recession, Oakland County was something like the 5th wealthiest county in the country.

    All that said – I recently purchased a buy-and-hold duplex in the area. I did not buy in the City of Detroit. Despite my personal knowledge of the area and my network of friends and family to call upon for help in my endeavor, I still feel like the C of D is too risky a place for a guy like me, just starting out with little capital, to start. That said, I read of the success of others and watch people like Dan Gilbert buy up properties left and right there and I wish them wel. If I still lived there, I would certainly be looking in Detroit, but the socio-economic conditions are so bad in some areas of the city that I decided it’s not for me at this time…

    Thanks for the post!

    • Thanks Paul! Not often we get true perspective of a market from someone who is from there and has seen everything about the city. You make excellent points. If I were putting marbles in pros and cons bowls of Detroit, I would add a marble to the pros side after reading your comments. You shed a very positive light on Detroit’s potential.

  4. Ali,
    I’m new to Bigger Pockets. Your post is insightful and well written. However, to the non- native Detroiter, the doom and gloom articles shed a dim light. The city has pockets of brilliance, areas only a Detroit native can show investors. There are homes that rival the architecture and sophistication of several metro area suburbs. I work for a large financial institution and they are heavily vested in the revitalization of Detroit.
    Not to mention the influx of “New Detroiter”. CNN is only showing the negative aspects. Donald Trump has visited, with a purpose I’m sure. Detroit is on the rise.

  5. Joshua Dorkin

    Ali – You talk about the increasing number of bad areas and a decline in tenant quality in Detroit. Is this subjective or can you provide statistics and data? Please provide a few links to any studies you’re referring to so we can all learn more here. Thanks.

    • Hey Josh. No, I said Detroit seems to have more bad areas than the majority of markets, not that it has an increasing number of bad areas. And tenant quality, not that there is a decline, there just tends to be a lower quality tenant. As per some of the other comments, I agree that the tenant side of things is most likely more specific to Metro Detroit.

  6. This is a great article, Ali. It’s nice taking a peak inside your pre-investment research. The majority of people I see fiercely defending Detroit stand to profit by doing so (at least that’s been my observation over on the forums, etc). Keep up the great writing!

    • Thanks Sharon! 🙂 As far as my pre-investment research, I really probably don’t do near as much as a lot. I never dig into overly detailed numbers and put myself in a position for analysis paralysis. I’m very big-picture oriented. Like when Atlanta was on the brink of becoming a hot spot, I heard not more than 10 bullet points about why and I was sold and new it was the way to go. Research is good, but some people way overdo it to the point of shooting themselves in the foot. So like with Detroit, it has taken 10 bullet points or less to convince me to stay out of it so far. I’m not against reconsidering due to the growth going on there, but for now not worrying too much about it.

  7. If anyone thinks that Detroit will be the only US city with bankruptcy issues going forward, they are smoking some powerful puffs! So many other cities are on the same fateful path. It’s sad but true.

  8. Waiting in O”Hare Airport recently, I was reading a local paper left by a previous traveler which included the real estate section.
    There was a large column of houses for under $500 most were in the $240 range.
    Now I know these places have some issues, but what if I could get a tenant who would pay the rent for just two months? My figuring I could walk off doubling my money, so why is no one investing in REI in these neighborhoods?
    Probably has to do with no bankable tenants who could come up with 2 months rent.

    Maybe I could turn the property into a farm?

    • Lol. I love it Dennis!

      Again with my big picture opinions- if those properties are sooo cheap, and available, and in theory 2 months of tenants could double one’s money… why isn’t everyone buying them? For good reasons, I can only assume. Stay out of them.

      • There are plenty of reasons. You have to pay the back taxes owed on the house, which a lot of times is $1000s of dollars. Then you have to pay the taxes on the house going forward, which the city of Detroit taxes are not cheap. Those houses are unlivable, because thieves and squatters have came in and ripped out anything that they can sell, from pipes to windows to floors etc. Most of them are moldy and some of them don’t even have roofs. The cost to renovate them is way too much. Now lets say you decide to go through with it. You put in a new tub, new windows, and new pipes, but no one is living there or is there to watch it. All that new stuff, all that time and money you just spent will be stolen by morning. So unless you can do a renovation and get tenants in the house in a day, it will be a constant uphill battle with thieves and squatters. By the time all is said and done, you’re now into your new fixer upper for more than the house can sell for. So you try to rent it, good luck finding a good tenant and one that can pay the amount that you are now going to be renting it for because you just spent so much fixing it up. So that’s why you don’t by $500 houses in Detroit. Unless you plan on buying a whole block, demoing the house, and making a farm (which will probably get destroyed) until the market turns around.

  9. Interesting topic for discussion Ali!

    For some folks, it can be quite the conundrum when it comes to which areas to invest in whether it be on a domestic and/or international level. There will always be those who will defend and argue their position. And, then there are those you just don’t hear about whether they are successful or not.

    As in any endeavor, there are folks making things happen in every market — near or far. I think the problem lies when outsiders (those who are not in the game) get influenced by other factors which could possibly lead to taking advantage of these so-called opportunities. Some may win and some may lose. But, it’s always those with the inside track who will stay on top in the end.

    It’s the herd as a whole that will end up hurt in the long run. But alas, that is all part of the game. And, it goes round and round again.

    Thanks for the write-up, I really enjoy reading these discussions! 🙂

  10. Hey I found some data of “Metro Detroit”, not just “Detroit”.

    • The median sale price for All MLS sales increased to $130,000 – up by 45.3% over August of last year.
    • All MLS sales for August were down by just 1.2%, from 7,041 to 6,957.
    • Average Days On-Market (DOM) for the entire MLS decreased by 21 days from 77 to 56.
    • Of the 6,957 sales closed in August, 6.2% (430) were identified as short sales and 35.8% (2,488) were identified as cash sales.
    Synopsis of Inventory (8-13 vs. 8-12)
    • On market inventory declined by 16.7%, from 26,404 to 22,007.
    • Listings received for the month were up by 10%, from 11,672 to 12,844.
    • Approximately 6.1% of the on-market inventory is comprised of properties identified as short sales.
    • Approximately 13% of the on-market inventory is comprised of properties identified as foreclosures.

    I don’t expect any follow up from you to josh or this post. I’m still waiting on the “Tenant-Friendly” links to support your stance on that.

    • Oh great stats, Joe. Thanks for sending. I’m not really sure what to give you for links on Michigan being tenant-friendly. Maybe Google “tenant-friendly states”? I’ve just been in the biz long enough to know a lot of states and where they fall with tenant versus landlord rights. For examples, some tenant-friendlies are Michigan, Illinois, and California. Georgia is very landlord-friendly. I didn’t get it from a link, I just know.

        • Joe, I can’t find one site that lists Michigan as either tenant- or landlord- friendly. I actually can’t find much about most states other than Arkansas because it’s supposedly the most landlord-friendly and California because it’s the most tenant-friendly.

        • Then no offense, but you shouldn’t include things in your articles that you can’t back up. It’s good to have your perspective, but things bottom out all the time. Detroit already bottomed. It’s only up from here.

        • Tyler, something written on the internet isn’t required to know if a state is tenant- or landlord-friendly if it can be found out by asking experts in the market. Of course not just taking the word of one random ‘expert’, but if both investors and property managers in a particular state all say with good reason that it is one way or another, it’s fairly safe to assume they know what they are talking about. Or better yet, ask a lawyer.

          But you’re welcome to only rely on information from the internet if that is more comfortable for you.

  11. This was a great post Ali. It was very interesting to me to read your arguments against buying in Detroit because they echoed my immediate thoughts when I started thinking about Detroit.

    I have been listening to the BP podcasts and I’ve learned quite a bit about real estate strategies. Before I started, it was literally a case of I didn’t know what I didn’t know. I really wouldn’t have known enough to start asking questions about holding notes, seller financing, peer-to-peer lending, and so on. I recently starting thinking that real estate investing must be about location plus strategy.

    For example, maybe in Detroit turnkey investing won’t work. It requires a higher outlay of money to get started and requires fairly good long-term tenants. Maybe instead partnering with other investors, buying several houses on the same street/area really cheaply, doing some fixup (to minimize costs), and doing seller financing would work. I was just thinking that the tenants/owners would feel “pride of ownership” and work harder to take care of their places.

    I admit I’m fairly new to real estate investing, so more seasoned investors could think up better solutions. It’s just that I heard someone recently in the podcasts who said the reason he was successful was that he generally zigged while others zagged.

    Thanks for the post. I learned something about investing.

    • I think your points are excellent Katherine. As Rachel said, investing can work anywhere, it’s just about how you do it. So for Detroit, it may not be the traditional methods that are wise, but that doesn’t mean a lot of success can’t be had there. And yes, zigging while others zag is very important, a lot of the time. Some times it’s just being dumb. (not saying that for this case specifically, just in general).

  12. In regards to Michigan being ‘tenant friendly’ – not sure my attorney thinks so. I have not yet performed an eviction in Michigan, but from what I understand – as long as you use the cort approved forms and methods – it’s pretty straight forward, at least in the district court that my rental property lives in (which is not the city of Detroit, but is in Michigan)

    • Yeah, would have to get more information Paul. The eviction process is often straight-forward, the problem is the time to which evictions can be processed due to the tenant rights. I know an investor personally who had horrible tenants and it took him 7 months to get them out. Metro Detroit on that one as far as I know. Whereas the landlord-friendly states, like Georgia, tenants can be kicked to the curb in 30 days.

      • My second hand info from 2 other investors and my attorney is to plan for 30-45 days after the initial notice period expires (7 days for non-pay/health hazard, 30 for reclaiming a month-to-month lease). I am told it is typical in my disrict to get a court date within a week or so of filing the actual eviction. Again, this is Oakland County and not Detroit but I am hearing that it is pretty well clockwork unless your tenant is hiring an attorney and fighting it tooth & nail.. I am sure other factors can come into play, however no-one in the local market that I know has given me any reason to worry about it as long as the paperwork is properly served and filed. As always, hire an attorney…

        • Definitely can’t beat those timeframes! Interesting, I would need to do more research as to how much everything can differ between micromarkets, if any?

  13. Things can always get worse and $3m invested into a city of that size and in that severe state of economic decline will have zero effect. The majority of it will be burned up in bureaucratic red tape. Unless I lived there, and probably not even then, would I ever consider buying there. People think they are getting easy to pick, low hanging fruit, but they are just wasting their time with rotten apples.

  14. Hi Ali, it’s been almost a year since the last comment and a number of interesting developments in Detroit. But my very question is this, 1. Has this changed your views with regards to investment in Detroit, and if so where are the hot spots to consider? ; 2. If the whole Detroit thing is put in the back burner for now where would you say are good growing States/location for investment especially if startup capital is very small, sub $50k with good rentals and capex appreciation in mind. Please this is open for opinions and suggestions from all. Thanks.

    • Ali Boone

      Hi Charles! I actually haven’t started reconsidering Detroit yet. I work with a lot of experts and they haven’t changed their minds on it yet, so I haven’t either. I think for me it will take more solid proof of what direction Detroit is going to go. A lot of it is still talk at this point, although some solid changes are being made, but because it went so far down, it’s going to take a lot to get it back up.

      I don’t work with anything sub $50k to be able to help you much there. I know other people on BP do, so maybe post a forum question asking for recommendations? Sorry can’t help on that one.

  15. Hi Ali. Great articles. I just found this site through Google search on REI @ Detroit and ended up reading a lot of your articles.

    Like Charles above, I also want to know what your opinions are on which cities to invest in? hopefully with about 10% c-c return.

    Say if you have 100-200k to invest in one or two properties, where would you do it now? I think our risk profile and general outlook are about the same.

    • Ali Boone

      Hey Jorge! Great question. The markets I would invest in are always changing based on the current real estate market and other factors. Right now, my favorites are Philly, Birmingham, Houston and Dallas. 2-3 years ago, it would have been Atlanta and Chicago no question. Before that, Phoenix and Memphis were easily the best ones out there. So it is always changing, but there are plenty out there.

      The current ones right now, as far as which ones would give you 10% c-c return: Philly, Birmingham, and Trenton. Those all actually can get you 10% caps, which would mean much higher than 10% c-c returns. (wooohoo!)

      • Chheang Yang

        Hi Ali,

        Thanks for your insights into investment opportunities throughout the nation. I’m struggling with determining which city to invest in currently. I keep looking at detroit because of the rock bottom prices, but there’s also a concern that the economy isn’t that strong in detroit as other cities around the nation (ie. philly).

        I’m currently looking through various cities and trying to find solid purchases in the 100-200k range. Any suggestions? Thanks!

        • Ali Boone

          Hey Chheang! Oh, for that price range you can get some super-solid growth cities and great properties. Philly is definitely a good one, and there is some interesting options there even (budget-dependent) for forcing appreciation off the top.

          Shoot me an email. Definitely good markets out there.

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