What's up with Detroit and all the horror stories about it?
Investor-friendly agents in Detroit, MI
See the agents BiggerPockets members work with in Detroit, MI.
See agentsMost Popular Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesDetroit is no different than any other cash flow market in the mid west or rust belt.
where folks get in trouble is going for the highest returns.
on paper to get the highest returns U end up with the cheaper properties that are in the worst locations.. and these locations have high criime poor schools and professional tenants/lifers.
If you simply google the median price of a SFR ( if that's what your looking for) in the city or MSA and buy at the price point or above or maybe 5% or so lower than that price point you should do OK with those.
lets say the median in Detroit is 200k what do you think the quality of a 80k home is in Detroit ??? just think of it logically.. you get what you pay for.
Regardless many do fine in the suburbs of Detroit where prices are higher schools are better and tenant base is better.
49 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Dan Tran
I know of several who have tried it and failed miserably. Numbers look good on paper but these lower dollar assets tenants have been known to induce a lot more damage to the property and mid rent payments.
Rarely did they honor a full term of the lease.
7e investments53 Reviews - 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Detroit is no different than any other cash flow market in the mid west or rust belt.
where folks get in trouble is going for the highest returns.
on paper to get the highest returns U end up with the cheaper properties that are in the worst locations.. and these locations have high criime poor schools and professional tenants/lifers.
If you simply google the median price of a SFR ( if that's what your looking for) in the city or MSA and buy at the price point or above or maybe 5% or so lower than that price point you should do OK with those.
lets say the median in Detroit is 200k what do you think the quality of a 80k home is in Detroit ??? just think of it logically.. you get what you pay for.
Regardless many do fine in the suburbs of Detroit where prices are higher schools are better and tenant base is better.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesJust as a follow up. Way too many potential REI, mostly the lazy ones, think Michigan is in Detroit.
Quote from @Jay Hinrichs:
Detroit is no different than any other cash flow market in the mid west or rust belt.
where folks get in trouble is going for the highest returns.
on paper to get the highest returns U end up with the cheaper properties that are in the worst locations.. and these locations have high criime poor schools and professional tenants/lifers.
If you simply google the median price of a SFR ( if that's what your looking for) in the city or MSA and buy at the price point or above or maybe 5% or so lower than that price point you should do OK with those.
lets say the median in Detroit is 200k what do you think the quality of a 80k home is in Detroit ??? just think of it logically.. you get what you pay for.
Regardless many do fine in the suburbs of Detroit where prices are higher schools are better and tenant base is better.
I have seen houses and multifamily down inside Detroit asking price @10,000 with a fix-up schedule provided.
It's called Land Bank Authority.
The problem is finding renters who will pay regularly and finding a property manager that meets your expectations on a regular basis.
As well as Murder, Rape and Arson. Drug dealing and prostitution.
Some parts are trying hard to become safe and nice again, but prices are higher there.
In the 1950's Detroit was the "Richest City in the World", many of the relics of that time (those un-burned) remain, and today still sell in the million dollar category (once rehabbed).
The Detroit of today, is a long way from Mayor Cavinaugh's Detroit:
https://www.youtube.com/watch?v=aBZ6hgA-Cc4
The areas outside Detroit are more costly, and some can be safer physically.
Good Luck!
- Investor · NJ · Member since 2022 · 155 posts · 224 votes3y
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
- Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes3y
Hey Dan, I invest in Detroit and am probably the expert here on BP in that market.
Definitely lots of horror stories. Some legit, some exaggerated. Almost all are entirely avoidable.
I have 12-doors there. I lived in Metro Detroit from 2017-2022 and built my portfolio primarily from 2019-2021. I was extremely hands on.
As a result, I have a crazy strong network and see a lot of deal flow. I've also seen a lot of people fail, had my own challenges, etc.
Happy to discuss it all.
I now live in CA (again) and my portfolio produces over $16k in gross rents. Over half of that is net profit. And I don't have the headaches you'd remotely expect me to have.
Besides my own investing I also work with investors to help them get started in Detroit. I have a ton of off-market deal flow, contractors I work with, as well as an internal PM that's only available to folks I work with (not interested in being a full fledge PM).
I basically offer everything to be successful there so folks don't become one of those horror stories.
Anyway, happy to chat if you want to send me a DM. That goes for anyone.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesKind of like Newark?
Quote from @Bernard Joseph S.:
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
- Investor · NJ · Member since 2022 · 155 posts · 224 votes3y
Quote from @Joe Villeneuve:
Kind of like Newark?Quote from @Bernard Joseph S.:
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
Lol, yep! Terminal A is new at Newark, so yea that’s the nice. The rest of the airport and city you can keep it
Quote from @Dan Tran:
I'm interested in investing in cheaper properties for Section 8 buy & hold, and the numbers/inventory are almost suspiciously attractive in Detroit, MI.
A lot of BP posts and threads, as well as a few google searches, warn a lot about scams, agents misrepresenting 'turnkey' properties, crooked PM companies, a slow HA office, and very high crime.
How much of this is exaggeration? Has anyone on this forum successfully done OOS investing in Detroit?
How relatively difficult (compared to ex. Ohio) is it to evict a troublesome tenant in Detroit?
I have worked in many different markets from KS, to Indi, to Memphis and Detroit. I left them all and have been working in the Cleveland markets for about 10 years, I recall buying one in Detroit about 11 years ago, total disaster, we just walked away, I am sure you can be successful there, however, you better have a SUPER team in place.
All the best
- Member since 2023 · 243 posts · 199 votes3y
Quote from @Travis Biziorek:
Hey Dan, I invest in Detroit and am probably the expert here on BP in that market.
Definitely lots of horror stories. Some legit, some exaggerated. Almost all are entirely avoidable.
I have 12-doors there. I lived in Metro Detroit from 2017-2022 and built my portfolio primarily from 2019-2021. I was extremely hands on.
As a result, I have a crazy strong network and see a lot of deal flow. I've also seen a lot of people fail, had my own challenges, etc.
Happy to discuss it all.
I now live in CA (again) and my portfolio produces over $16k in gross rents. Over half of that is net profit. And I don't have the headaches you'd remotely expect me to have.
Besides my own investing I also work with investors to help them get started in Detroit. I have a ton of off-market deal flow, contractors I work with, as well as an internal PM that's only available to folks I work with (not interested in being a full fledge PM).
I basically offer everything to be successful there so folks don't become one of those horror stories.
Anyway, happy to chat if you want to send me a DM. That goes for anyone.
It appears the key, like other places is "knowing your market".
I visited Detroit recently and checked out some of the homes on realtor.
There are several in scary condition and are the worst I've seen. This is where REIs would stop.However, you have to look further. Check out the school ratings. Avoid areas where the rating is 1 or 2. Check out comps.
On the the bigger pockets podcast and the Real Estate Rookie podcast, Ashley Hamilton has become very successful in Detroit as she knows her market and overinvests in the property, using section 8, relates to her tenants by treating it like a service, and not using the slumlord "tenants/properties are for cash flow only. Nothing more" mentality.
BP Article: https://www.biggerpockets.com/...
Real Estate Rookie: https://tinyurl.com/ybjrsf85
Bigger Pockets Podcast: https://tinyurl.com/4mxcczyy
- 3yGreg MillerPro MemberRental Property Investor · detroit, MI · Member since 2020 · 21 posts · 25 votes
Quote from @Bob S.:
Quote from @Dan Tran:
I'm interested in investing in cheaper properties for Section 8 buy & hold, and the numbers/inventory are almost suspiciously attractive in Detroit, MI.
A lot of BP posts and threads, as well as a few google searches, warn a lot about scams, agents misrepresenting 'turnkey' properties, crooked PM companies, a slow HA office, and very high crime.
How much of this is exaggeration? Has anyone on this forum successfully done OOS investing in Detroit?
How relatively difficult (compared to ex. Ohio) is it to evict a troublesome tenant in Detroit?
I have worked in many different markets from KS, to Indi, to Memphis and Detroit. I left them all and have been working in the Cleveland markets for about 10 years, I recall buying one in Detroit about 11 years ago, total disaster, we just walked away, I am sure you can be successful there, however, you better have a SUPER team in place.
All the best
A lot has changed in Detroit in 11 years. 11 years ago, the city hadn't even declared bankruptcy. 2013 was the burnt ashes and the phoenix is still rising. So much growth from 2017 to present. You should come for another visit!
Quote from @Greg Miller:
Quote from @Bob S.:
Quote from @Dan Tran:
I'm interested in investing in cheaper properties for Section 8 buy & hold, and the numbers/inventory are almost suspiciously attractive in Detroit, MI.
A lot of BP posts and threads, as well as a few google searches, warn a lot about scams, agents misrepresenting 'turnkey' properties, crooked PM companies, a slow HA office, and very high crime.
How much of this is exaggeration? Has anyone on this forum successfully done OOS investing in Detroit?
How relatively difficult (compared to ex. Ohio) is it to evict a troublesome tenant in Detroit?
I have worked in many different markets from KS, to Indi, to Memphis and Detroit. I left them all and have been working in the Cleveland markets for about 10 years, I recall buying one in Detroit about 11 years ago, total disaster, we just walked away, I am sure you can be successful there, however, you better have a SUPER team in place.
All the best
A lot has changed in Detroit in 11 years. 11 years ago, the city hadn't even declared bankruptcy. 2013 was the burnt ashes and the phoenix is still rising. So much growth from 2017 to present. You should come for another visit!
Thats ok, my team is in Cleveland, ( 20% net caps cash purchases) I have done about 500 there :)
Continued success
- 3yScott AllenBusiness MemberReal Estate Agent · Columbus, OH · Member since 2020 · 449 posts · 471 votes
@Dan Tran I have not heard anything great about Detroit but I'm sure deals look great on paper there. Research Columbus, OH and tertiary markets in Ohio if you're interested in getting into section 8 housing. Sometimes it is wise to visit a property during the inspection period if you can to verify the condition and neighborhood that it's in. Video walk throughs of the inside and surrounding properties can help as well
- Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes3y
Quote from @Jeff Roth:
Hi Dan-
Property taxes are high in most of Detroit.
I personally invest in Lansing, MI.
Similar numbers. Much lower property taxes.
To your success!
It's really not that cut and dry. If you calculate taxes simply based on the tax rate and purchase price it's going to be high.
But if you lookup the actual SEV of the property you're buying it's likely far lower than you'd expect. You need to do your calculations that way.
I also appeal my taxes for each property I buy the first year they come due. I have a great strategy for this and I've been 100% successful. On average, I've had my taxes reduced over 50%.
That's money in my pocket every year forever.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesNewark. Detroit on the other hand, isn't given credit for all the great things that it has. The press for years has had their fun trashing it. Too bad they have their head you know where. It's easy to repeat what you've read. Just as easy to rate as city based on a layover at an airport.
Quote from @Bernard Joseph S.:
Quote from @Joe Villeneuve:
Kind of like Newark?Quote from @Bernard Joseph S.:
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
Lol, yep! Terminal A is new at Newark, so yea that’s the nice. The rest of the airport and city you can keep it
- Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes3y
@Dan Tran So back in the years 2012 to 2015, I was really into turnkey rentals and managed to acquire about 11 of them. But as time went on and I became an accredited investor, I shifted my focus more towards syndications and private placements. Starting from the ground up with those turnkey rentals was quite the experience.
During that time, it was possible to find some solid rental properties in places like Atlanta, Birmingham, and Indianapolis that could generate rental to value ratio equal to or higher than 1% of the property value. However, things have changed since then, especially between 2018 and 2020, when prices started to soar and for the same assets you were buying them at 0.8-0.9% RV. It feels like that was the turning point for turnkey rentals, and now it's challenging to find good deals, especially with some turnkey marketers inflating prices significantly like 10-20k.
Nowadays, I'm noticing a trend where investors are looking at other markets like Detroit or Baltimore, Maryland - and going away from LTR to STR which is risky because STRs are discretionary spending. While the numbers may look attractive on paper, those areas often have high crime rates and overall poor conditions. So, even though the financials might seem appealing, it's important to consider the bigger picture and the tenant headaches that will happen.
The current reality is that it's becoming increasingly difficult to find properties of the same quality and affordability as we used to. The access to such opportunities has diminished over time, making it tough for newer investors to replicate the same success. It's a challenging landscape, dude, and it's only going to get tougher.
- Investor · NJ · Member since 2022 · 155 posts · 224 votes3y
Quote from @Joe Villeneuve:
Newark. Detroit on the other hand, isn't given credit for all the great things that it has. The press for years has had their fun trashing it. Too bad they have their head you know where. It's easy to repeat what you've read. Just as easy to rate as city based on a layover at an airport.Quote from @Bernard Joseph S.:
Quote from @Joe Villeneuve:
Kind of like Newark?Quote from @Bernard Joseph S.:
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
Lol, yep! Terminal A is new at Newark, so yea that’s the nice. The rest of the airport and city you can keep it
Did I hurt your feelings Joe? Don't worry, you're a big boy, you'll be ok I promise. Like I said, the airport was nice. The rest of it, enjoy yourself, invest to your heart's content my man!
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesFeelings not hurt. I'm just laughing.
Quote from @Bernard Joseph S.:
Quote from @Joe Villeneuve:
Newark. Detroit on the other hand, isn't given credit for all the great things that it has. The press for years has had their fun trashing it. Too bad they have their head you know where. It's easy to repeat what you've read. Just as easy to rate as city based on a layover at an airport.Quote from @Bernard Joseph S.:
Quote from @Joe Villeneuve:
Kind of like Newark?Quote from @Bernard Joseph S.:
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
Lol, yep! Terminal A is new at Newark, so yea that’s the nice. The rest of the airport and city you can keep it
Did I hurt your feelings Joe? Don't worry, you're a big boy, you'll be ok I promise. Like I said, the airport was nice. The rest of it, enjoy yourself, invest to your heart's content my man!
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesI also like the Detroit airport especially the hotel with its own security lane.
Quote from @Bernard Joseph S.:
Quote from @Joe Villeneuve:
Newark. Detroit on the other hand, isn't given credit for all the great things that it has. The press for years has had their fun trashing it. Too bad they have their head you know where. It's easy to repeat what you've read. Just as easy to rate as city based on a layover at an airport.Quote from @Bernard Joseph S.:
Quote from @Joe Villeneuve:
Kind of like Newark?Quote from @Bernard Joseph S.:
I had a layover at the airport a couple weeks ago, nicest part of Detroit IMO lol
Lol, yep! Terminal A is new at Newark, so yea that’s the nice. The rest of the airport and city you can keep it
Did I hurt your feelings Joe? Don't worry, you're a big boy, you'll be ok I promise. Like I said, the airport was nice. The rest of it, enjoy yourself, invest to your heart'si a content my man!
- That's exactly why you invest sooner than later.
Quote from @Lane Kawaoka:
@Dan Tran So back in the years 2012 to 2015, I was really into turnkey rentals and managed to acquire about 11 of them. But as time went on and I became an accredited investor, I shifted my focus more towards syndications and private placements. Starting from the ground up with those turnkey rentals was quite the experience.
During that time, it was possible to find some solid rental properties in places like Atlanta, Birmingham, and Indianapolis that could generate rental to value ratio equal to or higher than 1% of the property value. However, things have changed since then, especially between 2018 and 2020, when prices started to soar and for the same assets you were buying them at 0.8-0.9% RV. It feels like that was the turning point for turnkey rentals, and now it's challenging to find good deals, especially with some turnkey marketers inflating prices significantly like 10-20k.
Nowadays, I'm noticing a trend where investors are looking at other markets like Detroit or Baltimore, Maryland - and going away from LTR to STR which is risky because STRs are discretionary spending. While the numbers may look attractive on paper, those areas often have high crime rates and overall poor conditions. So, even though the financials might seem appealing, it's important to consider the bigger picture and the tenant headaches that will happen.
The current reality is that it's becoming increasingly difficult to find properties of the same quality and affordability as we used to. The access to such opportunities has diminished over time, making it tough for newer investors to replicate the same success. It's a challenging landscape, dude, and it's only going to get tougher.
- Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes3y
Today is better than never or tomorrow
- Member since 2020 · 41 posts · 13 votes3y
Quote from @Bob S.:
Quote from @Dan Tran:
I'm interested in investing in cheaper properties for Section 8 buy & hold, and the numbers/inventory are almost suspiciously attractive in Detroit, MI.
A lot of BP posts and threads, as well as a few google searches, warn a lot about scams, agents misrepresenting 'turnkey' properties, crooked PM companies, a slow HA office, and very high crime.
How much of this is exaggeration? Has anyone on this forum successfully done OOS investing in Detroit?
How relatively difficult (compared to ex. Ohio) is it to evict a troublesome tenant in Detroit?
I have worked in many different markets from KS, to Indi, to Memphis and Detroit. I left them all and have been working in the Cleveland markets for about 10 years, I recall buying one in Detroit about 11 years ago, total disaster, we just walked away, I am sure you can be successful there, however, you better have a SUPER team in place.
All the best
Hi there, Would love to pick your brain about the cleveland Akron market if you ever have time.
- Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes3y
I will note from my experience, that certain lenders will not lend in Detroit, especially for fix and flip financing. Just something to look out for. Likely due to the values being hard to gauge as stated in various comments above.
- Homeowner · Louisville, KY · Member since 2023 · 1 post · 0 votes3y
@TravisB what is SEV?
Join the conversationCreate a free account to reply, vote on answers and follow this thread.