Advice For Buying Rental Properties Near Detroit

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Advice For Buying Rental Properties Near Detroit

Robert Piller
Austin, TX · Member since 2013 · 103 posts · 19 votes

Which are the top zip codes in the Detroit metro for Buy & Hold single family properties..both in terms of potential appreciation and for cash flow?

I am looking to purchase about a dozen properties up there within the next few months -- and being out-of-state, I am hoping for some guidance.

Thanks.

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y

    @Robert Piller

    Hi Robert,

    Have you considered Toledo OHIO.

    There are some great deals there.

    Thanks

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  • Bryan Dracka
    Lincoln Park, MI · Member since 2013 · 14 posts · 0 votes
    12y

    Hi Robert,

    The "downriver" area is a good place for rentals. Lincoln Park 48146, Southgate 48195, Wyandotte 48192, these are all blue-collar communities south of the city with good school districts and no serious crime problem like is often associated with Detroit. The home prices here are still fairly low from the crash but they are bouncing back quite a bit in the last year or two and the property taxes aren't too terrible like they are in some cities here. The suburbs directly west of the city are a similar story, there are a lot of rentals in these areas and they do pretty well as far as cash-flow.

    Depending on what price range of houses you are looking to buy...the northern suburbs, Oakland County, specifically northern Oakland county is a much more affluent white-collar area.

    I hope that helps some!

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  • Gary Hurst
    Investor · Belton, TX · Member since 2013 · 47 posts · 9 votes
    12y

    Robert, I was just looking at some of the Foreclosure websites and wow there are tons of homes for 10K and under. Hudhomestore.com is one of them.

    I am from Michigan (now in Texas)and I am considering going up there to look for myself. If I take 100k buy say 10 houses, rehab max 5k each the cash on cash return should be huge. Not to mention the appreciation. Buying houses at 1 to 5 sq foot NICE!

    Plus Detroits bankruptcy with new conservative government for the state I think there is HUGE potential. Good Luck

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  • John Knappmann
    Landlord · Flat Rock, MI · Member since 2011 · 179 posts · 26 votes
    12y

    I agree with Lincoln Park (although I might stay south of Southfield Road), Wyandotte, and Southgate. I would add Dearborn, especially 48126 and 48124. 48128 is a little more solid middle class (and more expensive) with professionals and teachers. I also would suggest Dearborn Heights (48125 and 48127). Westland, Garden City, and Redford might also be worth a look. Some of the Redford zip code are actually in Detroit, but I kind of like that area.

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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @ Engelo: Have you invested in Toldeo, OH? I am definitely open to areas for purchase.

    @ Bryan: Thanks for those zip codes. I like buying houses under $60K after all repeairs are done for rentals in my portfolio - and was hoping to snap them up for much less than that in Detroit area. Is that do-able?

    @ Gary: I was thinking the same thing -- and Iprefer buy and hold. What part of Texas are you in?

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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @ John: Thanks for the tips

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    12y

    @Gary,

    I am not from Detroit but your way of thinking on your strategy could lead you in the wrong directing. I can assure you they will all need more then $5k in rehab and if they are for sale for $10k, regardless of where in the US its a very bad area especially in Detroit. You will have tons of turn over, vacancies, theft!!! You would be better off buying 2 homes for $50k. Be careful, if Detroit was that good of a deal, those homes would not be available.

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  • Gary Hurst
    Investor · Belton, TX · Member since 2013 · 47 posts · 9 votes
    12y

    I in Bell County. Killeen Texas about an hour north of Austin. Killeen is the home of Fort Hood the largest Military post. Many foreclosures and high rents.

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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @Gary Hurst I have several rentals in Ft. Hood area. We should get together some time. I live in Austin.

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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @Curt Davis Your advice is golden. I agree with the $50K-$60K max in good markets ($25-$30K in more speculative markets) per home strategy--but that is after all repair costs are built in. I also think the if you can buy $10K homes and fix them for $5K- investors would be snapping up 10-20 at a time.

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by Robert Piller:
    @ Engelo: Have you invested in Toldeo, OH? I am definitely open to areas for purchase.

    @ Bryan: Thanks for those zip codes. I like buying houses under $60K after all repeairs are done for rentals in my portfolio - and was hoping to snap them up for much less than that in Detroit area. Is that do-able?

    @ Gary: I was thinking the same thing -- and Iprefer buy and hold. What part of Texas are you in?

    Hi Robert,

    Not as of yet but have been following the area very closely.

    The team and myself have bought 35 houses this year in Kansas City.

    Thanks

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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @Engelo Rumora How's the KC market?

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  • Bryan Dracka
    Lincoln Park, MI · Member since 2013 · 14 posts · 0 votes
    12y

    I am from Detroit, and Curt is exactly right!! These houses for 5k-10k (some are even <1k) need a lot of work, much more than 5k worth. And that is not the worst part, many of these houses are in neighborhoods that are practically abandoned.

    That said, these houses are IN the city of Detroit! The suburbs are a different story entirely, no mass crime problems, no vacancy issues. There are actually places in the suburbs where population is rising, demand for rentals is increasing. Certain areas surrounding Detroit are experiencing an uptick despite all the problems with the city itself.

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by Robert Piller:
    @Engelo Rumora How's the KC market?

    Great cash-flow

    Not much growth at present.

    Thanks

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  • Aaron Yates
    Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    12y
    Originally posted by Robert Piller:
    Which are the top zip codes in the Detroit metro for Buy & Hold single family properties..both in terms of potential appreciation and for cash flow?
    I am looking to purchase about a dozen properties up there within the next few months -- and being out-of-state, I am hoping for some guidance.

    Thanks.

    @Robert Piller , I canbhelp you with your venture in regards to costss, evaluations, ROI, and information on rentals in specific markets of Macomb and Oakland County.

    I lf you are interested in working together let me know.

    0Reply
  • Gary Hurst
    Investor · Belton, TX · Member since 2013 · 47 posts · 9 votes
    12y

    Yes that would be cool. I teach, but sometimes run down to austin. I will let you know next time I head that way.

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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @Gary Hurst Looking forward to it.

    @Aaron Yates Sounds good. I just sent you a note.

    @Engelo Rumora Cash flow is king. Appreciation is just a guess-but you can bank on cash flow all day long!

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by Robert Piller:
    @Gary Hurst Looking forward to it.

    @Aaron Yates Sounds good. I just sent you a note.

    @Engelo Rumora Cash flow is king. Appreciation is just a guess-but you can bank on cash flow all day long!

    I agree

    Growth is based on predictions. I always recommend to base investment decision on the numbers in the particular deal and not on hopes that the property will go up in the value.

    Hoping is not a strategy :)

    Thanks

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  • Geof Greeneisen
    Investor · Howell, MI · Member since 2011 · 202 posts · 52 votes
    12y

    Hi @Robert Piller, I've been purchasing in south Oakland County for the past several years, specifically Royal Oak, Hazel Park & Ferndale. These areas are north of Wayne County. If there is anything I can do to help shed light in these areas I would be happy to share my business model. Your numbers are do-able in these areas, but probably not too much longer.

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  • Andrew FidlerBusiness Member
    Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
    12y

    @Robert Pillar

    Living in Toledo...I'm biased...but there are absolutely a range of deals, it depends on your strategy and scope of cashflow.

    We have some nice suburb areas with $100k purchase prices and $800-1000 rent rates (Maumee/Perrysburg)...some higher prices to be had in the Slvania/Ottawa Hills area if that's your preference with a slightly higher rent rate.

    Personally, I invest in the 43608 and 43612 zip codes...rule of thumb is the further north the better the neighborhood. In my area I realize $20k purchase/renovation cost and $700/mo for 3/1 houses. I also do a healthy business with Section 8, my seventh got approved Thursday morning.

    Always happy to talk Toledo!

    [email protected]419-410-3836
    LaPlante Real Estate
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  • Robert Piller
    OP
    Austin, TX · Member since 2013 · 103 posts · 19 votes
    12y

    @Andrew Fidler I'll check out Toledo - but I prefer properties with a 1.2% -1.25% rent to purchase/repair price--not 1% or less.

    So if I pay $50K, I expect $600-$625/m in rent.

    Maybe that's why I always seem to stay in the $40K-$60K area?!?!?

    I'm getting these returns on most of my properties-- so will only grab deals with similar ROI.

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by Andrew Fidler:
    @Robert Pillar
    Living in Toledo...I'm biased...but there are absolutely a range of deals, it depends on your strategy and scope of cashflow. We have some nice suburb areas with $100k purchase prices and $800-1000 rent rates (Maumee/Perrysburg)...some higher prices to be had in the Slvania/Ottawa Hills area if that's your preference with a slightly higher rent rate.

    Personally, I invest in the 43608 and 43612 zip codes...rule of thumb is the further north the better the neighborhood. In my area I realize $20k purchase/renovation cost and $700/mo for 3/1 houses. I also do a healthy business with Section 8, my seventh got approved Thursday morning.

    Always happy to talk Toledo!

    @Andrew Fidler

    Hey mate,

    I will give you a call next week. Ill be in Toledo on the 10th and 11th of November. It will be great to catch up.

    Thanks and have a great weekend.

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    Oz Realty4.5369 Reviews
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  • Andrew FidlerBusiness Member
    Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
    12y

    @Robert Piller

    Rob- I buy my houses foreclosed for ~$10k and rehab the snot out of them for another ~$10k...so my total cost is $20k each.

    $700 rent / $20,000 means my properties yield 3.5% on your scale...agreeing with you that dividing $700 by .012 (1.2%) you would be paying $58,333.00 for your target return.

    I fully agree some folks prefer to hit the $100k cost and $800 monthly rent (0.8%)...I've just made a damned good portfolio getting into the border zones of Toledo...blue collar predominantly rental neighborhoods. It's not the area you flip in but it is the area you make cash in. :)

    I've never tracked my properties based on monthly rent/building cost percentage...more along the lines of making 25% annually on my total investment per year $5000 net from $8400 gross on a $20k property since I buy my properties with cash.

    I'd love to hear more about the basis the the percentage tracking methodology, first time I've used it.

    [email protected]419-410-3836
    LaPlante Real Estate
    WebsiteView Page
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  • Joe Delia
    Involved In Real Estate · Rochester Hills, MI · Member since 2010 · 812 posts · 178 votes
    12y
    Originally posted by Robert Piller:
    @Andrew Fidler I'll check out Toledo - but I prefer properties with a 1.2% -1.25% rent to purchase/repair price--not 1% or less.

    So if I pay $50K, I expect $600-$625/m in rent.

    Maybe that's why I always seem to stay in the $40K-$60K area?!?!?

    I'm getting these returns on most of my properties-- so will only grab deals with similar ROI.

    Deal one of my clients just put under contract at 10 1/2 and hoover in warren is 60K PP, 10K rehab, Rent 1150-1250. This might be something that interests you.

    600-625 rents are low for the area... maybe downriver, or south warren and your purchase price could be less.

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