Planning to start investing in Detroit - any one use Upside investments?

[Sunny Karen]

Hello BP community,

My family is evaluating a cash-flow market to get into - and we are close to finalizing on Detroit for various reasons (entry point, >1% RTP, strategic investments in parts of the city, ...)

Based on conversations in my local REI meetups, this will be our first time experimenting with BRRRR's in Detroit with the intent to hold onto the properties long-term. Plan is to buy SFH & Duplexes and start out small and scale quickly once we figure out the market. We have done a lot of reading here about Class-C properties and the risks that come with it, but haven't experienced it first-hand.

We have full-time W-2 jobs and cannot be local in the area and need a trusted team on the ground. Has anyone here worked with Upside investments (https://www.investinupside.com/about.html) - Nader Shariff team? It looks like they promise a hands-off approach (sourcing, rehab management, property management) but wanted to see any experiences here in the BP community.

Besides that, I understand there is no crystal ball, but for Detroit investing - what's stopping Detroit from going back to 2008 pricing in the future?

[Michael Smythe]

@Sunny Karen let's do a deep dive on this property listed as sold on their website:
15095 SORRENTO ST, DETROIT, MI 48227

if you do some searching on Zillow, the property does NOT show as sold and the last listing is from 03/17/2020. If this property had an actual LEGAL sale since then, can't think of a reason it would not show on Zillow.

Zillow also shows that the property is in the Bethune Neighborhood. We've ranked this as a Class D Neighborhood! Would NOT recommend anyone OOS buy in a Class D Neighborhood. 

Using Google Streetview (image capture 07/2022) to virtually drive the block, shows 5 vacant properties, one of which is significantly fire damaged. Actually, not that bad for a Class D Neighborhood, but there are so many BETTER streets in Detroit. Also, maybe they've been bought & renovated in the last 21 months.

The real challenge is the advertised $105k value.

Zillow shows a Zestimate of $59,600, RentZestimate $1,314
Redfin Estimate is $67,444, rent est $1,089
Realtor (dot com) estimates:
---Collateral Analytics $60,212
---Quantarium $49,728
---CoreLogic $67,264

Please show us where you can find ANYTHING that supports their $105k price!
FYI: none of the sites listed above know the condition of the property. So, they all assume average condition per the neighborhood sales prices only.

So, there's no way you'll be able to BRRR this property! Also, how much money do you think you'll lose if you pay their price of $98k?

One last challenge is their estimate of property taxes - they are all VERY low:(

Michigan has some interesting property taxes because there's a Taxable Value and a State Equalized Value, as well as Homestead and nonHomestead millage rates. 

Property taxes will INCREASE after you buy a property and often double or triple from what they are now. So, it's important to know what they'll be or you may not cashflow at all!

It's NOT rocket science to figure this all out and the state even provides a website where you can estimate what your property taxes will be AFTER your purchase. 

Full disclosure, the City of Detroit Assessor's office is not the best, so you often don't see as large as an increase as you should - but, there will be an increase!

PM us if you'd like more info...