Detroit

[Corey McCue]

I'm very new to this and have only recently started researching real estate investment, so please excuse my ignorance (as this post will probably be riddled with it). My childhood best friend and I are in the process of research so that we can go in on a rental property together (him and I both have a little bit of capital to pool together), and as we're searching for a good place for our first property (we're currently leaning towards Houston area), I was wondering if Detroit is worth touching with a 10 foot pole? Thing is that him and I only have about 30-30K in which to invest and we're both college students, so we don't have a steady income with which to take out a conventional bank loan. Just looking for some insight on how to stretch our capital as far as possible. Him and I are anxious to get our feet wet, but obviously want to avoid making any major mistakes. Any insight would be greatly appreciated!

[Christian Hutchinson]

Originally posted by @Corey McCue:

I'm very new to this and have only recently started researching real estate investment, so please excuse my ignorance (as this post will probably be riddled with it). My childhood best friend and I are in the process of research so that we can go in on a rental property together (him and I both have a little bit of capital to pool together), and as we're searching for a good place for our first property (we're currently leaning towards Houston area), I was wondering if Detroit is worth touching with a 10 foot pole? Thing is that him and I only have about 30-30K in which to invest and we're both college students, so we don't have a steady income with which to take out a conventional bank loan. Just looking for some insight on how to stretch our capital as far as possible. Him and I are anxious to get our feet wet, but obviously want to avoid making any major mistakes. Any insight would be greatly appreciated!

With $30K you can't buy anything in Detroit that isn't high risk, or its in an area where the tenant pool is low quality.

Appraisals are an issue in the city, very low chance you can finance anything.  If you had $70K you could pay cash for something that will generate for you pretty good, meaning double digit returns.

I would not invest in Detroit as a first-timer, or doing it remotely.  Its an hands-on market.

IF you were to do it, check the area between Mexicantown and Corktown. You could score a duplex to quad thats 2000-4000 sq ft, and hope Corktown and Mexicantown keep getting people so your investment appreciates from spillover tenants.

But expect some elbow grease to get it livable, and try to have it ready to rent in June and July.  You can snag Medical/Dental/Law/Pharmacy Students, or some of the new Fellows through various foundations who trying to score a cheap place, $400-$600, in the City(requirement to their employment) but don't have the money to live in Downtown, Midtown, Lafayette Park where one bedrooms start at $1000/month, two bedrooms start at $1300.

Check areas off/on of West Grand Blvd, but south of Michigan Ave.

Also,

Right now The North End is in play, thats the area off of Woodward but south of Highland Park. The closer to Woodward you are the better.  I had one set of tenants move out of my place in Midtown where they payed $1500/month to move to that area for an unit that runs $750 this month. I was surprised they would move there but, ran through that neighborhood about six months ago and several homes(8+) were being completely gutted.  I have a quad in that area, but we are 4 blocks off Woodward, so tenant type changing is probably 2-3 years away, or the when the Light Rail Project completes.

If you invest in Detroit.  Walk the neighborhood.  Come back in a week and walk it again.  Walk it at 6 AM-7 AM and 8 PM-9 PM.  Invest in Motion Sensor Lights, and if possible a six foot fence. Glass Block Window anything less than 5 feet from the ground.

I say all this, and I make pretty good money on my Detroit Units. Good Luck.