Thoughts about properties in Detroit?

[Jake Hemrick]

There has been a lot of talk about property in Detroit. Some properties in Detroit are going for $500 or even less in some cases. This seems like an opportunity for buy and hold. The city will rebound at some point and I feel like there could be huge returns on these properties. Very tempting. What are your thoughts?

[Account Closed]

Stay away.

I am a RE investor in California, and at one time (2013), I owned 19 SFR and Duplexes in Detroit.

I started small, buying 3-4/year starting in 2009. 

Yes, most of these houses I bought for between $2,000 and $5,000. Most required at least $5,000 in work just to get them rentable. 

The problem with these houses are that most of the renters that are willing to live in these areas are just not good tenants. Most will be able to pay the 1st month and deposit, helping you recoup some of of your initial investment. But after 3-4 months (sometimes sooner), they will stop paying. I thought I was just having bad luck, but it kept happening. 

We screened tenants through employment verification, etc. However, these tenants are basically "professional" in that, they know that the eviction process takes months and they can live there for free while you try to get them out. 

They just don't care. 2 of my tenants burned down my house after I tried to evict them. I was the one with the last laugh because I received $30K insurance settlements on each. 

I thought that with the little money I had ($30K to start) that I could buy 3-4 houses as opposed to 1 small one in California. Boy was I wrong.

By 2014 I sold all of my holdings in Detroit and now I am buying 4 units in Oakland. Yes, they are in rough neighborhoods, but the tenants here are much better and care about their living situation much more than in Detroit. 

STAY AWAY!