Detroit

[Tora Miller]

hello everyone I am looking to buy my frist rental property inDetroit and was wondering if there were any one else that plan or own rentals in Detroit that could give me some advice thanks

[Christian Hutchinson]

Originally posted by @Mike Carino:

Originally posted by @Bridget Smith-Osbourne:

@ Christian Hutchinson.   I would love to know which area(s) of Detroit you are currently investing in (highly profitable and desirable) . I just visited Detroit for the first time and am seriously considering investing here. Really impressed with Downtown. Have been told by many locals they are seeing changes that were not present a few years back. Planning a second trip in August. Any thoughts/ inputs really appreciated

Bridget I would advise on planning your 2nd trip, to seek out your team to work with that will be your boots on the ground here and REI meeting and BP are great start. This will give you a sense of what will work. Being in the hot area is possible, but you will be beat to the punch by the local investors and investors that have a strong teams. Alot of people ask on here where to go, than eventually start asking how do they do it.

 @Bridget Smith-Osbourne Mike is very right...the areas that are "next" changes month to Month.  You are eyeing up Detroit because of a "Cheap House".  Yes its cheap, compared to other cities, but its very Cash Intensive, banks are not going to do you any favors.  For instance, Herman Kiefer's Medical Complex announced plans for redevelopment this week. Deals not done; but in the works(headed to City Council for approval).  So you would want an attached neighborhood(the closer the better) to this project. This area around Herman Kiefer, and Henry Ford Hospital has LOTS of brick duplex to quads, or even Multi-Family buildings with 6-12 units.  But realize these homes were built almost 100 years ago, and most likely have not have been updated with HVAC, Electrical, etc, and will be distressed. Be ready to open up your wallet to renovate, and spend time not earning any cash.

I found a really nice Duplex right behind Henry Ford Hospital, and it was completely updated, and reasonably priced(just short of turnkey but you could rent it as is no issue). But it was sandwich between two homes that were burnt out, and only 5 homes out of maybe 20 on the block were in livable condition.  Are you ready to dump say $85K into that even though you can get $800/month on each unit?  Remember, you can't mortgage this property because comps are non-existent, and you have tie up $85K of cold hard cash(or Home Equity Line/Loan).

But like all real estate deals, and especially those in Detroit, I don't trust its actually happening until I see Construction Equipment working. Lots of projects die in Detroit for numerous reasons. Its a tough market. So you could position yourself to feed off of Herman Kiefer, and now you are holding a real dud, hoping to get Downtown/Midtown spillover when they come.

I tell anyone the best bet is the Woodward Corridor.  If your feel more adventurous work Michigan Ave and Jefferson.  If you can score a deal within 4 blocks of these major streets, and within 3 miles of Downtown(lets just say Campus Martius) you will be able to get a tenant, and of course do well if the money lines up.

Once you come here you your network will direct you to areas you can dig into.  I urge you to pay attention to the calendar here.  Several Foundations, and Companies based in SE Michigan have special Internships specifically for people who are 20-25ish, college graduates, and willing to LIVE in Detroit.  These people don't make LOTS of money only $25-33K per year, but will pay 1K-2K+ a month in rent.

These groups descend on Detroit starting in Mid to Late June until about the 1st week of September. This has been going on about four years now. As you can imagine these Interns have huge networks. They have fellow Interns who end up in some not so desirable areas and they will do anything to move after a few weeks. I have rented to a couple of these groups. They are great tenants.

These "Interns or Fellows" have Ivy League Backgrounds, Top Public Universities, Masters Degrees from Local Public Universities in STEM Disciplines, did time in the Peace Corps, etc.  Why do they take these Internships? Want a job at DTE(Energy Company), GM, Blue Cross, etc. in a highly visible roll with direct access to the C-Suite Management, this is your golden ticket.  You aren't just an accountant pushing Payables through some morbid process in a cubicle trying to meet some Performance Metric.  Companies end up offering a Permanent Position to about 60% of the Interns after a year, and another portion extend them a year. Or these people find different employment.  Either way most have minimal ties to Michigan and Detroit, so them having a job, and desirable living area, they WILL stick around.  These programs don't provide housing, and the "Interns" must find it on their own.