decent cities/neighborhoods to buy rental properties?

Question

I presently have a rental in California ( I live in California) and it seems that the price to rent ratios in California doesn't look that great here anymore. So lately I've been looking at listings in Detroit where it seems better. I don't know the neighborhoods but have read up that bagley is not to bad but it looks like I might of missed the boat on that one. Houses there are going around 100-150k but the rents look to be 800-1000 range so that isn't to great. anyone have any suggestions for other neighbourhoods in Detroit? from what I can gather the tax rate for out of state investors is a whooping 2.6% is that correct? Anyone know a reputable property management company in Detroit.

Any other cities recommended for rentals? specifically the neighbourhoods in those cities. I'm looking for something in the 50-120k range so I don't have to put to much down and tie all my money up in one property.

Remington Lyman · Answer

@Chad Demoss I would recommend looking into Columbus, Ohio. You can find 1%ers while investing in a rapidly appreciating market.

Chad Demoss · Answer

I was wrong property tax in Wayne county is 4.1% for non-homestead houses. Ohio is looking more attractive for what I want to do.

Priyanshu Adathakkar · Answer

Look at university districts and/or good school districts, one-bedrooms and studios are also good if they are in CBD.

Blake Cooper · Answer

I like rural. It's easier to pick up more rental units and spread your eggs across multiple baskets rather than investing in one flat in a city and finding the building is a bust.

Drew Sygit · Answer

@Rassan Sampson: Sorry to hear about your challenges, but pretty standard for Detroit.

Rassan Sampson · Answer

@Drew Sygit I can attest to the risk you're mentioning. I closed on my first property last June and have since had the water heater and furnace stolen, repairs over budget by about $7k to get the CoC, and now have a tenant that occasionally pays rent. Short term results have been bad but I still have high confidence in the property and area.

My only suggestion to anyone looking to get into the market is to do your homework, be completely prepared for some large bumps in the road, and treat everything as a learning experience for your future plans, it's tough to get it all 100% right out the gate.

Drew Sygit · Answer

@Andre Alexander: don't soft sell issues with Detroit rentals!

@Chad Demoss: besides having to secure vacant properties against theft of furnace, HWH, copper and more, you also have to deal with a low-demographic tenant pool where "pride in home" has been dis proportionally sucked out of them by the "system". They're hard on their homes because they don't really care about them. Rent is the last bill they pay every month. Detroit still works if you buy the right property and know what you're doing.

In the Ring Cities, these issues are less of a risk:)

Chad Demoss · Answer

Well Drew I'm just looking for a rental property in an area that isn't over run with crime and blight. On the other hand I'm not really interested in houses where i'm barely breaking even hoping for appreciation. I briefly looked at the areas that Andre pointed out (thanks Andre) and there seems to be some nice returns in those areas. I'm well aware that neighborhoods can go from good to crap in a matter of blocks so my next step is to keep researching, find a knowledgable RE agent, property management and then do more research.

Thanks for your insight.

Drew Sygit · Answer

@Chad Demoss: The number one question to ask yourself BEFORE investing in the City of Detroit, is what is your appetite for risk?

As with any type of investment, higher returns are tied to higher risks, Detroit is no exception. As @Travis Biziorek mentioned, you can get a pretty high price/rent ratio in the city, but there are corresponding higher risks.

@Andre Alexander was offering you options in the Ring Cities around Detroit, which offer a lower return than Detroit, but also corresponding less risk. Many of these cities will still get you around a 1.5 price/rent ratio.

So, what do you want to do next?

decent cities/neighborhoods to buy rental properties?

decent cities/neighborhoods to buy rental properties?

Most Popular Reply

13 Replies