Buy and Hold in Detroit? Your Opinion

[Cameron Ellis]

does anyone think Detroit and its surrounding areas will recover.. Right now I am looking on zillion and the prices for these homes are crazy! I just seen a home for sale for $1,300 that sold for $160,000 in 2008.. In real good condition, would it be a great place to hold properties since their residents are wanting to purchase?

Please give your opinions on this

[Tom A.]

Originally posted by Ali Boone:

The problem with Detroit, aside from it's consistent declining population, is the tenants. I know too many investors who have had so many expenses due to meth labs and non-paying tenants that you would end up actually paying out on that $1300. That's bad. It doesn't go for all areas of Detroit of course, as I'm sure there are plenty of nice areas, but it does go for any area with $1300 houses.

Michigan is extremely tenant-friendly, meaning it can take forever to get rid of bad tenants, all the while you are not collecting rent from them and paying out on their misbehaviors.

Detroit meth labs? No. Other drugs, sure but Detroit isn't a meth lab city or a meth user city. Got to go to the sticks for that.

I've never even heard of a contaminated meth lab house in Detroit. A quick check of the DEA's National Clandistine Laboratory Register shows about 1000 meth houses in Michigan since 2004. It lists just one meth house in the city of Detroit, back in 2008. http://www.justice.gov/dea/clan-lab/clan-lab.shtml

I also don't agree with the description of Michigan as an extremely tenant-friendly state. It's really more down the middle. Some courts and some judges may be more tenant-friendly or more landlord-friendly but getting an eviction isn't hard.

I'm sure there are some horror stories, but this is a good example why investors need to really know where they're investing lest they believe things are better (or in this case, worse) than they really are.