Detroit Rock City? Does it live up to it's name?
Contractor 路 Los Angeles 路 Member since 2022 路 17 posts 路 20 votes
Detroit Rock City? Does it live up to it's name?
2 Replies
- 3yGreg ScottPro MemberRental Property Investor 路 SE Michigan 路 Member since 2014 路 4k+ posts 路 6k+ votes
I'm an apartment owner and investor and live in Metro Detroit.
Metro Detroit has good opportunities, but I wouldn't say one chart makes it the tops for apartment investing. To help you with your pro/cons, what should you be aware of investing in Metro Detroit?
1) The local economy is highly correlated with the automotive industry. It does fantastic during expansionary times and suffers greatly during recessions.
2) If you are looking to get into the city proper, that is a whole other discussion with lots of risks, but there are plenty of good suburbs.
3) Understand how property taxes are calculated and forecast properly what yours will be after purchase. I've seen many out of state investors get killed because they didn't understand Michigan property tax laws.
- 3yDrew SygitBusiness MemberProperty Manager 路 Royal Oak, MI 路 Member since 2012 路 12k+ posts 路 9k+ votes
We think Metro Detroit is a GREAT place for OOS investors to consider!
YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/... (links also available @ our website)
Your biggest question shouldn't be WHERE to invest, but HOW you will invest!
Many OOS investors set themselves up for failure because they don't truly take the time to understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won鈥檛 pay them enough for the time required and even then it鈥檚 too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?
Good luck with whatever you decide馃槉
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