Is there any hope in Detroit?

Question

I had some investments in Detroit- a SFR and a loan. Both of them I'll say that I lost my shirt. Between shady business people (what I felt to be) crooked property management companies, and some of the rumor and innuendo that I'm seeing about the outlook for Michigan real estate, is there any hope in investing in Detroit?

Leroy K. Williams · Answer

Detroit is pretty simple if you know what you are doingHere are a few guiding principals when trying to succeed here:#1. Yes there are many dilapidated homes and Yes there are many low income residents but that does not translate to a pool of renters who would be happy with a low end rental property. Even in the core of the neighborhoods people expect decent housing and if you find renters willing to move in to poorly put together homes you should consider that a serious red flag. In short if you renovate properly you will attract a good tenant and vice versa.#2. If you are going to rehab in Detroit you have to rehab "strategically". Your intuition will likely tell you to get all your plumbing, hvac, electrical etc out of the way first..Don't do it like that. Leave furnaces, hot water tanks for last. Don't place covers on your electric meter cans, don't allow your plumbers to use copper hard pipe. Don't throw brand new windows in at the beginning of the rehab. #3. If you are going to hire a team to renovate and manage ask them to take you to the supply house where they purchase materials. If they know their stuff the guys at the service counter will know who they are and will be willing to speak kindly about them. They should know people at the Pro-desk in Home Depot, at the local Sherwin Williams, and other Lumber yards. They should have basic accounts in those places if they are really pros. #4. A property manager should have an office that tenants can visit and that you can walk into. They should use some form of online management app as a owner's portal. #5. Don't hire the giant property management companies and expect them to care about your handful of properties when they have much bigger fish to fry. You are better off if you have a smaller portfolio with hiring a smaller firm so they will show the proper amount of care to you and your properties.Inbox me for more info

Greg Scott · Answer

I know plenty of people that have invested successfully in Metro Detroit and the City of Detroit. Sounds like you got hooked up with the wrong people.

Bruce Woodruff · Answer

As long as there are people, they will need housing. Unless Detroit empties out (which I suppose is a possibility), a savvy investor can make it work.

Joe Villeneuve · Answer

I was going to make a comment that addressed this as a serious question...then I looked at where this message came from, and I started to laugh. I'll give that answer I spoke of, after I stop laughing. Sorry.

Drew Sygit · Answer

Metro Detroit offers many options for meeting the 1% Rule and relatively high ROI. Follow our "Deep Dive" series we're doing about Metro Detroit cities and City of Detroit Neighborhoods: https://www.biggerpockets.com/... The two most common mistakes we see investors make, over & over again, are: 1) Not understanding and running their own ROI numbers 2) Not having a clear understanding of the type of asset a property is In our opinion, your best team member should be your Property Management Company (PMC). They have to deal with any property you buy every month until you sell or terminate them. Everyone else on your team will be transaction-based and not really involved after a purchase. We're in the Metro Detroit area, so you may want to follow our blog here on BP, but at least read the following posts: How to “Screen a PMC Better than a Tenant”: https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes In our experience you will need to: 1) Learn to "Maintain to the Neighborhood", not your personal standards 2) Tenant-Proof everything you can Hard surface flooring, not carpeting (too easy to trash) Same basic paint for everything No garbage disposals for them to break Only spring-type doorstops also with plate on the wall Glue rubber mats under sinks to prevent water damage Sheet aluminum on walls around stovetops, for easy grease removal Towel racks - screw 1x3 to wall studs, then screw rack to that Install low-profile downspout ext, not aluminum that always disappear Plan on cleaning gutters and leaves up in the fall as tenants won't Avoid garage door openers 3) Have a great application screening process: Check credit for evictions & convictions, utility collections Focus on employment/income stability Require bank or debit card statement - you'll be surprised what they spend their money on! Make surprise visit to their current home to see how they treat it - that's how they'll treat yours! Deliberately have a few challenges in your screening process - it will weed out "entitlement mentality" problems 4) Allow payment plans, but create system to track when payments due, so they don't keep falling further behind You will need to call them on due dates or they will fall further behind Be prepared to give a strong NO when asked if you will change rent due dates to "make it easier" for tenants to pay rent based upon their SSI or paycheck dates. This shows total lack of budgeting and is a sign they will only fall further behind with more excuses. 5) Have a defined eviction process, but allow 3-5 days of flexibility for inevitable slow-pays. 6) Find handymen that live in an area only 1 Class higher than your property. Sending a Class A handyman to a Class C or D property will waste your money. Send Class B to C and Class C to D. They will also get along better with the tenants.

Stephen Brown · Answer

A lot of investors have success around Lake Erie. From Detroit to Toledo to Cleveland. You just need a team and get in the right area.

Scott Mac · Answer

Hi Chris,You need to know D-Town, what's going on, the areas, neighborhoods, danger zones, the DMZ, etc....It might be easier if you were boots on the ground (but in the wrong area they will steal your boots and leave you dead on the ground).You need to know D-Town, what's going on, the areas, neighborhoods, danger zones, the DMZ, etc....Some areas have things going on and some are just pure dangerous to your life.If you can pronounce the following you might consider yourself knowing the area a little bit (if you can't You need to know D-Town BETTER). Because when the locals are talking to you about these places you will know what they are talking about.If you have never heard of any of these places (or don't know how to pronounce them in the local lingo)--You need to know D-Town Better.-- Gratiot-- Hamtramck-- Dequindre-- Livernois-- Bois Blanc-- Wyandotte-- Ypsilanti-- The DMZ-- The U.P.-- The Rouge (Fords)-- Woodward--etc...https://www.youtube.com/watch?v=mYsFUFgOEmMWill it ever be GREAT like it used to be in this video below, only if large investment is made in hiring and people flock there for a "Better Life". Right now, I doubt anyone goes there for a "Better Life"...Right now it seems to me more like Gold Miners going there seeking to strike a vein of cash flow....How it used to be: https://www.youtube.com/watch?v=aBZ6hgA-Cc4Just my 2 cents.

Account Closed · Answer

There are people with the equipment and know-how to make a living salvaging wrecked cars. That's Detroit.As far as a "comeback", you know how they talk about 20 year markets? Detroit has had decades.

Gary Carver · Answer

@Chris LumLee. Definitely hope. I help Buyers and Sellers daily investing here Successfully. Do some research, get a team here￼￼

Paul S. · Answer

Unfortunately you are the VAST majority of OOS investors - most just won't post here when all goes bad.