Out of State Investing, First Time, Cap Rate

[Account Closed]

Good Morning,

I am looking into investing in metro Detroit for multi-family properties. I live in California and have multifamily investment units here that I have had for many years. I am looking for areas with the best cap rate, I have found a deal that can generate 7-9 cap in the metro Detroit area (Warren County) its a small risk with the deal size being under 200k and I'm going in all cash no financing. My question is, am I getting in too late? Are there other cities or areas in the country where I could get a better cap rate and return, if so where? I have looked at Mississippi, Alabama, Louisiana and Florida and nothing there really spiked my interest I don't see their economies in the small cities I went to really growing, hence my interest in a bigger city with more growth potential like Detroit. My concern is that I am paying the premium due to housing pricing increases, and maybe its best to hold off to see what happens in the coming months? Does this sound like a solid investment? I fear the housing market crashing and buying at the top, but I don't know much. Any suggestion and advice would help, cheers! 

[Joe Hammel]

@Dana Tesser

You’re looking at coming to the best cash flow/roi and solid location in the country. Welcome.

I love my rentals in Warren and so do our clients who buy them.

Warren has Large Chrysler and GM plants within the city as well as Henry Ford and multiple hospitals.

Auto and healthcare are Michigan’s 2 largest industries. Both in Warren.

It has appreciated double digits for quite some years now (I can share the trend) but with increasing rents, the numbers still work really well.

It’s never too late. Nearby cities are priced higher so the overflow into Warren will continue.

Not sure if this link below will work…but it points out that when the rest of the nation is overpriced, metro Detroit is still showing undervalued.

https://fortune.com/2022/04/06/overvalued-housing-markets-home-prices-mortgage-rates-corelogic/