Are Low income rentals in Detroit worth it?

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Are Low income rentals in Detroit worth it?

Cynthia Miller
Dearborn, MI · Member since 2017 · 72 posts · 19 votes

I have a couple rentals in the Westside of Detroit.  I have been seeing the city improve the neighborhoods, I've seen other investors fixing them up. I just haven't made any profit off mine and its been a headache. The tenants don't pay then you have to take them to court and that cost money. Then they don't take care of the houses and you have to fix up after you evict. 

I made mine nicer than most for the area hoping to attract better tenants but it hasn't done any good. I think any decent tenants will go to the surrounding suburbs and pay a little more.

Trying to show the houses is a headache. The people don't show up to appointments and waste your time, or say they want it then can't come up with the money or proof of income etc.  I've tried a management company and that was worse. They got me a tenant that knew how to work the system and delayed the eviction and filed appeals for 6 mos!

I'm about ready to get out but I'm afraid as soon as I do things are really going to pick up in the city and i'm going to be kicking myself. I'd like to hear from others who have rentals in Detroit...not midtown area but the lower income areas.

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Amia Jackson
Investor · Philadelphia, PA · Member since 2017 · 39 posts · 28 votes
9y

I would say no. I know as a former very low-income person, that if you have even a little bit of money, you're going to move somewhere nicer. The people that choose to live in very low-income areas when there are other choices are most likely terrible tenants. There is a level of dysfunction that keeps people in neighborhoods like that. it usually involves a complete lack of ambition or a leaning towards illegal activity or gaming the system.

There's money to be made but you have to understand your tenants. let them paint, check employment history, expect that more people will be moving out than who moved in. know how to leverage high-income season (tax rebates!) make the house as indestructible as possible. if you get a good tenant be good to them. f

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  • Amia Jackson
    Investor · Philadelphia, PA · Member since 2017 · 39 posts · 28 votes
    9y

    I would say no. I know as a former very low-income person, that if you have even a little bit of money, you're going to move somewhere nicer. The people that choose to live in very low-income areas when there are other choices are most likely terrible tenants. There is a level of dysfunction that keeps people in neighborhoods like that. it usually involves a complete lack of ambition or a leaning towards illegal activity or gaming the system.

    There's money to be made but you have to understand your tenants. let them paint, check employment history, expect that more people will be moving out than who moved in. know how to leverage high-income season (tax rebates!) make the house as indestructible as possible. if you get a good tenant be good to them. f

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  • Dan Schwartz
    Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes
    9y
    It's a specialists' job. Sure, there is money to be made - a colleague in Dearborn Heights bought a home for $6K, patched the walls and sold it for at least 10x that much - but we've also seen those types of gains, with far less headaches, in better neighborhoods. Don't be disappointed if this niche isn't your speciality. Simply find the one that is!
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  • HJ Bercy
    Investor · FL · Member since 2014 · 73 posts · 8 votes
    9y

    Its nitch for someone.  Not everyone can manage/profit in low income areas.   All posters above I agree with their assessments. 

    I have a few properties in bad and decent neighborhoods.  I been fortunate to have decent tenants and only had to let one go (carry-over from previous owner).  Screening, Job history, Eviction background  are my critical assessments of potential tenants.  You want to increase your chance of getting good tenants vs bad ones.  

    In the bad neighborhoods you can put too much (upgrades) into those homes. The chances are those tenants wont appreciate it, thus you have to do just the bare basics.

    @Cynthia Miller :  If you like we can discuss your situation in detail and can try to help you navigate these waters of landlord/tenant environment.

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