Thinking of selling Detroit rentals

[Cynthia Miller]

I'm thinking if selling my Detroit properties and reinvesting somewhere else. I've had nothing but problems with tenants who don't pay and destroy the house. I'm  not making money and its become a big headache.

Has anyone sold anything in the lower income Detroit areas lately and what did you end up getting?

I don't want to leave the house empty on the market for a year and I won't take a loss either. 

Also can anyone can refer me to a good realtor who is familiar with the Detroit market and buyers.

[Marcus Auerbach]

Cynthia I believe it's not the fault of Detroit as a metro, but rather the property class you have bought and the neighborhood you are in.

Most people start the process with a property, and then find the tenants. I always suggest to new investors to think about the type of tenenant they want first. And that's not A, B, C or D - that is too general. 

Try to think about who they are: young professionals without kids, section 8 without a car and depending on public transpoortation, travelling nurses looking for furnished apartments, young families with 2 jobs and kids who need a yard and a finished basement - whatever it is, they will have specific wants and needs on the tupe of property, features and location. 

Start there: once you know who you want to rent to, that will decide the type of property, location as well as features and finishes. Now you have a very clear idea of what you want to buy.

I have been an investor much longer than an agent and so I work quite a bit with Milwaukee investors. Every now and then someone approaches me with a D-class portfolio in the inner city. When they bought the properties the numbers looked amazing and how bad can it possibly be - after all you just hire a PM to take care of the headaches, right?

So it is a liquidation job and some just want to unload fast, ideally as a portfolio and to another investor, willing to sell at a discount, no matter how much they loose. 

The better way of selling the properties is to actually evaluate them one by one, and then "flip" them - meaning rehab them individually - obviously you have to be sensible to your ROI, so often times it will just be paint and carpet. But dressing them up a little bit goes a long way.

Be very careful with accepting offers - you want your agent to speak with the buyer's lender and make sure they can actually pull it off. I just took over a listing that had fallen through on financing no less than 3 times - in the end their pre-approval was not solid. 

Take your money and buy something in a neighborhood closer to the median price point - and don't necessarily run from Detroit, just because you got burnt in the wrong neighborhood does not mean you can't put to work your expensive education the city already gave you. 

Good luck!