Time to invest in Detroit?

Question

I'm hearing so many things about investing in Detroit. It's hard for me to give Detroit a real look due to the history but I'm hearing investors are killing it and that the city is making positive strides. If I'm going to invest in Detroit, I'm really going to have to do a lot of research on what areas/streets have the most crime which are in tiny pockets in decent neighborhoods. Just wondering what everyone's feelings are on investing in Detroit.

Brian Ploszay · Answer

I would be very careful with the City of Detroit unless you are local and knowledgeable.  The City had the biggest urban decline in America during the last 40+ years.   That being said, selected neighborhoods are making a rebound.  But certain areas are not viable at all.  And I do believe the returns are superior for those who can properly run the investment(s).

Ujwal Velagapudi · Answer

Detroit's been very, very good to me, but at the same time I've treated my properties and tenants well also and learned over the years on mistakes I've made. I mostly had commercial retail, and SFH's. It's definitely a much tougher environment for out of state investors. Lots of people looking to take advantage, just be cautious about the smooth talking agent, property manager, and rehabbers.

I personally would not trust my money to anyone in Detroit to rehab my property, and definitely not ones that will be guaranteeing you any easy cash from rehabbing cheap houses. It takes a lot of due diligence, oversight, and understanding of the local market to do it, which nobody will put in the time or care like you would with your own money. This is true for most markets, but significantly even more so in the city of Detroit. Even when I lived there it was very difficult to rely on a company to do all of your rehab and PM, there needs to be a lot of oversight. I would look to Detroit right now as a place to invest in multifamily (10+ units), some commercial, or very stable SFH's with a long history of stable rent, but all primarily for cash flow and not flips. Once you have investments there and have a trusted network, you can slowly start to expand into larger projects.

Kissu Kirkwood · Answer

Detroit is different on every block. You need to deal with an entire team of trusted people that are referred by investors that know and have dealt with them. Rehab requires contractors and extreme oversight. I wouldn’t recommend that. I’ve bought two properties in Detroit and receive rental income every month. Can’t beat the numbers. I buy properties that don’t require rehab. I also DO NOT raise the rent. Respect the community. God bless.

Darius White · Answer

hi, Detroit born and raised. Still here locally, and you are right; it really comes down to the area. I'm currently in midtown and it is trending in the right direction. You will be surprised how different Detroit neighborhoods can be literally just a few blocks away from each other. Overall though the city is definitely moving in the right direction. I hope to begin investing here soon.

Leroy K. Williams · Answer

You can buy for $20,000-$25,000 SFH then invest $15,000-$20,000 in repairs and upgrades and have a property with an $75k ARV that will rent for $900 per month.  You have to know the neighborhoods in order to do this successfully.

Darius White · Answer

The area around wayne state is amazing. Property values are constantly increasing due to numerous business opportunities in the area. Many new restaurants as well being located near a major hospital brand. It is also great for rentals due to thousands college students. But to get in now im sure will be expensive so you have to find the right deal. I only see Wayne state area going up in the foreseeable future. Im not sure of what plant your referring to.

Tommy Hoang · Answer

I'm sure detriot is great. I'd give my strategy and timeline more weight than any city though. Like you'll be able to make money in any market if you put in the time, energy, and patience.

Frederick Kuo · Answer

I think the market obviously provides high returns for smaller investors depending on the property, although the weak economy and high housing inventory are risk factors.

Emilio Basa · Answer

@Israel Gonzalez what’s up Israel! Number #1 rule for investing in Detroit - zip by zip code, block by block, street by street. Number 2 Rule - get a team or boots on the ground.

When you do come to the city - use the Top Down Method for evaluating a neighborhood if you come to the city. When driving the streets and you see houses, start from the top (Roof) and work your way down. Notice little things like new roof? Fresh plywood on the house? New window stickers? Dumpster in the driveway? Then drive up and down the streets in a certain neighborhood are start counting up all the rehabs you see. Some areas have NO COMPS but tons of rehabs happening. That’s a neighborhood that is ready to explode.

Darius White · Answer

It totally depends on the neighborhoods. But i certainly think its possible. Some areas are high risk but also high rewards. Connect with detroit_investor on instagram.

Time to invest in Detroit?

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