who's been successful in Detroit?

Question

I'm interested in getting on touch with some people that have had good (or bad) experiences in Detroit. Wholesaling, Buy & holds, flips, Multi-family

Ericka G. · Answer

We've been successful in metro Detroit - I don't mess with the city proper because I feel it is a bit too risky for out of towners; I drove into the wrong area on accident when we first started investing in MI and it really put me off of in-town Detroit. I've lived in the hood before but that was on another level of scary. Sad and scary all at once. Felt like the Hunger Games. So, I stick to the suburbs near the airport as that works for my niche. You can get basically move-in ready 3 bdrm houses in neat little neighborhoods with decent schools for less than $50k (ours have been $28-52k). In 2.5 years of owning rentals in that area we have found zero crime, excellent neighbors, and lower costs on everything from repairs to food. Heads up: The two major expense watchouts for MI are property insurance and city taxes. I was shocked by how expensive insurance is in MI, a lot of big companies don't write policies anywhere in MI state...but with some digging and scale it becomes manageable. Be sure to get estimates on that before closing a deal. Also, local property taxes are higher than what I'd expected, so be sure to include that in your calcs as well.

Jon W. · Answer

I buy/hold and flip in the city of Detroit and the Metro area. Prices in the city have definitely gone up and it jumps each year but the city is changing in a real way. Where people would only go to Detroit for an event and leave, you now have people staying longer to check out the city. Non Detroiters are moving into the nice areas with force. It seems like a different place. There are many many depressed areas still trading at low numbers (5-25k) but you really don't want to invest there. The tenants, houses, and neighborhoods are tough to deal with. If you buy in a nice neighborhood, and there are many, you can get great housing stock, great tenants, and have a good experience. There are mortgage programs geared toward Detroit housing for any price level. I have never had any problem with loans but my experience is with houses worth more than $50k. Flipping is mostly possible in the nicest neighborhoods. As with any older house, rehab costs tend to be a little higher. So it does not make a lot of sense for houses that are worth $50k. I only target flips in Detroit areas where the houses go for $150 - $300k. Even then some houses will cost more to rehab than you can get out of them. It is case by case.

Keith Jourdan · Answer

Only done a few deals in city of Detroit . Suburbs about 70+ in past 2 years. City is tough for a number of reasons. Selling can be difficult , most all mortgage companies won't lend on sub $50k houses , so flipping isn't possible in 90% of Detroit neighborhoods (end buyer won't be able to obtain financing ) unless you do owner financing . Buy and hold rentals can be profitable , but class d tenants are high turnover high risk, eat up cash flow quick . Suburbs are great on the other hand. Good cash flow rentals and possible flip deals are out there . Major appreciation past few years in suburbs .

Keith Jourdan · Answer

Going to be tough. Anything for 20k is going to need tons of work and or in a warzone. Look into Lincoln Park/Taylor/Melvindale/Wayne areas. Might be able to find some turn key for $40k that rent for $800.

Patrick Squires · Answer

Checkout Metro Detroit Real Estate Investors Club and Renegade Detroit Investors Real Estate Club on FB This is a common thread/topic/podcast on how to play this area.

Keith Jourdan · Answer

Done 20+ flips , own 15 rentals . Fire away

Account Closed · Answer

I've done well with boring buy & hold but mostly b/c of market timing (2011-2014). So many people chasing the fast transactional quick buck (flippers, wholesalers, etc.) have flooded the Detroit market pumping up prices (i.e. 1849 gold rush) that I feel it's a larger risk now than it ever was during the dark days of the Great Recession. Ex) Homes that were 25k-50k in 2012 are now being "rehabbed" with painted cabinets and new HWH and listed for 100k+.

Joe Mazur · Answer

Hey @Ralph Noack. Welcome to the community. I wholesale in Metro Detroit, not so much in the city but suburbs mostly. As @Patrick Squires said, there are definitely a lot of threads in here on this topic. Take advantage of the knowledge from those if you can. If you have any questions that I can possibly help with, feel free to PM me anytime. Joe

Emilio Basa · Answer

Hi @Ralph Noack - I'm a wholesaler in the metro area and in the city. There are good and bad experiences a plenty lol. Too much to list. PM me or just ask away :)

Account Closed · Answer

@Jonathan Ghaly 20k homes in good neighborhoods was possible in 2010-2014. Very difficult to do now. If you find it, probably needs a lot of work and/or in a challenged neighborhood.