Would you invest $50,000 in Detroit ?

[Rebekah Keller]

I know this has has been asked many times with various amounts....

I am curious what Detroit investors would say.. I have a few directions that I am considering...

But what would you successful, seasoned, experienced Detroit investors say ?? Thanks so much!

[Christian Hutchinson]

In Midtown and Downtown in 2010-2014, 12 or so companies in Midtown and Downtown provided a rental incentive of $2000 for a year or up to $20K for downpayment or rehab money that was forgivable with each year for prorated for 7 years, for only a certain section of town. So that lead an initial charge, then Quicken Loans moved their operations from Livonia to Downtown. Then Aident a seatbelt/car seat supplier moved their HQ Downtown from Wisconsin. GM moved about 5000 technology people Downtown, after bringing 14K inhouse from contracting houses/consultants. Blue Cross Consolidated from Detroit, Southfield, Farmington Hills to Downtown. Microsoft moved its Southfield Office with about 300 employees Downtown starting early 2018. 5/3 Bank moved from Southfield to Downtown. Basically a Billionaire, and 3 or 4 companies got tired of hearing people turndown jobs saying "I'm moving to a Chicago, because its better". So they have been buying the old buildings and updating them to state of the art infrastructure, like smart elevators, gigabyte internet, data centers and co-locations. Downtown major players are Quicken Loans, Blue Cross, GM, DTE, Ally they basically have pumped up their campuses/work spaces.

In Midtown, Wayne State decided in the late 90s to start building student housing. There was another round of building in 2005. Then another round in 2013. With that build out WSU Police asked DPD to become the first responders to 911 around 2006. So response times decreased, visibility increased greatly. So Midtown essentially has its own Police Department(Downtown has a private armed security force paid for by Downtown Building Owners). Midtown is being dominated by WSU, Detroit Medical Center, Cardinal Health, Henry Ford Hospital, and the Illitch's(Little Caesars, Red Wings, Tigers, and now Pistons).

In each of these cases providing workers/residents mean spin-off business have appeared(gyms, coffee shops, bars) or established businesses have made major upgrades(some liquor stores don't have bulletproof glass in midtown, or the bowling alley adding a cafe and event space.

All development is subsidized by tax breaks/credits in all cities. There is much of that.  A recent law passed allows developments to capture property tax increases for 10 years or so if the price tag is over $30M. Amazon just opened a warehouse in Livonia with millions in giveaways for taxes.

The Illitch's finally built their new hockey arena, then they convinced the Pistons to leave Auburn Hills to downtown, the practice facility and all 500 employees for basketball operations. The stadium has been built similar to the Barclays or Verizon Center with retail and restaurants available even on none-game days because they are street-level.

All these big money players betting on the city, means small timers started grabbing homes built 130 years ago for pennies(I've paid $22/sq and $31/sq for mine) locate in a hot area get the house clean and updated and make your cash back. Also, a sizable number of boomers are selling their McMansions in the suburbs, downsizing to condos, lofts, or renovating the big old mansions. 5 years ago a 6000 sq ft mansion in Indian Village or Boston-Edison was $60-$150K (look at the absurd price now), yes they needed $200-$500K to get it back up to date but people sold their homes to do it with the cash they earned. I know a few older people that did that, they had season tickets to the Red Wings and Tigers, they use to drive down from Troy, Northville, Rochester, etc, but they retired, kids are grown, and they just wander around Downtown/Midtown and go to games everyday.

Whole Foods, located in Midtown Detroit in 2014, so everyone knows what that means in terms of incomes for the area. So now there is a branding of the "7.2" its the area of Downtown and Greater Downtown where the development is taking place. Its not a tax zone, its simply a branding. There is also "Live 6" which is development of 6 Mile neighborhoods in conjunction with U of D, Marygrove College and pretty much all of Detroit's still strong Middle Class neighborhoods of Bagley, Sherwood Forest, Palmer Woods/Park, Green Acres, University District. This is much more of a small player deal but the price of entry is greater, but it tops out much lower than the "7.2" and its heavily geared towards families with kids. Lots of private schools are in that part of town, but the pricing is less than the suburbs. The school systems in South Oakland County are not much better than Detroit, when you consider tuition at several Catholic Schools in NW Detroit are only 7-12k/year. Younger families such as mine you have to pay for early childhood education in Detroit, or in Bloomfield Hills its the same.

Several national daycare providers opened up in the office buildings, the waiting list are 6 months. My son's daycare is in GM HQ. Several of my neighbors same thing. Rainbow is completing a 3 story facility at the end of my street ready for opening early 2018. its $275/week/kid, and they do not allow State Vouchers(meaning no families getting childcare assistance).  All the daycares charge that in the "7.2" and they are turning people away.  While we waited for a slot I drove my son to the same company daycare in the suburbs $50/week cheaper and they had multiple slots open at any given time, Prob 1/3 of the families at this place were waiting on a Downtown daycare slot to become available.

I would suggest to anyone to target a Detroit property in near Downtown/Midtown. I challenge what major American City can you purchase a SFH, or a MFH for under $200K within 2 Miles of Downtown/CBD. As a bonus that is less than 2 miles from the riverfront, oh and isn't subject to earthquakes, hurricanes, random fires, and has a access to the largest freshwater supply system in the WORLD.