Anyone Successfully invesing in Detroit

[Marisa R.]

I have made no secret of the fact I am buying in Detroit, and a big fan

I have seen the good the bad and the ugly.

So what I learnt so far.......

Understand your market, what you buying and  true value of your property purchase. The comps don't always tell the full story. What's that saying...…"you make your money when you buy"

Buy in areas where there is a good spread of owner occupiers.

Stick to brick homes, prefer 3 bedders

Property management - will be a challenge, most will charge massive mark up fees on maintenance, so you need to know costs and compare to keep them honest.  This requires homework.

Sourcing good property management will  break or make you. Its taken me a while to source good property management.

Rent under market to attract larger tenant pool. Of course the numbers still need to stack up.

If buying distressed properties to hold, make sure you have allowed funds to do a decent rehab, nothing worse than ongoing maintenance issues in this market. It wont go down too well with tenants, and I am not saying build a new home.

Long term, good paying tenants is what will bring in the cash flow. I guess you could say this for any market. 

I outsource all my maintenance/repairs, I do not use property management, have built trust with a contractor. This will take time and homework but will also be key to making or breaking your investment in this market.

Look at potential neighbours where there is upside, that you know you can flip down the track. There are a few that make sense.

Please share your experience in this market 

[Travis Biziorek]

Hey Marisa, as you know I've been relatively active in Detroit since about May. We've picked up 4 properties totaling 5 units (just one duplex). We have an accepted offer out on our fifth property right now, but I haven't walked it yet so we'll see if it pans out.

I'm self-managing so I don't have the issues most experience with PM's here. If you're considering investing in Detroit and not planning to self manage, understand this market is extremely complex and difficult. While home prices are cheap, rents are too. This makes it difficult for PM's to scale their business. 

Consider a market where average rents are $1,500/mo compared to maybe $750/mo in Detroit (not meant to be accurate, just showing an example). A Detroit PM needs 2x more homes under management than that other market just do have the same gross rents coming through. That means at least 2x more headaches, service requests, etc. More employees, more overhead, etc. And in Detroit it's likely more than 2x because the homes are older, tenants are of poorer quality, yada yada.

I've had success overall, but it's because I'm extremely picky about what I buy. I'm not interested in buying homes for $10,000-$20,000 and doing the required rehab. There are too many unknowns, and I really don't have the time for it. I'm more attracted to the homes in the $40,000-$60,000 range that needs little work and are in locations I believe will see solid appreciation in the coming years. 

It's working well so far, but it's also admittedly early in my journey.