Anyone Successfully invesing in Detroit

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Anyone Successfully invesing in Detroit

Marisa R.
Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes

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 

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Travis Biziorek
Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
7y

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.

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  • Danielle E.
    Rental Property Investor · Washington D.C. · Member since 2019 · 41 posts · 42 votes
    7y
    Originally posted by @Alex Khan:

    @Danielle Evans

    Is it your building or house ?

    Demo will run a bit higher than that. Proper way they want you to demo is asbestos removal first then demolish. You will also need a water permit and bond to be able to hook up to fire hydrant while demolishing the building needs to be sprayed with water.

    Now if the blight is there 9 times out of 10 it will be on the demo list. You can check if it is by checking at the Coleman young building. Safety zoning and building department.

    If it was me. I’d be patient with it and let the city handle it at no cost to me.

    Alex,

    Thanks for the feedback! It isn't mine yet but I planned to bid on it since the price is right. Prime locations in the city seem to be bought up pretty rapidly and I don't want to lose out. Perhaps I will see if I can get a few quotes on some of these locations to get a better idea of the cost. 

    0Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    7y

    @Constance Kawa-Small Portfolio now is 8 in Detroit with only 4 occupied. 5 occupied in Surrounding Suburbs  ( Dearborn, Dearborn Heights and Redford) 

    So nothing to be bragging about lol. 

    The flippers after a season or two usually bring 300% if not more and usually as is. 

    The last one I did was in June  of this year in Southwest Detroit (highly populated with Latin community and growing) $3500 quit claim deed on a Tuesday and sold on Friday for $15,000 on a quit claim. The guy 2 houses down bought it. He couldn’t speak a word of English and had his buddy translating the whole time. He’s still very happy and calls me for more houses like that in that price range all Cash (literally) 

    That was supposed to be a keeper and I didn’t even put it up for sale or anything they just came and offered me 10 I said no minimum 15k and he was ready. Every time I buy or sell a house I’ll put signs all over the property and area saying “we buy houses” 

    I do know my market very well though and I don’t buy unless it’s a great deal that I can flip right away for more if I needed to. 

    I don’t advise anyone to do this unless they understand the risks and they are willing to take that chance. 

    248-979-8119
    1Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    7y
    Originally posted by @Danielle E.:
    Originally posted by @Alex Khan:

    @Danielle Evans

    Is it your building or house ?

    Demo will run a bit higher than that. Proper way they want you to demo is asbestos removal first then demolish. You will also need a water permit and bond to be able to hook up to fire hydrant while demolishing the building needs to be sprayed with water.

    Now if the blight is there 9 times out of 10 it will be on the demo list. You can check if it is by checking at the Coleman young building. Safety zoning and building department.

    If it was me. I’d be patient with it and let the city handle it at no cost to me.

    Alex,

    Thanks for the feedback! It isn't mine yet but I planned to bid on it since the price is right. Prime locations in the city seem to be bought up pretty rapidly and I don't want to lose out. Perhaps I will see if I can get a few quotes on some of these locations to get a better idea of the cost. 

    My advice is to buy a lot or see what the lot is worth in that area. Personally I wouldn’t buy a house that needs to be demolished just because of the lot unless if it was very very prime location and the sale of the lot will cover purchase and demo costs and bring profit  

    248-979-8119
    1Reply
  • Danielle E.
    Rental Property Investor · Washington D.C. · Member since 2019 · 41 posts · 42 votes
    6y
    Originally posted by @Alex Khan:
    Originally posted by @Danielle E.:
    Originally posted by @Alex Khan:

    @Danielle Evans

    Is it your building or house ?

    Demo will run a bit higher than that. Proper way they want you to demo is asbestos removal first then demolish. You will also need a water permit and bond to be able to hook up to fire hydrant while demolishing the building needs to be sprayed with water.

    Now if the blight is there 9 times out of 10 it will be on the demo list. You can check if it is by checking at the Coleman young building. Safety zoning and building department.

    If it was me. I’d be patient with it and let the city handle it at no cost to me.

    Alex,

    Thanks for the feedback! It isn't mine yet but I planned to bid on it since the price is right. Prime locations in the city seem to be bought up pretty rapidly and I don't want to lose out. Perhaps I will see if I can get a few quotes on some of these locations to get a better idea of the cost. 

    My advice is to buy a lot or see what the lot is worth in that area. Personally I wouldn’t buy a house that needs to be demolished just because of the lot unless if it was very very prime location and the sale of the lot will cover purchase and demo costs and bring profit  

    Alex,

    There are several lots that are going up in price rapidly. My problem is getting around the Land Bank as they seem to own most of the lots/properties I am interested in. My plan is to buy empty lots and eventually build multifamily rentals on them as I obtain capital and the values continue to rise. I believe that Detroit investors should see great returns within the next 5 - 10 years. My Detroit properties will be buy and holds while I will continue flipping and wholesaling in Baltimore.

    0Reply
  • Mel Smith
    atlanta, GA · Member since 2017 · 11 posts · 1 vote
    6y

    Hi all,

    I purchased a house in Detroit (buy & hold) but I need a company that offers a service to monitor for possible blight violations since I live in Atlanta.  I am discovering that Detroit has requirements and regulations that I'm not familiar with and know no one in Detroit.  Any recommendations would be greatly appreciated.  

    Mel S

    1Reply
  • Danielle E.
    Rental Property Investor · Washington D.C. · Member since 2019 · 41 posts · 42 votes
    6y
    Originally posted by @Mel Smith:

    Hi all,

    I purchased a house in Detroit (buy & hold) but I need a company that offers a service to monitor for possible blight violations since I live in Atlanta.  I am discovering that Detroit has requirements and regulations that I'm not familiar with and know no one in Detroit.  Any recommendations would be greatly appreciated.  

    Mel S

    Mel,

    I decided to go with Marcus J. Twyman from Opulent Realty Team. He will be managing my properties beginning this month as well as finding tenants. I had a chance to do a tour of the city with his team this weekend and I was definitely impressed with his knowledge and expertise. I hope that you are successful in finding someone soon!

    Best,

    Danielle E.

    0Reply
  • Mel Smith
    atlanta, GA · Member since 2017 · 11 posts · 1 vote
    6y
    Originally posted by @Danielle E.:
    Originally posted by @Mel Smith:

    Hi all,

    I purchased a house in Detroit (buy & hold) but I need a company that offers a service to monitor for possible blight violations since I live in Atlanta.  I am discovering that Detroit has requirements and regulations that I'm not familiar with and know no one in Detroit.  Any recommendations would be greatly appreciated.  

    Mel S

    Mel,

    I decided to go with Marcus J. Twyman from Opulent Realty Team. He will be managing my properties beginning this month as well as finding tenants. I had a chance to do a tour of the city with his team this weekend and I was definitely impressed with his knowledge and expertise. I hope that you are successful in finding someone soon!

    Best,

    Danielle E.

    Thanks Danielle I'll reach out to him tomorrow.  Much appreciated.  

    0Reply
  • Danielle E.
    Rental Property Investor · Washington D.C. · Member since 2019 · 41 posts · 42 votes
    6y
    Originally posted by @Mel Smith:
    Originally posted by @Danielle E.:
    Originally posted by @Mel Smith:

    Hi all,

    I purchased a house in Detroit (buy & hold) but I need a company that offers a service to monitor for possible blight violations since I live in Atlanta.  I am discovering that Detroit has requirements and regulations that I'm not familiar with and know no one in Detroit.  Any recommendations would be greatly appreciated.  

    Mel S

    Mel,

    I decided to go with Marcus J. Twyman from Opulent Realty Team. He will be managing my properties beginning this month as well as finding tenants. I had a chance to do a tour of the city with his team this weekend and I was definitely impressed with his knowledge and expertise. I hope that you are successful in finding someone soon!

    Best,

    Danielle E.

    Thanks Danielle I'll reach out to him tomorrow.  Much appreciated.  

    Mel,

    My pleasure! 

    0Reply
  • Oloyede Ade Fatogun
    Developer · Hamilton, Ontario · Member since 2017 · 9 posts · 2 votes
    6y

    @Marisa R. Great write up and advice.

    0Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    6y

    I am looking at flipping one of my properties in Aviation Sub. I got it for a great price, well below market value, so I am thinking of taking some money off the table.

    I will provide updates on figures shortly

    1Reply
  • Constance Kawa-Small
    Rental Property Investor · Pittsburgh|Detroit · Member since 2019 · 75 posts · 39 votes
    6y
    Originally posted by @Marisa R.:

    I am looking at flipping one of my properties in Aviation Sub. I got it for a great price, well below market value, so I am thinking of taking some money off the table.

    I will provide updates on figures shortly

    And hopefully some before and after pics too!  

    2Reply
  • Quentin Mitchell
    Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
    6y

    Understanding the neighborhoods is key and when you do find a block that you like reach out to the neighbors on that block, they will tell you everything you need to know. 

    Also when you visit go by the property you are interested in purchasing as well about 2 to 3 block radius at different times, morning, afternoon, and night and do that more then one day it will get you a feel for the area.

    When you buy cheaper houses in the cheaper neighborhoods except to get cheaper rents but factor that into numbers during accusation and that can guide you in the amount you pay for the property and the repairs as well ( so that you do not overspend on either). 

    Be very patient in looking for your tenants because that will the key element in your buy and hold strategy, do not take the first person with money and check all references.

    1Reply
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