Detroit area opportunities

[Alexander Wright]

So ima newbie from Detroit and with the new chrysler plant under way for construction I'm think of land grabbing rental properties and flips in the detroit area but dont know where to start should I get super cheap properties that need alot of work and appraise for little and sit on them or what

[Travis Biziorek]

Originally posted by @Brian Ploszay:

Detroit, the City, is coming back.  But it is the city in America that has experienced the most decline, by far.  There are still bombed out neighborhoods everywhere.  The areas that are making a strong comeback are proximate to downtown.  And a few others.  

There is a lot of cheap real estate in Detroit, and investors have taken advantage of buying the cheap and attempting to rent them out.  The fact is that most working class people don't really want to live in those neighborhoods, and increasingly they are going to the suburbs.  And that is the bet that I would make if I was a first time investor.  The cheap property in Detroit (The City) simply is very risky.  

This is definitely the regurgitated narrative, but it's mostly untrue. That said, I can't blame you for believing it. Even most locals still do. 

The reality is people are migrating to specific areas of the city from out-of-state, downtown, and the suburbs.

I own 9 properties in Detroit, comprised of 11 units. I made my first purchase this June (six months ago). My underlying thesis was that Detroit is coming back strong, and the bottom is clearly in, starting in about 2016. That was hard to see back in 2016, but it's clearer now after a few years of strong appreciation.

I'm local, but moved here 2.5 years ago. I believe that gives me a unique perspective. My first impressions of Detroit have been positive. It's a cool, fun city with a lot of young professionals. As a result, the core city has become quite expensive, as have the suburbs. It's amazing how disconnected everything in between is and that's what I believe to be unsustainable as long as Detroit continues to grow (I believe it will).

So that's where I've been focusing my investing. Again, my thesis can be distilled to the idea that people will migrate from the suburbs and core city to the area in between as home prices and rents are becoming increasingly expensive downtown and in the 'burbs. It's only been six months, but it's proving to be correct.

80% of my tenants have either moved from the suburbs, more expensive areas closer to downtown, or from out of state. The other 20% are making lateral moves into my properties because I tend to remodel them to a higher standard and folks are sick of slum lords.

Are there still terrible areas that resemble war zones? Yes, absolutely. That can only be expected after 70 years of declining population. I'm not foolish enough to speculate what will happen with those areas or how long it will take. I don't buy stuff like that. 

But the tide has turned for Detroit and most haven't woken up to it yet. I can point to all sorts of investment, job growth, rising real estate prices, and other data to prove that but it doesn't matter. The narrative won't change based on that. The catalyst, in my opinion, will be the 2020 census. I believe we'll see the first population increase for Detroit in over 70 years. That will catch fire and flip the narrative, and it will be a 180 from the regurgitated copy/paste we so often see in these forums and elsewhere.