$100k, 3 Bed & Big Dreams: Help a Newbie Find the Sweet Spot

Detroit, Michigan
BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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$100k, 3 Bed & Big Dreams: Help a Newbie Find the Sweet Spot

Eyal Hevroni
Investor · Member since 2023 · 10 posts · 2 votes

Hello BP community,

I am an experienced real estate investor from Israel and I am excited to venture into the Detroit market. I am planning to invest around $100,000 into my first Buy & Hold house within the next few weeks, ideally a 3-bedroom with at least 1,000 square feet. 

My goal is to build a substantial portfolio, aiming for two more houses by the end of the year and continuing.

As a newcomer to Detroit, I am seeking your insights on the best areas to invest in. I am particularly interested in neighborhoods with strong potential for growth, rental income, and community revitalization.

I am open to various possibilities and eager to hear your perspective on these and other up-and-coming areas. Any advice or insights would be greatly appreciated!

I look forward to hearing from you and thank you in advance for your help!

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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
2y

If you're looking to invest in the City of Detroit, you need to watch out for the sharks, trying to sell you Class D crap, misrepresenting it as Class B or C.

Many investors make the mistake of trying to invest by zip code in the City of Detroit. The reality is that investing in the City of Detroit should be done on a block-by-block basis. This does NOT work for out of area investors though. We've found the "happy medium" is researching which of the 173 NEIGHBORHOODS in the City of Detroit to invest in. We've got data on that if you're interested.

@Joe Hammel and the FIRE Team can assist you in avoiding getting taken advantage of and investing for success in Detroit.

Logical Property Management4.9455 Reviews
WebsiteView Page
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  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    2y

    Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, double digit ROI, and yes the prices appreciate and you build equity.

    There are 2 types of people who dog on Detroit..

    1. People who don't actually own property in Detroit

    2. People who did it wrong and weren't able to execute.

    If you do it right, it’s statistically the best market in the country for cash flow.

    I'm pretty biased towards Metro Detroit...HOWEVER, I do personally make over $100k/yr cash flow from 16 properties here. All of which, I’ve purchased only within the last 4 years. I've also built and seen others build a lot of equity in that time.

    Purchase: $80k-$130k

    Rent: $1100-$1500 (no rent control in MI)

    1% rule: 1%-1.4% rule deals

    ROI: 10-14%

    Cash flow: $150-$300/door (after all expenses and budgeting for maint, capex, vacancy)

    Appreciation: 3-10%+ (has been double digit for a decade)

    Location: C+, B-

    These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

    *To answer your question directly*, it's slightly hard to name the locations directly, but Mike will be able to talk through these locations with you today when you guys connect. The suburbs are great and there are some specific tools to finding up and coming areas in the City.

    A little more about the area:

    We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

    The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those and sounds like you're aware to look for a slightly better property yourself already.

    Detroit has the the highest rent to price ratio in the country…and we’ve found the best balance of price/location within the area.

    Here is a picture of my portfolio...as you will see. Very close to what you're looking for...but also note...the ARVs are all closer to $100k+ at this point.

    [email protected]248-422-1685
    FIRE Realty Team - Keller Williams5379 Reviews
    WebsiteView Page
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  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    If you're looking to invest in the City of Detroit, you need to watch out for the sharks, trying to sell you Class D crap, misrepresenting it as Class B or C.

    Many investors make the mistake of trying to invest by zip code in the City of Detroit. The reality is that investing in the City of Detroit should be done on a block-by-block basis. This does NOT work for out of area investors though. We've found the "happy medium" is researching which of the 173 NEIGHBORHOODS in the City of Detroit to invest in. We've got data on that if you're interested.

    @Joe Hammel and the FIRE Team can assist you in avoiding getting taken advantage of and investing for success in Detroit.

    Logical Property Management4.9455 Reviews
    WebsiteView Page
    1Reply
  • Logan LaperriereBusiness Member
    Real Estate Agent · Grand Rapids, MI · Member since 2023 · 333 posts · 124 votes
    2y
    Quote from @Eyal Hevroni:

    Hello BP community,

    I am an experienced real estate investor from Israel and I am excited to venture into the Detroit market. I am planning to invest around $100,000 into my first Buy & Hold house within the next few weeks, ideally a 3-bedroom with at least 1,000 square feet. 

    My goal is to build a substantial portfolio, aiming for two more houses by the end of the year and continuing.

    As a newcomer to Detroit, I am seeking your insights on the best areas to invest in. I am particularly interested in neighborhoods with strong potential for growth, rental income, and community revitalization.

    I am open to various possibilities and eager to hear your perspective on these and other up-and-coming areas. Any advice or insights would be greatly appreciated!

    I look forward to hearing from you and thank you in advance for your help!


     Hello Eyal, 

    Detroit is a great market for Buy and Hold investing. I own a few investment properties in the surrounding suburbs.  As others have said you will want to work with an agent who is well versed on the area. You are still able to find properties that meet or exceed the 1% rule. 

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