Newbie with questions about other newbies experience in Detroit real estate market

[Hamidou Keita]

I'm seriously considering investing in Detroit within the next 90 days. I've already spoken with a property manager and agents, but I'd like to hear firsthand experiences from other new investors in the Detroit market, especially within the first year or two of their initial investment. Did you encounter any issues with property management, tenants, or agents? Are you cash flowing? Did you buy and renovate? I'm looking for both good and bad experiences to help me decide if I should proceed or stay away as a beginner in Detroit. Any insights would be greatly appreciated.

[Jeff Roth]

Great question Hamidou!

Should you consider investing in Detroit from out of state?

Personally, I think the taxes are high and the services you get for your taxes low there.

I know people that invest in Detroit but you must know the area down to the street and have excellent property management.

However, I just talked to my CPA today about a referral he was sending me who is a client of his that has 30 rental properties in Detroit and selling them all because the City doesn't really help, charges for everything, and they never have given a security deposit back to a tenant after they stayed because of their behavior or lack of payment. Certainly this is not the case for everyone but a cautionary tale nonetheless-especially being out of State.

My CPA is referring this investor to me because he knows I like the Lansing, MI area where prices are similar but taxes are lower, labor cost lower, and lots of economic development because it is the State capital.

To your success!

[Michael Smythe]

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?

[Jeff Roth]

Quote from @Michael Smythe:

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?

 Let me ask my CPA.

[Kenneth Jenkins]

Quote from @Jeff Roth:

Quote from @Michael Smythe:

It's all about realistic expectations.

We've dealt with many newbie investors, that despite extensive chats with them to try & set proper expectations, buy a Class C rental - yet expect Class A results. 

@Jeff Roth what discount is that investor willing to give on a package sale?

 Let me ask my CPA.

 I'd love to know as well.

[Kenneth Jenkins]

Quote from @Hamidou Keita:

I'm seriously considering investing in Detroit within the next 90 days. I've already spoken with a property manager and agents, but I'd like to hear firsthand experiences from other new investors in the Detroit market, especially within the first year or two of their initial investment. Did you encounter any issues with property management, tenants, or agents? Are you cash flowing? Did you buy and renovate? I'm looking for both good and bad experiences to help me decide if I should proceed or stay away as a beginner in Detroit. Any insights would be greatly appreciated.

 The number one thing I tell fellow investors is that in the city proper you will deal with 36th district court and that has a material impact on the speed with which the court process will proceed if you need to evict.  It can take 2-3x longer than in the suburbs and that does impact economic vacancy.  Not everyone starting off gets hit with this, and if you can buy a portfolio it can "de-risk" the issue to some extent, but if you have one property and experience an 8-9 month fight to collect rent prior to eviction with a large repair bill after that it can be very painful.

ALWAYS use a licensed PM in Detroit.  Otherwise prepare to cry and wonder if your money is being stolen.  

To answer your questions, yes we have encountered issues with property managment. That's the reason we self manage today.

Yes, our properties are cash flowing, but to varying degrees.  Our best property may be 20% coc and the worst is around 2%.  The average is in the low double digits.

Yes, we typically buy and renovate.  See my other posts for typical renovation costs in Metro Detroit, and how to build a portfolio in Metro Detroit if you don't live locally.

[Travis Biziorek]

Hey Hamidou, I have a ton of experience in Detroit. I've been investing there since 2019 and have done a bit of everything... Section 8, BRRRR's, tax auctions, self-management, buying with tenants, dealing with bad contractors, PM's, you name it.

I'm very open about my journey and happy to share resources with you before you invest.

[Hamidou Keita]

@Travis Biziorek Let's connect

[Joseph Bui]

I've scaled to 7 doors in Detroit, working on a flip as well. Overall a great market, but lots a gotchas that can get you if you aren't ready. Happy to connect and knowledge share if you are interested.

[Hamidou Keita]

Quote from @Joseph Bui:

I've scaled to 7 doors in Detroit, working on a flip as well. Overall a great market, but lots a gotchas that can get you if you aren't ready. Happy to connect and knowledge share if you are interested.

 I would love to connect

[Jonathan Weinberger]

Check out my posts. I've invested over $2M in Detroit and have shared my journey on here. Happy to answer any questions you have. 

At a minimum, dm your property management group and I'll tell you if you should stay away from them. I've chatted with a lot of them and fired 2 of them :)

[Hamidou Keita]

Quote from @Jonathan Weinberger:

Check out my posts. I've invested over $2M in Detroit and have shared my journey on here. Happy to answer any questions you have. 

At a minimum, dm your property management group and I'll tell you if you should stay away from them. I've chatted with a lot of them and fired 2 of them :)

I DM you