A Tale of Two Markets: Metro Detroit vs. Charlotte-Concord-Gastonia

Source: Detroit Metro Times and Hankins & Hankins

Every rental property investor wants to expand their portfolio. Only — there are quite a few barriers.

One of the biggest challenges any investor faces is knowing where to invest next.

If you’re looking at a fork in the road, look to us — our over-two-decades-wise property management team knows all the best spots to get solid cash flow (and equity) opportunities in the US. We focus on the Metro Detroit area, but we also know other prospective markets, like the Charlotte Metropolitan Area of Charlotte-Concord-Gastonia in North and South Carolina.

So, which area is better for aspiring investors? Both are popular for first-time investors, but there are differences that you should consider.

Below, we’ll tackle all the investment details you must know about the two real estate markets. This article is part of our ongoing Metro Detroit series that compares other hotspots. We’ve written with the expectation that you’ll read through to learn the strengths and weaknesses of the areas in terms of expected returns, tenant pool, and level of property management experience required to be in the ring.

We’ve presented all information as factual as possible, but we are a tad biased toward our home market, Metro Detroit, whenever it’s a close call.

Overview of Metro Detroit

Before anything, let’s start with the history of Metro Detroit. From the 1960s to 1970s, most wealth fled the city to the suburbs, resulting in a unique price spread in which real estate prices decreased closer to the city.

The following map, while a bit dated, shows the scope of Metro Detroit property values—how they decrease below $30,000 in at least half the City of Detroit, yet generally increase further away from the City of Detroit:

Source: Proximity One

Thankfully, since the Great Recession of 2008, the city’s jobs and population have grown back, and property values and rent amounts have skyrocketed compared to surrounding suburbs.

The city’s population had only ever left for casual appreciation for the surrounding areas, so in order to include today’s investors in the area's original market, we’ve included opportunities all over Metro Detroit.

We go into details in our ongoing Deep Dive series, should you want to take a closer look at the real estate potential of each neighborhood and city in Metro Detroit.

But, to stay up to speed, here’s a quick review:

• - The Metropolitan Statistical Area (MSA) of Detroit-Warren-Dearborn includes the 6 counties of Lapeer, Livingston, Macomb, Oakland, St. Clair, and Wayne.
• - Metro Detroit is the Detroit tri-county area that only includes Macomb, Oakland, and Wayne counties. They cover 3,888.4 sq mi (10,071 km2) and a population of over 4 million—the most populous metro area in Michigan.
• - The City of Detroit is the biggest city in the Metro Detroit metropolitan area and in Michigan. It’s 142.89 square miles (370.1 km²).

Today, Metro Detroit remains the most populous Michigan metropolitan area. Within this rental hotspot, there’s a total of 72 cities:

Source: Georgetown Public Policy Review

We’ve coined the term “Ring Cities” to refer to all the suburban cities bordering the main city in a semicircle. These Ring Cities have an excellent balance of affordable properties without the higher risks commonly associated with the City of Detroit investing. They have solid rental cash flow opportunities and impressive buy-and-hold investment potential for long-term gains.

The list below includes all cities in Metro Detroit. Focus on the Ring Cities highlighted in green if you’re new to the area. Any names with hyperlinks will take you to published Deep Dives for you to learn more about its investment potential:

I know what you’re thinking—what about investing in the City of Detroit itself? Let’s take a look. Metro Detroit’s major city is divided into 11 regions:

Source: Wikipedia.com

These regions are further split into 105 neighborhoods, which are listed below. As always, any of the hyperlinks you see will open one of our Deep Dive series — this time for Detroit neighborhoods:

Source: Loveland’s Detroit Neighborhoods Map

The city had a population of roughly 2 million in the 1950s. Less than half that population still lives in the area, meaning thousands of vacant homes are just sitting around waiting for someone to scoop them up.

However, some Detroit neighborhoods retained their population better than others, and they’re in demand.

It’s not surprising because the properties’ values are consistent, and rent values have been up for several years running.

Plus, the local government has been aggressively pursuing federal funds to deal with the vacancies, with projects specifically demolishing and rehabilitating as many buildings as possible to minimize the over-supply of homes in Detroit neighborhoods — subsequently increasing property and rent values.

Here is a snapshot of the real estate market and demographics in Metro Detroit:

Source: Home Area

There are significant differences between the City of Detroit and the rest of Metro Detroit, so out-of-state (OOS) investors must set their expectations correctly.

OOS investors shouldn’t invest in Metro Detroit just based on a zip code or random neighborhood someone mentioned. Instead, they need to partner with trustworthy and experienced experts to conduct throughout evaluation of the area they’re seeking to invest in.

Even property classes (A, B, C, or D) can vary significantly from one block to another. We’ve seen too many investors purchase what they thought was a Class A home only to realize that it’s nothing but a C.

There are unique challenges and opportunities in Metro Detroit and the City of Detroit. The best way to navigate the risks and reap famed returns is to do your due diligence and ask for help from professionals when you need it. And don’t forget to consider the Ring Cities!

Overview of Charlotte Metropolitan Area

The Charlotte-Concord-Gastonia MSA is one of the two official metropolitan boundaries of the Charlotte metropolitan area or “Metrolina.” It’s one of the fastest-growing metropolitans in the country.

The MSA borders:

• - Albemarle, NC
• - Columbia, SC
• - Gaffney, SC
• - Hickory-Lenoir-Morganton, NC
• - North Wilkesboro, NC
• - Shelby, NC
• - Spartanburg, SC
• - Winston-Salem, NC.

Compared to the other area called Charlotte-Concord Combined Statistical Area (CSA), the MSA doesn’t include two micropolitan areas, Shelby and Albemarle. Here’s a map to visualize:

Source: Proximity One

The Charlotte-Concord-Gastonia MSA has a total of 2.7 million people across 5,597.4 square miles, resulting in a population density of 482.6 people per square mile.

In terms of property prices in the MSA, the prices slowly increase as you get nearer to the center until it suddenly drops to $45,000 and below at the very center. Check the map below, assuming that income relates to property prices:

Source: Proximity One

The map also shows that most Charlotte-Concord-Gastonia residents aren’t as wealthy as you might expect, so property values in the MSA are likely at the lower end of the spectrum. We’ll discuss more details about property values in the following sections.

Here is a snapshot of the real estate market and demographics in Charlotte-Concord-Gastonia:

Source: Home Area

Comparing Real Estate in Metro Detroit vs. Charlotte-Concord-Gastonia, NC-SC

Rent, house value, property appreciation, the quality of your tenants, the condition of your property, and quality of life are the contributing factors to the general financial viability of your investments in Metro Detroit and Charlotte-Concord-Gastonia, NC-SC.

To start, here’s an overview of the rental properties listed on Zillow for the two metropolitans:

Source: Zillow

Home Value

According to Zillow, the median home value of Metro Detroit properties is $238,433. The figure reflects a 7% growth over the past year, and will likely continue to rise in the future:

Source: Zillow

Over in Charlotte-Concord-Gastonia, NC-SC, homes are valued at $385,197, which is an increase of 15.2% over the past year. The growth also implies a future increase:

Source: Zillow

Most available homes for sale are in the City of Detroit or the Ring Cities surrounding it. You’ll find the famous less-than-$100k properties that the Detroit market is known for. You’ll also notice that the housing density is much higher here compared to other markets in the nation, simply because of the smaller lots:

Source: Zillow

The heat map below shows the affordability of Metro Detroit in terms of property appreciation, with lower property prices in and around the City of Detroit. Still, don’t forget that the variation and diversity of Metro Detroit create scattered sweet spots all around — you can easily find affordable houses around developing neighborhoods, meaning you’ll gain more equity in the future.

Source: NeighborhoodScout

On the flip side, current Zillow listings in Charlotte-Concord-Gastonia show that property prices get higher the nearer you are to the metropolitan center. There are exceptions, no doubt, but the majority of properties for sale (and for rent) follow this pattern in Charlotte-Concord-Gastonia:

Source: Zillow

The properties near the center tend to be pricier, where property values slowly taper off the more you move outwards. Property appreciation rates in Charlotte-Concord-Gastonia can vary from one subarea to another, though, so generalizing the price spread is challenging. Here’s an example:

Source: NeighborhoodScout

Appreciation

In terms of appreciation rates, here are the details provided by Bestplaces:

• - Metro Detroit's home appreciation in the past decade is 143.9% and is up 16.4 %.
• - Charlotte-Concord-Gastonia home appreciation in the past decade is 86.8% and is up 18.4 %.

In general, both metropolitans have relatively affordable homes and good appreciation rates. Comparing them to national rates from the year before, home values grew by 11% to $416,000 in November 2022.

The rate trails behind the 16% annual growth back in July, however, which may indicate that the market slowed.

Still, 2023 looks to be a growth year. The fact that millennials (the largest segment of the population right now) are finally purchasing homes also helps to bring in other forms of housing and add competitive pressure on property prices.

Average Rent

Looking at average rent, both Metro Detroit and Charlotte-Concord-Gastonia have higher rates than their respective larger areas across Michigan and North Carolina. Still, average rents in the areas are lower than the national rate, especially for larger homes with three and more bedrooms:

Source: Bestplaces

Looking at Zillow listings, we see that the numbers are accurate and, in fact, understated — which means you can likely charge higher than the average rent as a rental estate investor.

The potential tenant pool sizes for the areas are around 27.70% of renters in metro Detroit and around 30.2% of renters in Charlotte-Concord-Gastonia.

Based on these figures, you’ll have a slightly larger tenant pool to choose renters from in Charlotte-Concord-Gastonia than in Metro Detroit. We’ve written a closer look at the regions’ demographics and financial ability in the later section on tenant quality.

Rent-to-Price Ratio

We use the rent-to-price ratio as an indicator of a property’s likelihood to generate positive cash flow. The industry standard “1% Rule” states the minimum ratio, which is what we suggest you use to shortlist your prospective properties. This is the formula:

Monthly Rent / (Purchase Price + Rehab ) > 1%

Given that Metro Detroit and Charlotte-Concord-Gastonia have widely varied and diverse properties, this easy formula should help you estimate the return on investment (ROI) in seconds.

Side-by-Side Chart

Let’s pull up Zillow listings to see the data in action. This is what you should do once you get serious about investing in either metropolitan.

Here are examples of three-bedroom properties in Metro Detroit and Charlotte-Concord-Gastonia. See how they compare to each other in terms of property values and rent amount:

Source: Zillow

Based on these examples, the listing in Metro Detroit shows a ratio above the industry minimum, while the one in Charlotte-Concord-Gastonia falls short. So, if you want to prioritize generating a strong cash flow, Metro Detroit is your best bet. Add in the healthy appreciation rate, and you’re looking at an excellent balance of cash flow and equity gains in the long run.

Quality of Tenants, Properties, and Living

As a rental investor, you must consider the quality of tenants, properties, and neighborhoods, as these factors determine your investment success. Tenants, after all, are the lifeline of your business. They’ll influence:

• - The stability of your rental income.
• - Property maintenance needs to protect your assets.
• - The necessary and possible home renovations and rehabilitations.
• - The kind of property management required to handle the tenants.

The following information comes from our local knowledge and multiple research points and is meant as a definitive metrics guide.

Let’s start with this map that shows the quality of life in the City of Detroit (and its surrounding areas) and North and South Carolina. These ratings are based on property values, employment areas, quality of schools, income levels, and other key investment criteria:

Source: Roofstock Charlotte and Detroit surrounding areas

The most City of Detroit properties are Class C, meaning they come with more tenant issues and property maintenance requirements—not ideal for beginners.

Certain parts of Charlotte-Concord-Gastonia show a similar situation—we see lower-ranking neighborhoods around the area’s center.

Tenant Quality

Average Income

The income and unemployment rates in the areas are essentially the same. However, the latter has a better forecast for job growth, which will likely attract more residents into the area.

Source: Bestplaces

We understand that you want to charge higher rent whenever possible. But it’s more important to find tenants who are financially capable to keep up with rent payments, which is what stable income and employment can provide. Still, it all boils down to how thoroughly you screen your applicants.

Overall, a growing job market helps to increase the population and strengthen the local economy — thus expanding your tenant pool, and making quality renters in the process. The growth will also affect property values and rent prices in your favor, and thankfully, both metropolitans should experience future job growth based on the given data.

Educational Attainment

Residents in both areas attain nearly the same level of education. The only notable differences are that Charlotte-Concord-Gastonia has slightly more degree holders compared to Metro Detroit. Both areas have many high school graduates, which means potential tenants have better chances of securing well-paying jobs.

Source: Bestplace

Property Condition

Property Age

The median home age in Metro Detroit is 53 years, while in Charlotte-Concord-Gastonia, the average is 27. This difference is significant, but being old isn’t always bad for a home — it just means you’ll have more renovations and maintenance to deal with throughout your ownership.

Source: Bestplaces

Home Ownership and Rental

The percentage split between homeowners and renters in Metro Detroit and Charlotte-Concord-Gastonia are also similar, although there are slightly more renters in the latter. Either way, a third of the entire metropolitan population includes potential tenants, so you won’t likely run out of renters to attract and retain in either area.

Quality of Life

Local Economy

The pandemic greatly affected Metro Detroit’s economy, just like it did the rest of the world. While the area’s automotive and manufacturing sectors held on, its smaller businesses and the leisure and hospitality industry didn’t take the hit lightly.

Things are looking bright for locals in 2023, where the number of new business applications in Michigan increased by 42.2% in 2020 versus 2019. In terms of real estate, the median sales price of Metro Detroit single-family homes grew by 23.3% to $236,300 in 2020. New construction permits now continuously reflect pre-pandemic levels.

Job growth in Metro Detroit shows growth in 2023, too:

• - Ford Motor Co. announced its multi-year plan for a 30-acre “mobility innovation district” Downtown.
• - Google has joined as a founding member and plans to train locals to fill in the 5,000 new job positions in the future district.
• - Henry Ford Health, Tom Gores and the Detroit Pistons, and Michigan State University will invest $2.5 billion to develop the City of Detroit’s New Center neighborhood into a vibrant community with state-of-the-art residential, retail, commercial, recreational, and healthcare facilities.
• - Bloomberg crowed Michigan’s economy as #1 among 37 other states with a population over 2 million, thanks to its impressive recovery from COVID-19. The announcement made headlines worldwide.
• - General Motors plans to create an all-electric future with 5,000 manufacturing job opportunities in the state.
• - Michigan also plans to align at least $126 million in resources to support the goals of this district, expanding local job growth.

Charlotte-Concord-Gastonia was not spared from the pandemic, but it’s also showing growth in the post-COVID landscape.

North Carolina (including a large part of Charlotte-Concord-Gastonia) recovered all jobs that were lost during the pandemic and has even added close to 100,000 more jobs than before COVID-19. This pace is above the national rate, where employment has yet to recover.

The number of new businesses in 2021 outpaced every other year on record in NC, too. In fact, business creation filings grew 40% compared to 2020, with nearly 180,000 new businesses entering the economy. Locals are certainly exploring their entrepreneurial potential.

And, thanks to the growing economy as a whole, North Carolina is forecasted to add upwards of 302,000 new jobs between 2018 and 2028, which will be an annual growth rate of 0.6%. Almost all of these jobs will be in service-providing sectors.

To summarize, here is a snapshot of the economy of the two metropolitans:

Source: Brookings.edu

Both areas show growth after the unpredictable pandemic that swept the world. This is good news for investors like you, as both metropolitans will continue to attract new residents and retain their current locals due to improvements in job growth and livability.

Safety and Crime

In terms of safety, both metropolitan areas have higher crime rates than their respective greater areas (Michigan and North Carolina). Notably, Charlotte-Concord-Gastonia’s property crime rates are higher than the nation’s, unlike in Metro Detroit.

Source: Bestplaces

Both areas have varied neighborhoods with widely differentiating crime and safety rates, and you’d be likely to find a property that’s completely safe and beautiful to live in that’s only a street away from an area deemed unsafe.

These two maps show just how much crime rates can vary:

Crime rates are always changing in all areas, so conduct your own research on the area by visiting and getting a sense of the community. Quality tenants will prioritize safety, so you should as well.

Diversity

Regardless of race, your goal as an investor is to purchase rentals where there is a tenant pool that is responsible, reliable, and communicative. They should have zero problems with handling payments, taking care of your assets, and following your lease agreement.

Since potential tenants in Metro Detroit are different from those in Charlotte-Concord-Gastonia, evaluate for yourself what kind of tenants you want to have before committing to a property.

Liveability

In a nutshell, here’s the life one can expect from the two metropolitans:

*Density isn’t always a con! Density also means more potential tenants.

Both areas show strong economic growth for tenants seeking greener pastures for their careers, and there are many schools for families with younger children.

Of course, you still need to be careful when choosing your investment area. Prioritize places that are in high demand among high-quality tenants so you only attract responsible renters with a higher financial capability. Consider the characteristics of each subarea, focus on its demographics, and be keen on its property conditions.

If you’re a beginner or OOS investor, we highly recommend that you work with expert guidance to go through all the key investment factors in detail before pouring your money into either metropolitan area.

Conclusion

Investors should conduct a rigorous evaluation of the investment opportunities before choosing to invest in Metro Detroit or Charlotte-Concord-Gastonia. These markets are huge and have many cities with their own strengths and weaknesses — all dependent on your priorities as a rental investor.

To sum up, here’s a summary of the information presented above:

If you ask us, the two markets are very similar and they’re both constantly evolving. However, based on our two decades of experience and bias towards our home market, we conclude that Metro Detroit offers the most lucrative opportunities.

That said, we know money is the root of all investments, so our advice is to focus on finding the sweet spot between cash flow and appreciation when you’re looking to purchase. Short and long-term returns, baby!

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If you still want to explore your options, we have an ongoing that goes into detail with every city in Metro Detroit and neighborhoods in the City of Detroit. Check those out!

But if the data has already convinced you to invest in Metro Detroit, ! We’ll also answer any questions you have, so comment below or shoot me a message. I’m more than willing to help you on your investment journey — one investment property at a time.