Deep Dive into Detroit Neighborhoods: Rosedale Park
Source: Zillow listingThe City of Detroit is on the rise. After years of decline, Motor City is seeing a resurgence in investment and development. With plenty of affordable homes below the $100k mark and a demand increase for single-family homes…
The city is a hotspot for rental property investors looking to cash in on the city's newfound prosperity.
However, the City of Detroit is not without its challenges. With 105 neighborhoods, all with unique features, property conditions, and tenant demographics, it's difficult for investors to know how to navigate the market and capitalize on the inevitable risks.
That's why Logical Property Management is writing this deep dive report on Detroit neighborhoods to help investors make informed decisions about where to invest their money. This installment will mainly focus on Rosedale Park, an area located on the city's east side.
City of Detroit
Looking at the big picture, the City of Detroit is divided into 11 regions. Here’s a map to visualize it:
Source: Wikipedia.comThese regions are in different geographic locations and have unique personalities and features. For instance, Downtown Detroit is a central business district, while New Center is a historical area with a balance of commercial and residential places.
Rosedale Park is part of the region of the North West, East English Village, which is primarily a residential area with great historical sites. It’s also known for having a tight-knit community, much like the rest of the City of Detroit, which makes it an excellent place to live.
Now that we've looked at the City of Detroit, let's take a closer look at Rosedale Park.
The Beautiful Rosedale Park Neighborhood
Rosedale Park is a small neighborhood bounded by Westwood Drive, Lyndon, Glastonbury Avenue, Southfield Freeway, Grand River Avenue, and Fenkell.
With a population of around 4,445 people, Rosedale Park is made up of middle-income families and white-collared employees. Rosedale Park's population density is significantly higher than the rest of the city—7,768 people per square mile compared to 4,829 people per square mile.
You can see where the neighborhood is on the map below. Any links you see will also take you to previously published Deep Dives, should you want to explore more of what the city has to offer:
Source: Loveland’s Detroit Neighborhoods Map
Rosedale Park was first developed in the early 1900s as a streetcar suburb of the City of Detroit. The neighborhood was designed with winding streets and plenty of green space, which was meant to give residents a respite from the hustle and bustle of city life. Rosedale Park quickly became a desirable place to live, and by the 1920s the neighborhood was fully developed.
Source: Google MapsToday, Rosedale Park is a peaceful and quiet neighborhood that is still in high demand. Families are attracted to safe and affordable homes.
In terms of property conditions, Rosedale Park is a mix of both older homes built in the early 1900s and newer homes built in the 1950s. Because of this, the area has a mixture of well-maintained and run-down properties. However, overall, the condition of homes in Rosedale Park is above average compared to other neighborhoods in the City of Detroit.
Real estate developments are also on the rise in the neighborhood, where new construction townhomes are being built to meet the demand for housing. These new developments attract even more families and employees to the area, further solidifying Rosedale Park as a desirable place to live.
The affordability of Rosedale Park makes it an ideal neighborhood for rental property investors looking to cash in on the city's resurgence.
But what exactly are the investment opportunities in Rosedale Park?
Investment Opportunity
Let's begin with the most crucial factor of any real estate investment: monetary returns. Of course, evaluating an opportunity has several things to consider, but financial viability will be your ultimate goal. Below, you'll see the average property condition, rent amount, and home values of Rosedale Park properties to determine the profitability of its market.
Property Condition
The housing style in Rosedale Park is a mix of early-1900s and 1950s-era homes. There are various home styles, including bungalows, Cape Cods, and Tudor-style houses—meaning there is a wide variety of property conditions.
Some homes are well-maintained, while others require some TLC. Still, the average condition of homes in Rosedale Park is above average compared to other neighborhoods in the City of Detroit, where many properties are in poorer condition.
Most properties in Rosedale Park were built in 1949 and earlier, meaning they range from 73 to 83 years old. Given that they are considered "old homes," you'll have to deal with significant renovations if the home hasn't been updated for a while.
Source: City-DataHere are some tips for you when handling old homes:
- Inspect the structure. There might be structural rot, cracked foundations, pest infestations, water infiltrations, and undersized beams and posts that are far from our current building codes.
- Check the wiring. Electrical systems in old homes might be old, so they certainly need updating. For example, you should check for the old “knob and tube” wiring if the home still has it, as those aren’t adequate for what our electrical devices require today.
- Look out for old pipes. Similar to electrical systems, the plumbing and HVAC boiler systems might be outdated, broken, or dangerously close to disintegrating. Check the underground sewers as well—you don’t want to deal with bursts or clogs that will significantly damage your property.
As always, conduct a thorough inspection before purchasing the home.
If you don’t have the experience or knowledge, get in touch with a certified professional to budget your project properly. Don’t underestimate the task—it might take more money than you expect to overhaul an old home and bring it up to rental standards.
Home Value, Price, and Appreciation
Niche says that the median home value in Rosedale Park is $116,401. But this figure might be greatly underestimated, as Redfin reports a median sales price of $185,000 instead, where there is a 1.6% increase year-over-year. The difference is even more significant if we look at Zillow listings, where properties are consistently priced above the $200k mark:
Source: Current listings on Zillow as of August 2022Now, yes, property value is important. But you need to check the bigger context and calculate the rent-to-price ratio when choosing rental properties. That way, you’ll know if the price is worth the potential cash flow you’ll generate from the investment. The rent-to-price ratio isn’t fool-proof, but it’s an easy and quick indicator to shortlist your options to a handful of properties.
So, the rule of thumb is to ensure that the monthly rent is a minimum of 1% of the total acquisition price—including the purchase price and any renovations. With the average rent of $1,418 monthly and the average property price of $116,401 from Niche, the ratio results in a favorable 1.2%.
However, if we used three-bedroom Zillow averages of $1,900 rent and $228,528 property price, the ratio comes out as only 0.8%. These results mean you have to be careful in sifting through your options and ensure that you’re purchasing a property that you can realistically charge a reasonable rent for.
In terms of appreciation, NeighborhoodScout gives us a heatmap where we see that Rosedale Park is on the middle of the spectrum—not the highest appreciating area in the city, but it’s not the lowest either:
In fact, since the City of Detroit has been seeing above-average rates for the last decade—top 30% nationwide—you can bet that Rosedale Park properties will appreciate alongside it in the future. Add that to your monthly cash flow and you’re all set for both short- and long-term investment returns.
Potential Tenant Pool
It goes without saying that tenants are the lifeline of every rental property investor’s business venture. Therefore, you want to acquire homes that’ll attract high-quality tenants. Then you’ll have renters that pay on time, are responsible for property maintenance, and will protect your overall investment asset.
Next, let’s evaluate the tenant pool in Rosedale Park to see what kind of tenant management to expect. We’ve based it on the following key factors: income, employment, and racial diversity to help you budget for potential costs and foresee the type of tenants you’ll have to handle.
Average Rent and Rent-to-Income Ratio
According to Niche, the median rent in Rosedale Park is $1,418 per month. However, this might be an understatement, as the two current Zillow listings for Rosedale Park look like you can expect to charge around $1,900 per month for a three-bedroom property:
Source: Current listings on Zillow as of August 2022Using the rent estimates and average income, let’s compute the rent-to-income ratio you can get from Rosedale Park properties. The industry standard states that the tenant’s income should be at least 3x the rent for them to have the capacity to pay each month—stabilizing your cash flow.
Based on the Niche, the median household income in Rosedale Park is $65,945 annually or $5,495 monthly. That means that the average rent of $1,418 per month is roughly 25% of their income—slightly below the industry’s guide. The discrepancy is even more significant if you charge higher rent (like the Zillow listings are doing).
You’ll need to comb through the market to find tenants that earn at least $1,648 per month to ensure that you generate positive cash flow regularly.
Tenant Demographic: A
The best way to evaluate tenant demographics is by understanding the various classes. For example, Class C and D tenant pools will require intensive, hands-on property management, while Class A and B tenants won’t need your constant attention or supervision.
In this particular case, Rosedale Park tenants are a mix of Class C and B tenants. This is fairly obvious from the high rental amounts alone—not everyone can afford $2k every month for rent. Still, you have to be diligent with your screening to ensure that you only accept those with stable employment, high income, and a sense of responsibility to maintain the property and keep up with payments.
Average Income: Niche shows that the median household income in Rosedale Park is $65,945 per year. This is more than twice the median household income in the rest of the city ($32,498), which is good news for you as a rental investor—you can charge higher rent and see it come in consistently.
Source: NicheUnemployment Rate: The unemployment rate in Rosedale Park is a tad lower than the city’s, which is another good news for you. Rosedale Park has an unemployment rate of 10.4% compared to the City of Detroit’s 11.9%. However, take COVID-19 into consideration, as both figures might still be affected by the economic effects of the global pandemic resulted in.
Diversity: Niche provides the following racial diversity breakdown for Rosedale Park:
Source: NicheNeighborhood Livability: A
Closely related to the tenant pool is the neighborhood’s livability. After all, only responsible tenants can afford to live in a beautiful place—and vice versa. So you’ll want to invest in areas that attract tenants who have stable jobs, good pay, and will abide by your lease agreement. Plus, the property will increase in value if it’s located in an up-and-coming neighborhood, which is always a bonus.
Here’s Rosedale Park in a snapshot:
Crime and Safety: Rosedale Park is one of the safest neighborhoods in the City of Detroit. Just take a look at this heatmap from NeighborhoodScout, where you can see that there are barely any crime that happens in Rosedale Park—it’s colored with the lightest blue:
Source: NeighborhoodScoutWalkability: Rosedale Park is extremely walkable. Trulia reviews from locals say that the neighborhood has sidewalks, easy parking, dog-friendly spaces, and yards that are well-kept. Of course, the reviews also say that a car is needed to get around. But you have the option to use your legs instead of vehicles.
Source: TruliaSchools: Niche gives us a list of the best public schools in Rosedale Park which includes the following institutions: Plymouth Scholars Charter Academy (rated A+), Farmington Steam Academy (rated A), Niji-Iro Japanese Immersion Elementary School (A-), and Hamtramck Academy (rated A-). Investing in homes near these areas will certainly attract families moving into the neighborhood.
Overall, the livability in Rosedale Park is extremely good. Niche ranks the neighborhood as #38 best neighborhood for young professionals and #52 most diverse neighborhood in the City of Detroit:
Source: NicheMoreover, Areavibes reports that Rosedale Park has incredible amenities, cost of living, and housing options for locals to choose from. It won’t be difficult for rental investors like you to find good tenants in the area and experience an influx of young professionals coming into the neighborhood regularly.
Source: Google MapsOverall score: A-
Based on the information provided in this article, we’re giving Rosedale Park a score of A for investing in rental properties. The main factors that pulled the score down are the slightly challenging rent-to-price ratios and general property condition, but the livability and appeal of this beautiful neighborhood make it an excellent place to invest in real estate.
Still, we have to come clean and say that all property scoring systems are inevitably subjective. If you truly want to know what Rosedale Park and the City of Detroit are like, you have to visit the area yourself to evaluate potential investment returns.
Our guide ends here, but you don’t have to stop learning. Get in touch with our team of expert property managers in Logical Property Management to see how you can enter, navigate, and succeed in the City of Detroit’s real estate market today. With more than two decades operating in the area, we have the experience and insider knowledge you wouldn’t want to miss out on.
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This guide is part of our ongoing series that evaluates the rental investment potential of every city and neighborhood in Metro Detroit. If there is a specific area you’d like us to prioritize, let us know in the comments below. We’re not stopping until we’ve covered them all!
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