Deep Dive into Detroit Neighborhoods: Grandmont

Source: Detroit Experience Factory.

The City of Detroit, and Metro Detroit in general, is well-known amongst property investors for its affordable housing market. Yet, Michigan’s “Motor City” has 105  neighborhoods, some of which are blighted areas, and some of which are flourishing communities.

This makes the City of Detroit notorious for its high-risk, high-reward real estate investment strategy, and it means that out-of-state and out-of-country investors need to know more about the neighborhoods in the city to make a calculated choice when buying rental properties here.

That’s why we’re sharing our experience as local residents and property managers with this “Deep Dive into Detroit Neighborhoods” series. One by one, we’ll flesh out the real estate potential and risk of each neighborhood in Detroit. We’ll help you evaluate their rental investment strengths and weaknesses, prioritizing the factors that most influence the following:

• - Expected returns from rental properties
• - The type of management required for the rental properties

For this article, we’re featuring one of the city’s neighborhoods: Grandmont. By the end of this article, you can make an informed decision when choosing where to invest in this varied rental market. Let’s start!

The City of Detroit

To begin, let’s take a look at the City of Detroit as a whole. The city is divided into the following areas:

Source: Wikipedia.

Moreover, each area has its own “personality.” Downtown Detroit is the central business district, the New Center is a historic district, and Midtown is a mix of business, university, and residential neighborhoods. Our featured area, Grandmont, is located in the northwestern portion of the city (north area of West Side), which includes Bagley, Grandmont, Martin Park, Old Redford, Rosedale Park, and Greenwich Park.

Here’s a map and a list of the Detroit neighborhoods, where any of the hyperlinks you see will take you to previous Deep Dives we’ve already published:

Source: Loveland’s Detroit Neighborhoods Map

According to GrandmontRosedale.com, the Grandmont neighborhood is part of a bigger area called Grandmont-Rosedale that includes North Rosedale, Minock, Rosedale Park, Grandmont #1, Jeffries Southfield Industrial Park, and Schoolcraft Improvement Association.

Here’s a map that shows where Grandmont is located in relation to the other neighborhoods:

Source: GrandmontRosedale.com

Grandmont Neighborhood

Grandmont is 0.331 square miles with a population of roughly 2,677 people. The population density is 8,094 people per square mile, which is nearly twice as high as the city’s average of 4,829.

Source: Google.

Grandmont is nicknamed “The Home of Good Neighbors,” priding in 800 homes with a close-knit community. The area is served by the Grandmont Community Association (GCA) and is home to Ramsay Park and Edison Elementary School.

Based on the statistics, Grandmont locals are largely lower-middle-income residents. Still, more than a third of its people are employed in executive, management, and professional occupations, and its rate of childhood poverty is better than more than half of the nation’s neighborhoods.

Grandmont is also part of the Grandmont Rosedale Development Corporation (GRDC), which is a non-profit group dedicated to preserving and revitalizing all communities under the Grandmont Rosedale area. The organization holds a wide range of improvement programs to help the lovely community prosper, such as the following initiatives:

• - Revitalizing the Grand River Commercial Study Area to be the community’s business district area
• - Organizing numerous programs for community improvement
• - Purchasing and renovating vacant and/or dilapidated homes
• - Offering home repair grants and loans to low-income homeowners
• - Promoting the neighborhood to new homebuyers

Efforts like these allowed the greater Grandmont Rosedale community to avoid most of the wide-scale blight that affected the City of Detroit back in the 1960s to 1970s. While the City of Detroit has around 1 empty lot for every 5, Grandmont Rosedale has around 1 in every 10—significantly lower than the rest of its neighbors.

So, Grandmont is obviously a nice place to live in the City of Detroit. But is it good for investing in rental properties? Let’s take a closer look.

Investment Opportunity

There are many factors that you should consider when evaluating a real estate opportunity. But at the end of the day, the most important factor is the financial viability of your potential investment.

If you’re thinking about investing in Grandmont properties, follow us in our assessment of the property conditions, average rents, and home values in the area. These three factors will significantly impact the success of your financial investment (in addition to the quality of tenants you secure for your property).

Property Condition

Similar to the rest of the city, Grandmont properties were largely built from 1939 to 1949. City-Data.com breaks down the properties by the year built so you can see that the majority of Grandmont properties are roughly 78 years old:

Source: City-data.

The housing stock in Grandmont consists of a lot of “period” properties. This isn’t necessarily a negative thing, however. For example, urban houses of this age are typically well-built, with few structural issues, and come with original features that add to the appeal of a rental home (like hardwood floors, fireplaces, and crown molding).

Some older properties, though, may have underlying issues to be aware of when purchasing, like:

• - Outdated outlets & electrical systems
• - Obsolete plumbing systems
• - Old windows
• - Functionally obsolete heating systems

Still, there are many older homes that have been completely refurbished in the past few years, giving them all the benefits of period charm, without any of the costs of repairs.

How do you tell the difference? Always have your property inspected by a professional—this will let you catch and budget for any additional repairs you might have to do before renting out your property.

Average Rent and Rent-to-Income Ratio

The majority (63%) of Grandmont properties are owned instead of rented (37%), so you can expect the houses to be better maintained and cared for, as owners are generally more careful than renters.

According to Niche, the average rent in Grandmont is $1,162 per month. This figure is the same as the national average and is higher than the City of Detroit’s average of $899. Here is a more detailed breakdown of the rent averages in Grandmont:

Source: Niche.

Let’s check actual listings to see if these numbers are accurate. Here are the three listings we see for rent on Redfin, where we can see the rent amount these properties are asking for.

Source: Redfin.

As we can see, a two-bedroom property can charge $850 per month, and three-bedroom properties can charge around $1,300 to $1,600 per month. These numbers check out with the average rent figures we saw earlier, which indicates accurate information.

Considering the average household income of $4,564 monthly (or $54,779 annually), the rent-to-income ratio for Grandmont is 25.46%, where most renters will set aside almost a third of their income for rent. This comfortably meets the rule of thumb of “income = 3x rent” to ensure that tenants are financially capable of rent your property.

Home Value, Price, and Appreciation

Based on Zillow, the average estimated value of properties in Grandmont (as of May 2023) is $136,100.

Source: Zillow.

Looking at actual for-sale listings on Redfin, two-bedroom properties are selling for $38,000, three-bedroom properties are selling for roughly $124,000, and four-bedroom properties are selling for $195,000 (see map below). These figures are reflective of Zillow’s estimates:

Source: Redfin.

When choosing a rental property, you don’t just want a house with a good sales price, though—you also want one with a strong rent-to-price ratio.

Ideally, the ratio of your monthly rent/house value (purchase price + repairs) needs to be 1%, if not higher. This is known as the 1% rule, and is a quick calculation that gives you an indication of whether or not an investment opportunity will yield positive cash flow.

In general, the City of Detroit has the highest rent-to-price ratio across the 50 biggest cities in the US—indicating strong, cash-flow generating potential for rental properties here. Unfortunately, with an average rent of $1,162 and an average property value of $136,100, Grandmont’s rent-to-price ratio is only 0.8%. You might find properties that meet the 1%, but it’ll take a little more research and some good negotiation skills.

Potential Tenant Pool

We’ve evaluated the type of tenants you’ll expect to find in Grandmont, as your renters will heavily contribute to the success of any rental investment.

In the City of Detroit, it’s common to experience thefts, vandalism, missed rents, property damages, and evictions in some areas, whereas in others the tenant pool is largely white-collar, reliable renters. Where you buy will determine which type you end up with, and, in turn, how much profit you miss out on due to tenant issues.

These scores are based on many data points, including our own local knowledge and 20-plus years of experience as a property management company in Metro Detroit. Keep in mind that scores are not “official”—they’re merely a guide to help you determine if this is the right area for you to invest in.

Tenant Demographic: B

Average income: According to Areavibes, both Grandmont’s average income per capita and median household income are higher than the City of Detroit’s overall average. This is good news, because it means more financial stability and capability for your potential tenants, protecting your cash flow.

Source: Areavibes.

Unemployment rate: Unfortunately, Grandmont has an unemployment rate of 12.6%, which is slightly higher and reflective of the rest of the City of Detroit. There is also no data regarding poverty in the area, but we can assume that it’s close to the city’s percentage of 39.4%.

Diversity: Here’s a breakdown of the population in Grandmont in terms of diversity:

Source: Areavibes.

Interestingly, Grandmont has more Jamaican (6.2%) and Haitian (1.7%) ancestry residents than any neighborhood in the nation.

Neighborhood Livability: B-

You want to invest in a neighborhood that is in high demand with high-quality tenants. That way, you attract people who will be responsible for paying rent and taking care of your investment property. So let’s look at some statistics on the lifestyle in Grandmont and the kind of tenants that the area attracts.

Crime and safety: Crime rates in Grandmont are higher than the rest of the city (and of the state and nation), although data from NeighborhoodScout indicates otherwise, as you can see in this heat map:

Source: NeighborhoodScout.

We suggest that you visit the area yourself to see if safety might be an issue—evaluations aren’t as accurate as we’d want them to be, especially because the City of Detroit is highly diverse from one neighborhood to another.

Transportation and walkability: Grandmont is a car-dependent neighborhood with some public transportation. When going to work, 86.3% of the residents drive a car, while 6.1% choose to carpool.

Source: Areavibes.

School rankings: According to Trulia, Grandmont residents can send their kids to elementary and middle schools like Bates Academy and Edison Elementary School, and high schools like Cass Technical High School. Still, these schools are rated “average” or 5/10 by GreatSchools, so they might not attract as many family tenants as you would hope.

Overall score: B-

Taking all these factors into account, we can confidently rate Grandmont as a B- for rental investing. The main drivers for our conclusion are based on the following information:

• Grandmont properties are increasing in value, giving you equity gains in the long run.
• Tenants in the area typically pass the “rent = 3x income” rule, giving you stable cash flow.
• Properties are generally older, but there are recently refurbished houses available too.
• You might need local expertise and help to find rent-to-price ratios.

Overall, Grandmont is a good neighborhood to consider investing in, especially if you’re seeking to own rental properties in the City of Detroit. But we won’t sugarcoat it—you’ll need some help to ensure that you purchase good properties that’ll attract a consistent flow of tenants.

Not to worry, we got your back. Money is the root of every investment, and we do our best to ensure that every real estate investor in the City of Detroit gets their lucrative slice of the hot market. We’ll help you with our decades' worth of research, expertise, and knowledge—just get in touch today.

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This is just one of the many Deep Dives that unpack the investment potential of every Detroit neighborhood. We’re continuously creating these guides until we’ve covered the whole city. Check back often so you never miss a dive!

Any specific neighborhood you’d like us to tackle next? Just leave a comment down below and we’ll be sure to cover it in a future installment.