Deep Dive into Detroit Neighborhoods: Green Acres
Source: Google MapsIf you’ve been a real estate investor for quite some time, then you’ve most probably heard of the very affordable properties in the City of Detroit. Michigan’s Motor City has property prices that shock most investors from big cities like California, Boston, and New York. That’s because you’re highly likely to snag single-family or multifamily units for a fraction of the national average purchase price here.
Combine the low prices with the booming demand for single-family homes in the City of Detroit, and it comes as no surprise that this city is one of the nation’s top destinations for rental investors to reap strong cash flow returns.
That being said, there is a catch. The City of Detroit is exceptionally diverse with over a hundred neighborhoods—all with varying sub-areas, property conditions, and tenant demographics. Because of this, newbie investors and moguls alike need expert knowledge and guidance to navigate the inevitable risks in the Detroit market. Only with the right guidance and information can they gain the famed returns of the Detroit rental market.
In line with that, we’ve created this Deep Dive series to give local and out-of-state investors an in-depth view of the Detroit housing market. Our team is a local property management company in the greater Metro Detroit area, so we have the experience and insider knowledge to guide you into the City of Detroit.
Our goal is to give you everything you need to begin investing in one of the country’s hottest rental estate markets, focusing on the following factors that contribute to your investment success the most:
- - The expected returns from rental properties
- - The types of tenants to expect
- - The kind of property management required
Are you ready to dive into the City of Detroit? This article focuses on one of its good neighborhoods: Green Acres—known for having a variety of well-kept homes.
City of Detroit
Before we get into the nitty-gritty details, let’s look at the big picture. The City of Detroit has 11 regions:
Source: Wikipedia.comEach of these regions have a distinct personality.
For example, Downtown Detroit is the city’s central business district and residential area. Midtown, on the other hand, has a mix of business, cultural, residential, and university areas. New Center is a historic district with commercial and residential spots. And the North—where our featured neighborhood today resides—has a blend of historical, residential, and university areas.
The North region includes neighborhoods surrounding the campus of the University of Detroit Mercy, such as the neighborhoods of Chaldean Town, Grixdale Farms, Highland Park, Palmer Park Apartment Building Historic District, Palmer Woods, Sherwood Forest, and University District.
For a closer view, here’s a map that shows where the neighborhoods are in the different regions. We’ve also provided a list, where the ones with hyperlinks will bring you to previously published deep dives:
Source: Loveland’s Detroit Neighborhoods Map
Our Focus: Green Acres Neighborhood
According to City-Data, Green Acres has a population density of 3,049 people per square mile. Its density is 33% lower than the overall average of the City of Detroit. This means that there are still many properties that investors can buy in the area.
Green Acres’ northern boundary is 8 Mile Rd, with Livernois on the west, Pembroke on the south, and Woodward Avenue on the east.
The neighborhood of Green Acres was established as a residential area in 1936. It’s popularly known for its housing styles dating back to the 1920s, 1930s, and 1940s. If you take a stroll through the area, you’ll be surprised to see many well-maintained brick Tudor and colonial homes.
“The thing about Green Acres is all the homes are different,” says Maria Dickerson, the president of Green Acres Woodward Civic Association. “You have homes that are in their original design with stained glass windows and a lot of them with natural fireplaces.”
A local who has lived in the neighborhood since 1984 shared that, “The architecture is the first thing that grabbed me. Our house is built like the homes down at Fort Wayne, off Jefferson Avenue. It’s the old Colonial style and I was attracted to that. And, the neighborhood was well-groomed, as well.”
But are beautiful homes all that Green Acres has to offer? What are the investment factors that the neighborhood has for you to take advantage of? Let’s dive deeper into the numbers to find out.
Rents & Rent-To-Price Ratio (The 1% Rule)
According to Niche, the median monthly rent across all property types in Green Acres is $1,262. This figure is 40.38% higher than the City of Detroit’s median rent of $899.
If we were to look at the current “for rent” properties listed on Zillow, however, we see that the average rent for a two- or three-bedroom property is even higher than Niche’s average:
Source: Current listings on Zillow as of September 2023The higher the estimated rent, the higher the cash flow for you. So it’s likely that the Green Acres market is moving towards your advantage as a rental property investor.
However, just knowing the average rent is not enough without comparing it to average property prices. So, let’s see what the rent-to-price ratio is like with Green Acres properties. The industry rule is to ensure that the rent is 1% or higher than the total property price (including the repair cost) to ensure positive cash flow.
Given the median monthly rent of $1,262 and an average house value of $199,225 by Niche, the rent-to-price ratio is 0.6%. This figure falls a bit short of the industry standard. To make it more accurate, we’ll use the following Zillow listing as an example:
A three-bedroom bungalow along W Eight Mile Road, Green Acres with a monthly rent estimate of $1,353 and a purchase price of $198,095. Even with an actual example, the ratio still comes out as 0.6%.
You’ll have to be very careful with the rental properties you invest in Green Acres, ideally ensuring that their rent-to-price ratio is 0.8% or higher for strong cash flow.
Property Values and Appreciation Trends
Moving on to property values, Niche reports that the average house value in Green Acres is $199,225. But, this may be understated as Zillow reports the median home value in Green Acres is $212,790. While Zillow doesn’t provide us with past performance or forecast, Redfin shows that the sales price decreased by 3.0% since last year, but also shows a higher estimate of $242,000 per property. And despite the decline YoY, the graph shows that the property prices are stabilizing.
Source: RedfinIf we are to peek into the Zillow properties that sold in the past three months, we see that the prices are higher than Niche’s average price. This means that even though Redfin reported a decline in the average sales price in the last 12 months, there’s still a higher chance that the prices will skyrocket in the next years:
Source: Zillow properties sold in the last three months as of September 2023While rental property investors are usually only focused on cash flow, increasing property prices means that you’ll also have impressive equity gains in the future. It also means that people are increasingly attracted to this neighborhood, giving you a larger tenant pool to work with.
In terms of appreciation, Green Acres falls on the higher end of the spectrum compared to other areas of the City of Detroit. As you can see in the heat map below from NeighborhoodScout, Green Acres is looking pretty green—indicating high property appreciation rates:
Source: NeighborhoodScoutNeighborhood, Properties & Tenants
Now, let’s take a look at the overall livability, general property conditions, and tenant demographics to expect with Green Acres homes. These are important factors to consider as a rental property investor, as they’ll determine the property management and maintenance you need, as well as the appeal of the neighborhood to attract more residents.
Let’s start with the quality of life in Green Acres.
Quality of Life in the Neighborhood: B+
There are two factors that will affect your profitability: the neighborhood’s livability and its tenant class. A high-quality, attractive neighborhood will give you a tenant pool filled with renters who’ll pay on time, take care of your assets, and abide by lease agreements, while the opposite might skip payments, treat the home poorly, and leave you with depleted profits.
In other words, you want to invest in areas that attract the kind of tenants that will help increase the amount of money in your pockets.
Local Economy
Green Acres itself is a residential neighborhood, but it’s surrounded by thriving business communities on Livernois Avenue. Here, locals can find many restaurants and shops, all within walking distance.
For example, popular destinations include Kuzzo’s Chicken & Waffles, Mr. Fo-Fo’s Deli, 1917 American Bistro, and Avenue International Kitchen. There’s also Bucharest Grill and Southern Comfort where diners can have great food after visiting the unique neighborhood shops. There are some older businesses too, that continue to thrive, like Baker’s Keyboard Lounge and other multi-generational shops.
“The Avenue of Fashion is a little bit different from a lot of the districts. We have a lot of specialty boutiques with one-of-a-kind, original pieces,” said the president of the Avenue of Fashion Business Association, Dolphin Michael.
“The new trend now is to have walkable business districts, so you don’t really want to get in your car and drive out to wherever. You want to just walk over to the shops, go shopping, and buy whatever you need,” which explains the tremendous foot traffic in the area.
Green Acres is near this busy avenue, where the vibrant community in Livernois contributes greatly to the overall appeal of Green Acres. It also has easy access to Gateway Marketplace and commercial strips in Ferndale close by. As you can imagine, most residents will live in Green Acres, and travel a short distance to nearby business areas for work.
Crime and Safety
Based on Niche’s rating, Green Acres is slightly safer than the rest of the City of Detroit. Plus, its residents are actively helping reduce crime in Green Acres, where they implemented citizen patrols that work with the local precinct to report suspicious activity and concerns.
Still, as with any neighborhood in the city, Green Acres’ crime rates will undoubtedly vary from one street to another. Being a real estate investor, ensure that you conduct thorough research on the crime and safety rates on the specific block you’re eyeing to have an accurate understanding.
School Rankings
Just like all the other neighborhoods in the City of Detroit, Green Acres is within the Detroit Public School District, where you can find Green Acres Elementary—ranked five stars and 7/10 by GreatSchools. In terms of test scores, student progress, and equity, the school is above average.
There’s also Green Acres Nursery and Kindergarten for families with younger children, Barack Obama Leadership Academy (K to 5th), Bridge Academy West (6th to 8th), and Cesar Chavez Academy High School (9th to 12th) nearby based on Detroit Schools Guide.
Livability
Green Acres is also known for having pleasant, united residents. “I would say that we’re a people’s community in that we are very open to ideas and diversity, and we want people to become involved,” shared Maria Dickerson, the president of Green Acres Woodward Civic Association.
A current resident agrees with this saying, “Green Acres is a family-oriented community (with) beautiful homes (that are) very affordable near the suburbs…”
The neighborhood’s homeowners association is also extremely active, with year-round events, monthly newsletters, and other activities. “Our association does a lot of things as far as beautification and safety. We have committees that deal with city services. They go downtown to hearings. We have some vacant properties in our area and we have a committee that keeps the houses looking like they’re lived in. We do things that build community pride,” Dickerson explained.
Green Acres is named #7 in Niche’s Best Neighborhoods to Live in Detroit, giving the city high grades for its housing stock, family-friendliness, job opportunities, nightlife, cost of living, crime and safety, and more.
Areavibes gave Green Acres a livability score of 69/100, which is considered average. Nevertheless, it’s ranked #15 in the City of Detroit, and #47 in all of Michigan, making it better than 55% of all areas.
Green Acres attracts residents looking for a beautiful place to live, but not necessarily a budget-friendly, affordable one. Areavibes also gave a chart of what the cost of living is like in the neighborhood, showing that it’s slightly more expensive than the rest of the City of Detroit:
Source: AreavibesWhile Green Acres is relatively walkable, most locals either drive to work (83.3%) or carpool (6.7%) instead of walking.
Average Property Age & Condition: C
Average property age: 83 years
According to City-data, Green Acres properties were built in 1960 or earlier, with most of the homes leaning on the older end of that spectrum. Given that, the average property age of Green Acres homes is around 83 years old—way above the industry standard of what is considered an “old” home.
Source: City-dataBased on the chart above, the majority (41.58%) of Green Acres properties are aged 83 and above:
Now, having an “old” home doesn’t always mean something bad. Property age is subjective, after all, and you can still find beautiful brick Tudor homes that are well-maintained in Green Acres. (Just take a look at this Tudor-style home with amazing interior designs and decorative modeling!)
Still, here are the old-home problems you should look out for:
- Old windows and lack of insulation
- Failing sewer lines
- Corroded galvanized plumbing supply & waste lines
- Outdated electrical systems
- Previous alterations & maintenance not up to code
- Toxic lead paint
The list isn’t exhaustive, but it should give you a glimpse of what you should prepare for when dealing with old homes—while preserving its unique personality and heritage.
Tenant Demographics: A
Compared to other real estate investments, rental properties are the only ones that require a thorough evaluation of a neighborhood’s potential tenant pool. After all, you don’t want to invest in a home only to find out that the locals don’t have enough income or stable employment to pay monthly rent.
Not to worry, we’ve already listed it out for you below. You’ll see the key factors that contribute to tenant class and demographics in Green Acres, so you know what kind of tenant you’ll likely find.
Income
According to Niche, the median household income in Green Acres is $77,294 per year or $6,441 per month. This number is 122.35% greater than the median household income of the City of Detroit, where locals earn $34,762 per year or $2,896 per month.
The higher income your tenants earn, the more they can afford rent, and the more you can potentially charge a higher amount without worrying about their financial capability. Just remember to follow the industry standard of ensuring that the rent is not more than 30% of the tenant’s income.
Unemployment
Unfortunately, Areavibes reports that the unemployment rate in Green Acres is 14.7%. This rate is higher than the City of Detroit (11.9%) and Michigan (5.2%). Still, don’t forget that we just went through a global pandemic and an economic downfall. So, the economy is likely still trying to recover from its devastating effects, and these figures probably don’t reflect the up-to-date situation.
Ensure that you conduct thorough tenant screening to see if the applicant has a stable job. Its stability will directly relate to your rent income, as well as the tenant’s ability to maintain the home.
Education
Niche reports that the majority of Green Acre residents (37%) have a bachelor’s degree, while others have some college or associate’s degree (28%) or a master’s degree (21%). Only 8% have but a high school diploma and even fewer have less than a high school diploma (6%).
In contrast, while more locals in the City of Detroit have some college or associate’s degree (33%), only 7% have a master’s degree and only 10% have a bachelor’s degree. In other words, Green Acres locals seem to have a greater educational achievement than residents in other Detroit neighborhoods.
This means that your tenant pool has a higher chance of securing well-paying jobs, enabling them to rent at a higher cost and take care of the property well.
Diversity
In terms of racial diversity in Green Acres, here is a chart provided by City-data:
Source: City-dataIn a nutshell, the tenants you’ll find in Green Acres fall on the higher end of the spectrum. They’ll likely have higher monthly income, higher educational attainment, and relatively more stable jobs. Still, let’s not forget that Green Acres has a higher percentage of unemployment, so you’ll have to screen thoroughly for the tenants who do have a well-paying job.
Additionally, 77% of Green Acres residents own their homes, which is 29% higher than the City of Detroit. In other words, you’ll likely work with a smaller tenant pool, where only a few people will rent.
Rent-to-Income Ratio
Let’s push the analysis further by checking the rent-to-income ratio.
The industry standard is to ensure that the tenants earn a monthly income that’s 3x of the rent amount. As an investor, you’ll want to stick to this ratio as closely as possible, because the stability of your cash flow will depend on the financial ability of your tenants.
Source: Current Zillow listing for rentSo, residents in Green Acres earn a monthly average household income of $6,441 based on Niche. If they were to rent a three-bedroom home for $1,400 (like the Zillow listing above), they’d only have to spend 21.73% of their income on rent, which is within the industry standard of 30%.
As a rental investor, this is good news for you because you have an opportunity to charge higher. However, if you want to secure a stable cash flow, it’d be best to look for tenants with high incomes so you can set a higher rental price.
Overall Score: B+
Based on all the information we’ve provided in this article and our personal experience as a property management company in Metro Detroit, we’re giving Green Acres an overall score of “B+” for rental investing. Our conclusion is based on the following key contributors:
- Average rent amounts in Green Acres are higher than in the city, which means rental property investors like you can potentially earn higher rent income than in other neighborhoods. Still, don’t forget that you should find homes that can give you a rent-to-price ratio of at least 1%, as some of the Green Acres properties will fall a bit short of that standard.
- Excellent Livability, where there’s high trust among neighbors and the area is deemed relatively safe. When a neighborhood has a good quality of life, you can expect that there will be an increased influx of residents, resulting in a higher demand for rental properties.
- Tenants in Green Acres have higher incomes than the rest of the city, potentially attracting new residents seeking better-paying jobs for the years to come. This also means many tenants can afford higher rent—you only have to ensure that you find them.
Given all the information we’ve scoured for this article, we see Green Acres as a good neighborhood to invest in rental properties, where you can find excellent opportunities to grow your real estate portfolio.
If you’re still unsure and hesitant to get a slice of the Detroit market, reach out to our team for more guidance. We’re more than willing to help you in your investment journey.
We’ve already helped more than a handful of investors over the years to invest all over the greater Metro Detroit area successfully! Get in touch with us today to grab your share of the opportunities.
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