Deep Dive into Detroit Neighborhoods: LaSalle Gardens

Neighborhoods.com

The City of Detroit is known to be the second most affordable cities in America. We can attest to these facts because as a property management company, we’ve operated in the area for the past few decades.

However, while the real estate market attracts many rental investors seeking lucrative cash flow, the city is exceptionally diverse and complex. With 106 neighborhoods with different characteristics, tenant demographics, and property conditions, it takes an experienced local expert to navigate the risks and sift out good opportunities in the City of Detroit.

But you don’t have to be a professional if you have us around.

This installment is part of our ongoing Deep Dive series, where we unpack all the investment details you need to know about each corner of the City of Detroit. With these ultimate guides, you’ll be well-informed and fully prepared to start investing in the burgeoning Motor City—empowering you to reap the acclaimed returns of the Detroit rental market.

We’ll go through the key evaluating factors such as the following:

1. Expected investment returns from rental properties

2. Types of tenants to expect and manage

3. Types of property management required

For this particular installment, we’re diving into the up-and-coming neighborhood of LaSalle Gardens, described by Areavibes surveyees as an “extremely safe” place to live.

City of Detroit

Let’s start with the big picture. The City of Detroit is divided into 11 regions, as you can see below:

The City of Detroit is known to be one of the second most affordable cities in America. We can attest to these facts because as a property management company, we’ve operated in the area for the past few decades.

However, while the real estate market attracts many rental investors seeking lucrative cash flow, the city is exceptionally diverse and complex. With106 neighborhoods of different characteristics, tenant demographics, and property conditions, it takes an experienced local expert to navigate the risks and sift out good opportunities in the City of Detroit.

But you don’t have to be a professional if you have us around.

This installment is part of our ongoing Deep Dive series, where we unpack all the investment details you need to know about each corner of the City of Detroit. With these ultimate guides, you’ll be well-informed and fully prepared to start investing in the burgeoning Motor City—empowering you to reap the acclaimed returns of the Detroit rental market.

We’ll go through the key evaluating factors such as the following:

1. Expected investment returns from rental properties

2. Types of tenants to expect and manage

3. Types of property management required

For this particular installment, we’re diving into the up-and-coming neighborhood of LaSalle Gardens, described by Areavibes surveyees as an “extremely safe” place to live.

City of Detroit

Let’s start with the big picture. The City of Detroit is divided into 11 regions, as you can see below:

Source: Wikipedia.com

Now, each of these regions has its distinct features and personality. Here are a few examples:

1. Southwest Detroit is a vibrant area with thriving businesses and colorful buildings.

2. New Center is a diverse and dynamic region with a mix of entertainment and history.

3. Midtown is the city’s cultural center with a university and revitalized business areas.

4. Downtown Detroit is the city’s central business and residential area.

LaSalle Gardens is part of the Upper West Region of the city. The square-shaped neighborhood is bordered by Rosa Parks on its east, West Grand Boulevard on its south, Linwood to its west, and Euclid to its north.

Here’s a map that shows where LaSalle Gardens is, as well as all the other neighborhoods in the City of Detroit. We’ve also listed them in a chart, where you can find hyperlinks to previous Deep Dives we’ve already published:

Loveland’s Detroit Neighborhoods Map

LaSalle Gardens Neighborhood

Based on City-data, LaSalle Gardens has a population of 1,267 in a small area of 0.201 square miles. This means the population density is 6,311 people per square mile, which is 30.69% higher than the average density of the City of Detroit.

Source: Google Maps

LaSalle Gardens is home to a beautiful mix of 4,000-square-foot mansions and duplexes. Most of them reflect an earlier time, which means that the houses are pretty old. Still, “they don’t build them like that anymore” and many have been maintained well over the years, giving the neighborhood its signature charming personality.

The neighborhood is also surrounded by expensive, beautiful places such as Boston Edison right above it and New Center just beside it. These two neighborhoods are on the radars of aspiring tenants, where investors take their chances to purchase high-priced properties in hopes of securing quality tenants.

Many tenants are starting to consider LaSalle Gardens as a possible alternative to more pricey areas. LaSalle Gardens is close enough to good neighborhoods without the overpriced rent amounts—and, for investors, costly purchase prices.

Based on our experience, we’re expecting LaSalle Gardens to become the “next Boston Edison” in the coming years, where we’ll likely see price hikes and increasing appreciation rates.

If there’s a good time to invest in LaSalle Gardens properties, it’s now!

Still, let’s not get ahead of ourselves. We still need to go through all the details to see if LaSalle Gardens truly is a good place to invest in rental properties.

Investment Opportunity

So, let’s get into the nitty-gritty of investing in LaSalle Gardens rental properties. While many factors go into a good investment opportunity, the most important is financial viability.

Below, you’ll see the average property conditions to expect, the median rent amount you can charge, and the property values to budget for in LaSalle Gardens. These are the key indicators to the profitability of investment here and should give you a good idea of the market.

Property Condition

According to City-data, most homes in LaSalle Gardens were built in 1939 or earlier. This means you’ll find a lot of properties aged 83 and older, which is similar to most properties in the City of Detroit aged 70 to 100 years old.

Source: City-data

Within our industry, any property that is aged 50 and above is considered old. So you’ll need to have the knowledge to handle the older homes in LaSalle Gardens. Of course, you’ll also run into some properties that were recently renovated and modernized. If you plan to purchase a distressed or fixer-upper home as a rental investment property, be prepared to deal with common issues such as:

1. Lead-based paint concerns

2. Outdated outlets & electrical systems

3. Obsolete plumbing systems

4. Old windows

5. Pest infestations lurking within the walls

These are only a couple of things that you should look out for in an old home. If you don’t have the experience, it’s better that you hire a professional to point out the underlying issues. Then they’ll help you assess the condition of the property before purchase.

Average Rent and Rent-to-Income Ratio

Data from Niche states that the median rent in LaSalle Gardens is $765 per month, which is 7.16% lower than the $824 average of the City of Detroit. According to City-data, however, most of the rent paid is closer to $600 rather than $700.

Source: City-data

Still, the information from City-data is already 3 years outdated. The landscape might have shifted drastically, so we’ve pulled up some current listings for rent on Zillow for a more accurate estimate:

Source: Current listings on Zillow as of March 2022

As we see from these 3 listed properties, the estimated rent is significantly higher than the averages given by Niche and Bestplaces. We can safely assume that the difference is caused by recent market shifts, especially since Weichert’s data that broke down average rent by property sizes also show lower numbers than actual Zillow listings:

1. Studio apartment: $489

2. One-bedroom unit: $556

3. Two-bedroom unit: $665

4. Three-bedroom unit: $796

5. Four-bedroom unit: $820

Higher estimated rent means higher cash flow for you, anyway. So perhaps the LaSalle Gardens market is moving towards your advantage as a rental property investor.

With that in mind, let’s move on to rent-to-income ratios.

Residents in LaSalle Gardens earn an average household income of $22,101 per month according to Niche. This may seem high, but it might be because the average household size in LaSalle Garden is 3.7 people, compared to the rest of the city, which only has an average of 2.5 people per home.

Moreover, more than half (51.4%) of residents in LaSalle Gardens live with their families, compared to the City of Detroit, where only 37.2% are family households.

Given the median income and average rent, most households in LaSalle Gardens must set aside 3.4% of their monthly income for rent. Thanks to large family households, LaSalle Gardens easily fits into the industry rule of “income = 3x rent” for stable cash flow.

You can be reasonably confident that your tenants will be able to keep up with payments.

Home Value, Price, and Appreciation

According to Niche, the median home value in LaSalle Gardens is $67,300, which is 36.79% higher than the city’s average value of $49,200. Although, the current Zillow listings in LaSalle Gardens are much higher ranging from 95k to over 340k.

Take a closer look at the listings above and you’ll realize that there are many options around the $100,000 price as well, which speaks to the city’s overall affordability—even in the LaSalle Gardens neighborhood.

City-data also breaks this information down into different housing types. While detached houses in LaSalle Gardens cost roughly the same as the rest of the city, townhouses and 2-unit structures are significantly cheaper (72.77% and 36.11%, respectively) here than the average of the City of Detroit.

Source: City-data.com

Sales price is important because each investor has their own budget to consider. But you should also consider the rent-to-price ratio when choosing which property to purchase as a rental investment.

The industry rule states that the estimated monthly rent should not exceed 1% of the total house value, including the purchase price and necessary renovations to bring it up to rental standards. If you stick to 1% and below, you’ll have a positive cash flow quickly.

Properties in the City of Detroit typically have a ratio of 1% and higher, which explains why many investors are flocking to the area. The city has one of the best rent-to-price ratios across 50 cities nationwide—and LaSalle Gardens is one of the reasons why.

Coming in with an average rent of $765 and an average home value of $67,300, the ratio in LaSalle Gardens is a favorable 1.13%. This result means you can expect to garner a healthy cash flow from rental properties in the neighborhood.

Currently, there isn’t a lot of data on LaSalle Gardens’ property appreciation rates. Redfin reports that home sales prices have dropped -62.3% since last year, but this is only based on 2 homes sold. And so, it might not be the most accurate information to make decisions with.

We can’t determine the appreciation rates and potential equity gains in LaSalle Gardens right now. But it doesn’t discount the fact that the neighborhood has plenty of opportunities for investors.

Potential Tenant Pool

Now that we know the average rent and property prices, let’s get into the tenant pool of LaSalle Gardens. Knowing what kind of tenants you’ll likely have will help you prepare for the management required.

Moreover, you’ll want to prioritize investing in good tenants that’ll cost you less in maintenance, repairs, missed payments, and troublesome disputes. Doing so will increase your end profits and overall success as a rental investment and business.

Next up, let’s evaluate the tenant pool in LaSalle Gardens. We’ve listed their average income, employment, and racial diversity so that you have a glimpse of the potential costs and tenant management needed.

Tenant Demographic: C+

Average Income: Niche reports that the median household income of residents in LaSalle Gardens ranges from just above $25,000 per month to $150,000. Most of them fall in the higher range, which is closer to the city average of $30,000 per month.

Areavibes provides similar data, where the median household income is $25,774 compared to the city average of $26,249. And the median income per capita in LaSalle Gardens is $14,753 compared to the City of Detroit’s average of $15,562.

As with anything, we suggest that you screen prospects and accept tenants who have a monthly income of at least 3x more than the rent you plan to charge.

Unemployment Rate: Areavibes also reports that the unemployment rate in LaSalle Gardens is 12.5%, which is slightly higher than the city rate of 11.9%. This information might still reflect the challenges that the global COVID-19 pandemic has brought upon us, however, so should be taken with a grain of salt.

Diversity: See below for Niche’s breakdown of the racial diversity among LaSalle Gardens residents:

Source: Niche

Neighborhood Livability: A-

Aside from the tenant pool, you also need to consider the overall livability of the neighborhood. As a rental investor, you want to purchase properties in locations that attract high-quality tenants. These are the ones who’ll take care of your property, pay rent on time, and abide by the lease agreement. All this ultimately increases your chances of securing tenants that are responsible.

Plus, it doesn’t make sense to invest in a neighborhood where people don’t want to reside. You’ll have to deal with high vacancy rates, among other factors that make the place challenging to live in like high crime rates, high cost of living, and a lack of good amenities.

Is LaSalle Gardens an attractive place to live in? Let’s take a look at what life is like here:

Crime and Safety: According to Niche, the crime rate in LaSalle Gardens is significantly higher than the national average. However, looking at the heat map from NeighborhoodScout, the crime in LaSalle Gardens is relatively average compared to its surrounding areas:

Source: NeighborhoodScout

Transportation and Walkability: Areavibes’ survey results show that LaSalle Gardens has public transit available. Restaurants and grocery stores are also within walking distance and most streets have sidewalks for locals to walk around safely.

Trulia’s survey also shows similar results, where 83% of respondents said there are sidewalks. Although 70% also said that a car is needed to get around easily, locals also said finding parking is easy.

Schools: LaSalle Gardens is part of the City of Detroit’s unified school district. According to Niche’s list of “2022 Best Schools in LaSalle Gardens,” residents can enroll their children in the following schools:

1. University Liggett School (PK, K-12)

2. University of Detroit Jesuit High School and Academy (7-12)

3. Southfield Christian School (PK, K-12)

4. Bishop Foley Catholic High School (9-12)

5. Cabrini High School (9-12)

6. Inter-City Baptist School (K-12)

7. Cass Technical High School (9-12)

With many residents living as family households, it’s safe to assume that there are a lot of families with children that’ll find LaSalle Gardens a good place to live. You can consider investing in larger homes with more than two bedrooms to attract these kinds of tenants—especially if you purchase a property close to any of the above schools.

To add, Niche also included LaSalle Gardens in their list of “Neighborhoods with the Lowest Cost of Living in Detroit.” This means that the neighborhood attracts tenants seeking a more affordable lifestyle.

Overall score: B+

Based on all the research we’ve done and our personal knowledge of the area, we’ve scored LaSalle Gardens a “B+” for rental property investing.

This score is driven by the following key factors:

1. The Rent-to-Price Ratio in LaSalle Gardens is 1.13%, which means you’ll easily reap the famed cash flow that the Detroit market is known for, and earn back your investment in no time.

2. Larger properties like townhouses and 2-unit structures are more affordable in LaSalle Gardens than the rest of the city, being 72.77% and 36.11% cheaper, respectively. You can purchase bigger homes here with the same capital funds.

3. The neighborhood is an attractive area, especially as it’s in close proximity to Boston Edison and New Center. Tenants who can’t afford these 2 more expensive neighborhoods will certainly consider LaSalle Gardens an alternative.

We’re expecting LaSalle Gardens properties to increase in price pretty soon given their favorable factors. Still, it should be said that all property scoring systems are inevitably subjective, so we strongly suggest that you visit the area for yourself. Take this guide as a kickstart to your own evaluation.

Ultimately, LaSalle Gardens is an up-and-coming neighborhood right smack in the middle of the City of Detroit. All rental property investors should definitely consider this neighborhood, especially if they want to reap the famed returns of the Detroit real estate market.

Should you need more help, feel free to contact our team at Logical Property Management!

We are more than willing to help aspiring investors dip their feet into the City of Detroit.

*Please keep in mind that all comments & grades are relative to Detroit and are subjective.

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This guide is part of our ongoing Deep Dive series into Detroit neighborhoods and the cities surrounding Motor City. We’re certainly not stopping with LaSalle Gardens when there are so many other good areas to consider!

If you have a specific area you’d like us to prioritize, leave a comment below, and we’ll meet your request as soon as we can.