Deep Dive into Detroit Neighborhoods: Cornerstone Village

Source: Zillow listing

Whether you’re new to the real estate scene or not, you’ve likely heard of the famous Detroit market that’s filled with rental investment opportunities for you to grab. The market has wildly affordable properties at a fraction of the national average purchase price (shocking investors from New York, California, and Boston), and there is a booming demand for single-family homes in this area that’s not going anywhere.

The City of Detroit is undoubtedly one of the nation's top destinations for rental investors to yield the highest cash flow, often also enjoying significant equity gains the longer they hold on to their properties.

That being said, there’s a catch. The city is exceptionally diverse. There are a total of 105 neighborhoods, all with varying sub-areas, tenant demographics, and property conditions. Because of this, both newbie and mogul investors need expert knowledge and guidance to navigate the risks within the city.

Only with the right information can you reap the famed returns in the Detroit rental market.

Not to worry, though—we’ve got you covered. This article is part of our ongoing Deep Dive into Detroit Neighborhoods series that provides investors with an in-depth view of the Detroit housing market. We’ve been operating in this area as a property management company for more than two decades, and are more than willing to share all the things we’ve learned for your success in this hot market.

The key factors we’ll focus on are the following:

• - The expected returns from rental properties
• - The types of tenants to expect
• - The kind of property management required

These contribute the most to your rental investment success, and you’ll find all of them below. Are you ready to dive into a City of Detroit neighborhood? 

Let’s get to it.

City of Detroit

Before we get into the details, let’s look at the big picture. The City of Detroit is divided into 11 regions:

Source: Wikipedia.com

These 11 regions have distinct features and personalities. For example, Downtown Detroit is the central business district with a couple of residential areas. Midtown has a mix of business, residential, university, and cultural areas. New Center is a historic district with residential and commercial spots. And the East Side, which is further divided into Upper East, Central East, and Lower East, has most of the city’s prominent attractions surrounded by residential areas.

Cornerstone Village, in particular, is located in the Upper East area. Here’s a map to help you visualize where the neighborhood is in the City of Detroit:

Source: Loveland’s Detroit Neighborhoods Map

Our Focus: Cornerstone Neighborhood

Our featured neighborhood for today is identified with the red marker above. You may have noticed that it’s where Balduck Hill used to be—this is because Balduck Hill is the former name of Cornerstone Village. The neighborhood changed its name to reflect its location as the easternmost corner of the city. (The famous Balduck Park still retained its name, however.)

Cornerstone Village borders Grosse Pointe, Grosse Pointe Farms, Grosse Pointe Woods, and Harper Woods. It has a population of around 8,947. It’s not a large location, either, so the population density here is certainly on the higher end of the spectrum.

Source: Google Maps

Cornerstone Village is a bedroom community with diverse housing stock. There is also a commercial corridor framework, recreation facilities, and infrastructure assets that support its vibrant, tight-knit community that many locals happily call home.

In recent years, the City of Detroit Housing and Revitalization Department is conducting comprehensive revitalization plans, issuing requests to improve the quality of life, strengthen economic development, provide new housing choices, and elevate the overall vibrancy in Cornerstone Village.

Moreover, Cornerstone Village is close to Grosse Pointe, which is one of the most beautiful and highly-rated places to live in the state. Tenants and investors who are priced out of the expensive neighborhood are looking to nearby places like Cornerstone Village to take advantage of the growing economy and improve livability in the City of Detroit.

With ‌these factors, is Cornerstone Village a good place to invest for rental property investors like you? Let’s take a closer look at the numbers to find out.

Rents & Rent-To-Price Ratio (The 1% Rule)

According to Niche, the median monthly rent across property types in Cornerstone Village is $952. This amount is 15.53% higher than the City of Detroit’s median rent, which is $824. This is good news for you, as it means that you can potentially charge higher rent here than in other nearby neighborhoods.

Looking at current data on average rent listed and Zillow rent estimates, we can see that Niche’s median amount is actually understated. In reality, many investors are charging higher than the $1000-mark for their three-bedroom Cornerstone Village homes:

Source: Zillow listings as of June 2022

Now we can’t just look at the rent averages without comparing them to the average property price. Doing so is the only way we can check if the average rent is an amount that’ll give you enough cash flow and returns. We’ll use this recently sold Cornerstone Village property to do the math:

Source: Recently sold Zillow listing

At the purchase price of $115,000 and a Rent Zestimate of $1,158, the rent-to-price ratio is a favorable 1.0%. This is exactly what the real estate industry considers excellent for generating cash flow, so investors seeking stable monthly rental income should certainly consider Cornerstone Village properties.

Property Values and Appreciation Trends

Niche says that the median home value in Cornerstone Village is $46,929. This may also be understated, however, as Redfin reports that the price is actually closer to $78,000. Moreover, this price has been growing by 30% year-over-year, and will probably continue to increase in the future:

Source: Redfin

Moreover, Redfin deems Cornerstone Village as a “Somewhat Competitive” housing market, where some homes get multiple offers, can sell for list price, and will go pending in around 7 to 19 days. It’s not the most in-demand housing market, but it’s still a good place to find lucrative opportunities.

Neighborhood, Properties & Tenants

Let’s now move on to the livability of the neighborhood, the general property conditions, and the tenant demographics of Cornerstone Village. These factors are important to consider, as they’ll determine the overall appeal of the area, the property maintenance you’ll have to deal with, and the potential renters you’ll have once you put your rental on the market.

Quality of Life in the Neighborhood

As an investor, you’ll want to invest in a neighborhood that attracts the kinds of tenants you’ll want to leave your hard-earned assets with. A high-quality neighborhood will give you higher-quality tenants that are most responsible for paying rent and maintaining the property, while the opposite is having renters that might not even follow the lease agreement.

Here’s what life is like in Cornerstone Village:

Local Economy

Cornerstone Village is part of the East Side of the City of Detroit, where the area fared reasonably well during the late 20th century, being a popular spot for city workers and police members. Of course, the neighborhood also had its economic downfall during the great recession. Businesses closed, there were high foreclosure rates, and the once vibrant blocks were plagued with blight.

Since then, however, Cornerstone Village has been able to successfully capitalize on its location, being near Grosse Pointe and home to the St. John Ascension Hospital that spurred new developments. Popular chains like Chipotle, LA Fitness, and Starbucks are now along Mack on the Detroit side, E. Warren is seeing more life as the neighborhood’s commercial corridor, Moross Greenway is now completed, and there’s the new magnet school called East English Village Preparatory Academy.

Redevelopment and renewals are all over the place, and Cornerstone Village is well on its way to becoming a bustling area on the East Side of the City of Detroit.

Crime and Safety

Based on Niche’s data, Cornerstone Village isn’t the safest place to live. However, it’s not the most dangerous neighborhood in the City of Detroit. As with any neighborhood in this diverse city, Cornerstone Village’s crime rates will also greatly vary from one street to another.

Being a real estate investor, you should conduct thorough research on crime and safety rates at a small scale, depending on where your property is located. You can find a lovely, safe home in a block deemed “unsafe,” and be confident that you’re investing in a place that’ll attract responsible tenants.

School Rankings

The top public schools that serve Cornerstone Village are the following:

• - George Defer Elementary School (Niche score A)
• - John Monteith Elementary School (Niche score A-)
• - Stevens T. Mason Elementary School (Niche score A-)
• - Cass Technical High School (Niche score B+)
• - Renaissance High School (Niche score B)

Given that the higher-rated schools are those of the elementary level, you’ll do yourself a favor by attracting families with younger children. It’ll also be wise to invest in properties that are as near as possible to these schools, so tenant families will have the additional benefit of being near to their chosen school.

Livability

Niche gave Cornerstone Village a couple of awards, including being the 51st most diverse neighborhood, the 55th best neighborhood for young professionals, and the 64th neighborhood with the lowest cost of living in the City of Detroit (out of 164 neighborhoods in Niche’s list).

In other words, Cornerstone Village attracts residents looking for an affordable place to call home, raise a family, or build a career. You’ll likely have a tenant pool of young professional workers seeking a rental home that fits within their budget.

Moreover, Cornerstone Village is very near the Grosse Pointe neighborhood—the 5th best place to live in Wayne County. Any tenant priced out of the expensive Grosse Pointe will likely look to Cornerstone Village for a more affordable option without straying too far from beautiful neighborhoods.

Overall Neighborhood Class: B-

Average Property Age & Condition

Average property age: 70 years

Unfortunately, there is no information on general property conditions that are specific to Cornerstone Village. Instead, we’ll look at the general property conditions of the City of Detroit, which reflects the majority of the properties you’ll find in Cornerstone Village.

The average property age in the City of Detroit is 70 years old. Here is a more comprehensive breakdown of housing by year built from Bestplaces, where you can see that the majority of the homes were built in 1939 or earlier:

Source: Bestplaces

Now, property age is subjective. However, anything older than 50 years old is generally considered “old” in the industry. Still, you can certainly find beautiful homes that are impeccably well-maintained in Cornerstone Village. (Just take a look at this stunning brick colonial home in the subdivision but with a Grosse Pointe zip code!)

Nevertheless, here are some common old-house problems you should prepare 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

It’s not a comprehensive list, but it should give you a glimpse of the long list of issues you may have to deal with when restoring an older property in Cornerstone Village to rental standards.

Overall Average Building Class: C+

Tenant Demographics

Compared to other types of real estate investments, rental properties require a thorough evaluation of an area’s potential tenant pool. After all, you don’t want to invest a ton of money in a property only to realize that the locals there won’t have the income or employment stability to pay monthly rent!

So, here are the key factors that contribute the most to the tenant class and demographics. Remember that some of these factors may still be recovering from the recent COVID-19 pandemic, so take them with a grain of salt.

Income

According to Niche, the median household income of Cornerstone Village residents is $32,734. This figure is slightly higher than the City of Detroit’s median of $30,894 per household, which means that you can likely find tenants in Cornerstone Village that can afford to pay higher rent.

Just keep in mind to follow the industry standard of rent being not more than 30% of the tenant’s monthly income, to ensure that you reap your monthly cash flow consistently.

Unemployment

There’s unfortunately no data regarding the unemployment rate in Cornerstone Village specifically. So we can assume instead that the rate falls around the city’s 11.9%. As always, ensure that the tenants you accept have stable jobs to pay rent and maintain the property well.

Education

Niche shows that there are more residents in Cornerstone Village that have some college or associate’s degree and a high school diploma or equivalent than in the City of Detroit. Here is the comparison:

Source: Niche

Higher education attainment means a higher chance of having well-paying jobs. In other words, it seems that Cornerstone Village residents can secure higher-paying jobs than the average local in the city, so you can potentially charge higher rent and be assured that the tenants can keep up with the payments.

Diversity

Here is a breakdown from Niche that shows the racial diversity in Cornerstone Village:

Source: Niche

In a nutshell, the tenant pool in Cornerstone Village earns more income and has higher educational attainment than the average resident in the City of Detroit. While the unemployment rate may make it more difficult for the tenants to secure jobs, make it a point to conduct thorough tenant screening for every applicant and you’ll find responsible and financially able tenants to reside on your property.

Rent-to-Income Ratios

Lastly, let’s check the rent-to-income ratio of the tenant pool in Cornerstone Village. With an average household income of $2,727 and an average rent of $952 per month, the rent-to-income ratio is 34.91%.

This is above the industry standard of ensuring that the tenant only sets aside a third of their income for rent, which means you can confidently charge the average rent amount and have a stable cash flow.

Overall Tenant Class: B-

Based on all the information you see in this evaluation and our experience as a property management company in Metro Detroit, we’re giving Cornerstone Village an overall score of “B-” for rental investing. Our score comes from the following key factors:

• - The rent-to-price ratio in Cornerstone Village is 1%, indicating a strong potential for generating stable cash flow from financially capable tenants.
• - The home values in Cornerstone Village may continue to rise in the following years, as the neighborhood already has a track record of consistent growth. This brings good opportunities for you to invest in equity gains on top of your cash flow.
• - Cornerstone Village locals have a higher average income and education attainment than the rest of the City of Detroit, attracting more tenants for you to secure as tenants.
• - Cornerstone Village is close to Grosse Pointe—a highly-rated place to live in the area. Tenants and investors priced out of the expensive neighborhood are looking to Cornerstone Village to take advantage of the improving livability in the city.

Investment Opportunity

Looking at all the information we’ve gathered, we see Cornerstone Village as a relatively good neighborhood for rental investors like you to find excellent opportunities to grow your portfolio.

If you’re still unsure of investing in the City of Detroit, reach out to our team of expert property managers for more guidance. We are more than willing to help you in your investment journey, having helped more than a handful of investors get their slice of the lucrative Detroit market successfully.