Metro Detroit Cities Deep Dive: River Rouge

Alt-Text: Part of Ford’s complex in River Rouge, Michigan

Welcome back to our Deep Dive series on all the neighborhoods and cities in Metro Detroit! If you’re new to the series, this is where we explore the rental property investment viability across the metropolitan area of Macomb, Oakland, and Wayne counties—famous for having affordable housing stock.

Why are we writing these articles, you may ask?

Well, the Metro Detroit market can be overwhelming, with 185 cities and 290 neighborhoods in the area, all with their own tenant demographics, property management requirements, property conditions, and returns on investment. Given its diversity, it’s difficult to sift through your options here to find the best investment opportunities, especially if you’re a newcomer to the area.

So, using our decades of experience as a local property management company, we’ve decided to create this ongoing series of in-depth research to evaluate the strengths and weaknesses of each area—all to direct you towards the next best spot to pour your hard-earned money in.

We’ll show you where you should look, and where you should avoid (or at least exercise extreme caution).

Moreover, we’ve prioritized the factors that contribute the most to your success as a rental property investor, so it’s easier for you to determine if an area is good or not.

Are you ready to dive into our featured area today? For this installment, we’re taking a look at River Rouge—named after the actual river that flows along the city’s northern border and into the Detroit River.

Source: Google Maps

River Rouge

River Rouge is a small city in Wayne County, Michigan. It has a population of 7,903 living in 4 constituent neighborhoods. The city’s total area is 3.24 square miles (8.39km2), where 2.65 square miles (6.86 km2) is land and the rest is water. Moreover, a small 0.93 square miles (2.41 km2) of the city’s land area is the unpopulated and industrialized Zug Island.

Now, River Rouge sits right below the City of Detroit, making it a “Ring City” in our terms. This is what we call the cities that border the City of Detroit in a semicircle, and have affordable properties without most of the usual risks associated with Detroit investing.

While the City of Detroit is on the northern border of River Rouge, the Detroit River is on its eastern side. You can visualize this better in the map below (we’ve added an arrow for easy reference):

Map showing Tri-County Metro Detroit Cities

Do you need a bit more help? Not a problem, here is a list of all the cities in the Metro Detroit area. Those that are highlighted in green are Ring Cities like River Rouge, and those with hyperlinks will take you to our previous Deep Dive installments:

Macomb County

Oakland County

Wayne County

Center Line

Auburn Hills

Allen Park

Clinton Township

Berkley

Dearborn

Eastpointe

Beverly Hills

Dearborn Heights

Fraser

Bingham Farms

Detroit

Harrison Township

Birmingham

Ecorse

Macomb

Bloomfield Hills

Garden City

Mt Clemens

Bloomfield Township

Grosse Pointe

Roseville

Clarkston

Grosse Pointe Farms

St Clair Shores

Clawson

Grosse Pointe Park

Sterling Heights

Commerce Township

Grosse Pointe Shores

Utica

Farmington

Grosse Pointe Woods

Shelby

Farmington Hills

Hamtramck

Warren

Ferndale

Harper Woods

Franklin

Highland Park

Hazel Park

Inkster

Huntington Woods

Lincoln Park

Pleasant Ridge

Livonia

Keego Harbor

Melvindale

Lathrup Village

Northville

Madison Heights

Plymouth

Novi

Redford Township

Oak Park

River Rouge

Orchard Lake / Oakland Township

Southgate

Pleasant Ridge

Taylor

Pontiac

Westland

Rochester

Wyandotte

Royal Oak

Southfield

Sylvan Lake

Troy

Walled Lake

Waterford

West Bloomfield

The Downriver Suburb of Detroit

The City of River Rouge was officially founded in 1922. But even before then, it was already known as “A Bicentennial City,” and throughout its history, River Rouge was a key part of Metro Detroit’s industrial scene. It was able to become so, thanks to the bordering waterways of the Detroit and Rouge Rivers. At the mouth of the River Rouge is Zug Island, where iron and steel are manufactured.

In 2015, Michigan Governor Rick Snyder selected the City of River Rouge as one of the 10 “Rising Tide” communities in the state and scheduled the city to benefit from the Michigan Department of Talent and Economic Development’s resources and efforts. Moreover, the city is seeing redevelopments in its existing housing stock.

Today, much of River Rouge’s housing stock still holds many properties that were built before World War II, making it one of Wayne County’s older and more historic cities.

Its residents are largely blue-collar workers, where 40.82% have blue-collar occupations. This is significantly higher than the country’s average of 27.7%. Overall, River Rouge is a city of office and administrative support, healthcare support services, and food industry services.

Given its older housing stock and industrial roots, is River Rouge a good place to invest in rental homes?

Let’s take a closer look.

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

Based on Niche, the average rent across all property types in River Rouge is $585 per month. We can break this number down to bedroom sizes, where we see that the rent amounts in River Rouge is significantly lower than the rest of Metro Detroit, Michigan, and the US:

Source: Bestplaces

If we were to compare the data to current listings on Zillow, we can see that 2 out of 4 listings are for 3-bedroom homes. Moreover, we can see that the rent averages given by Bestplaces are actually lower than reality (or at least what current owners are asking). This is good news, because it means investors can potentially charge higher:

Source: Listings on Zillow as of November 2021

Number of Rooms

Property Size (sqft)

Est. Monthly Rent

1-bedroom, 1 bathroom

600

$700

2-bedroom, 1 bathroom

650

$650

3-bedroom, 1 bathroom

1,056

$995

3-bedroom, 1 bathroom

n/a

$1,300

So, let’s use the rent-to-price ratio calculation to see if these homes can generate good cash flow. The industry standard is to ensure that the monthly rent is equal or higher than 1% of the property price.

The listing below is a 2-bedroom single-family residence in River Rouge. With a rent estimate of $830 and a property price of $54,900, the ratio comes in at 1.5%. This is pretty impressive and reflective of other Ring Cities around the City of Detroit, where the average ranges from 1.0% to 1.5%.

Source: Listing on Zillow as of November 2021

House Value and Appreciation

According to Niche, the average house value in River Rouge is $36,300. But Zillow reports twice this amount, where the typical home value of homes in River Rouge is $64,237. Plus, it seems like the upward trend will continue to skyrocket in the years to come:

Source: Zillow

Redfin also has their own data. According to their insights, River Rouge homes are sold for $39,800, which is a decline of 11.4% since last year. Some homes get multiple offers, but most of them sell 4% below list price and go pending after a month.

Given this, Redfin gave Rive Rouge a Compete Score of 47, which equates to a “Somewhat Competitive” housing market. It’s not exactly the hottest market out there for investors.

According to NeighborhoodScout, single-family detached homes are the most common housing type in River Rouge, accounting for more than half (66.2%) of the city’s homes. Others include duplexes, small apartments (22.44%), large apartments (9.58%), and row houses, and other attached homes (1.39%).

Looking at actual listings, we see 2-bedroom, 3-bedroom, and 4-bedroom homes available on Zillow. They are priced from $36,000 to $125,000 depending on the kind of property you’re looking for. Either way, River Rouge homes lean towards the more affordable end of the spectrum, where we see multiple homes below the $100,000 mark:

Source: Listings on Zillow as of November 2021

In terms of appreciation, River Rouge is one of the top 20% nationally for property appreciation rates—higher than most communities in the US. Its real estate appreciated 72.34% over the past decade, coming in at an average annual home appreciation rate of 5.59%.

NeighborhoodScout shows which areas in River Rouge appreciate the highest—but for me mindful that Zug Island is heavily industrialized and nicknamed “The Dirtiest Square Mile in Michigan,” so it’s not a residential area:

Source: NeighborhoodScout

Quality of Tenants, Properties, and Living

Now that we’ve discussed the financial viability of homes in River Rouge, let’s look at the quality of tenants, properties, and living in the city. These factors are important for a rental property investor, as they help determine the type of tenants to expect, the property conditions to bring up or maintain, and the attraction of the neighborhood you’ll invest in.

Average Property Class and Condition: C

Average property age: 78 years

Bestplaces reports that more than half (51%) of River Rouge properties were built in 1939 or earlier. Only a mere handful was built in 1970 and later. Given that the industry standard for “old homes” is any properties that are older than 50 years old, you will certainly see many old homes in River Rouge:

Source: Bestplaces

Old doesn’t always mean bad. But it does mean high maintenance. River Rouge homes are an average of 78 years old, so be prepared to handle major renovations to bring your investments up to rental standards. You might come across a few newly-refurbished homes, but you’ll still need to conduct careful budgeting and analysis before purchasing anything in this older housing stock.

Quality of Life in the Neighborhood: C-

Let’s see if River Rouge will attract high-quality tenants. After all, tenants are the lifeline of every rental property investment. Securing responsible tenants means you’ll have renters who’ll pay their rent consistently and take care of your place—maximizing the impact of your investment return.

The opposite is, of course, irresponsible tenants who will only drag your investment plans down. They’ll be a pain to manage, they’ll struggle to pay rent, and they’ll potentially trash your hard-earned assets.

Let’s see if River Rouge will live up to the demands of a successful investment.

Local Economy

We have to go back to discuss more Zug Island—the heavily industrialized site on the top of River Rouge. Zug Island played a key role in the City of Detroit’s industrial economy, but it’s recently being reevaluated for its polluted and concerning history.

Zug Island

Zug Island used to be a place where mill workers would beat their backs to manufacture steel, polluting the area and violating environmental rules for years. Nowadays, however, US Steel announced that it’ll idle a significant portion of its Detroit operation. Still, they’ll continue operations on the island at a diminished capacity, along with other facilities such as the EES Coke.

The industrial legacy continues, even with changes looming in the near future. In fact, there are rehabilitations going on in Grassy Island downstream, cleaning up the massive brownfield.

Future Developments

Leaders of the River Rouge River and Ecorse have recently taken a step towards implementing their West Jefferson Corridor Plan to revitalize both communities through the common main thoroughfare. They’re doing so by establishing a walkable business district along West Jefferson Avenue—a residential, mixed-use district on the riverfront.

To quote Marsh, Ecorse’s city administrator, “The goal is to get us on the path to sustainability. And how you do that is through community and economic development. It's the bloodline for any city." He continues to explain how the plan will harness the economic momentum, creating an attractive corridor in the area, especially since it’s only 15 minutes away from the City of Detroit.

Future Outlook

River Rouge has always been contested space. But it has never ignored its roots in the city's history, including its colonial conquest, democratic expansion, the transformation of nature into the world’s largest factory, class warfare between workers and capitalists, the triumph of democracy over National Socialism in World War II, and the recovery of the river from pollution and misuse.

School Rankings

River Rouge has its own school district, called River Rouge School District—a public school district that serves the entire city and northern city limits of Ecorse with more than 2,000 enrollments across 4 schools. These schools are the following:

•  -Ann Visger Elementary School
• - River Rouge STEM Academy
• - Clarence B. Sabbath Middle School
• - River Rouge High School

Moreover, Greatschools rated the majority of these schools as less than average (there weren't any reviews for Clarence B. Sabbath Middle School).

Crime and Safety

Unfortunately, River Rouge is familiar with high crime rates. While the northwest part of the city has fewer cases of crime, more crimes occur in River Rouge than other areas in Metro Detroit.

Crimegrade offers the following heat map that rates the safest and most dangerous areas in River Rouge:

Source: Crimegrade

While it’s true that the crime rate differs from one subarea to another, it goes without saying that River Rouge is experiencing a concerning crime rate nearly everywhere in the small city.

As a rental investor, you’ll have to pay an enormous amount of attention and care to ensure that your investment attracts responsible tenants and won’t be jeopardized by any type of crime. It won’t be easy, either.

Livability

Even with increasing economic developments and low living costs, River Rouge remains to have a Livability Score of 53 over 100, according to Areavibes. This ranking is considered “poor,” and it’s largely due to heightened crime, low employment prospects, poor housing conditions, and less-than-favorable school options. Unfortunately, it’s not a place that attracts a lot of good quality residents, as it seems.

Source: Bestplaces

Tenant Class and Demographics: C-

Lastly, we have to evaluate the potential tenant pool in River Rouge. As a rental investor, it’s crucial to secure quality tenants that will retain the value of your property. So, let’s look at the general demographics of the tenants you’ll get in River Rouge, based on the factors that contribute to your investment the most:

Income: The income in River Rouge is significantly lower than the greater Metro Detroit, Michigan, and the rest of the nation. This means you can only charge so high in terms of rent:

River Rouge

Metro Detroit

Michigan

United States

Income per Capita

$15,205

$31,140

$28,938

$31,177

Household Income

$29,671

$56,339

$52,668

$57,652

Source: Bestplaces

• Unemployment: The unemployment rate in River Rouge is higher than Metro Detroit and Michigan, but slightly lower than that of the nation. Still, this means your tenants might have an unstable job that will make it challenging for you to collect rent payments in time and in full:

River Rouge

Metro Detroit

Michigan

United States

Unemployment Rate

5.60%

4.50%

5.20%

6.00%

Recent Job Growth

-10.54%

-10.57%

-8.11%

-6.18%

Future Job Growth

35.02%

36.66%

32.48%

33.51%

Source: Bestplaces

• Education: Residents in River Rouge have achieved lower than its wider areas, which means they are likely less capable of securing high-paying jobs. It doesn’t apply to all tenants, but it’s certainly the average educational attainment of the area:

Source: Bestplaces

Diversity: Niche proves the following breakdown In terms of racial diversity in River Rouge:

Source: Niche

Based on the average income, unemployment rate, and level of educational attainment, River Rouge tenants may require a lot of management. You’ll need to hire a solid property management company to ensure that they pay rent on time, in full, and will take care of your rental home.

It won’t be easy if you’re planning to do all of these things by yourself.

Source:

Overall Score: C-

So, it goes without saying, River Rouge isn’t the best place to invest in rental properties. While the rent-to-price ratio, house value, and property appreciation rates are somewhat favorable, it’s difficult to manage rental properties here due to its current tenant and property base.

Now, things are different if you have a reliable, capable property management company to handle the daily ins and outs of the investment (such as our team in Logical Property Management!). But we’re not going to sugarcoat it for you—it’s going to take a lot of expertise, experience, and knowledge to protect your property and increase your returns on investments in River Rouge.

With this in mind, we suggest that you take the time to visit River Rouge yourself to conduct your own market research. In reality, all market analysis reports are somewhat subjective, so it’s still best to take this information as suggestions rather than hard facts.

Use this guide as a jump-off point to evaluate the city for yourself! You might find properties that go against all of this information and proves that River Rouge is a great rental property investment area—and we can’t wait to guide you in the process.

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Are you craving for more in-depth research on Metro Detroit neighborhoods and cities? Lucky for you, we’re not stopping with this installment! This article is part of our ongoing series on real estate investing in Metro Detroit. If you have a particular area you’d like us to prioritize, comment down below!

We’re not stopping until we’ve covered every nook and cranny of the famous Metro Detroit real estate market—one article at a time.