*OPINION PIECE*
My name is Ali Alshehmani. I am a real estate investor in Detroit. I've worked as a wholesaler, realtor, investor and run a real estate Facebook group which focuses on investment opportunities in Michigan.
So, why Detroit?
Detroit is a block by block city. In Detroit, there are many stories of success, but also many stories of failure. I hear stories about how people lost their money by buying properties in Detroit. To overcome this, you need to know the neighborhoods
Here's a breakdown of areas that would be ideal for fix and flips and or rentals
West Side Detroit Neighborhoods:
Bagley 48221
Fitzgerald/Marygrove: 48221
Aviation Sub: 48204
North Rosedale Park: 48219, 48223
Rosedale Park: 48223
Grantmont: 48223, 48227
Grantmont #1: 48223
Russell Woods: 48238
East English Village: 48224
Southwest Detroit: 48216, 48210
Redford: 48239, 48240
Warrendale:48228
I have given the neighborhoods and zip codes of the areas to be researched. Blocks do vary. But this is an overall guideline. Every home is a case by case situation.
Where to find the deals?
When working with real estate professionals, vet them accordingly. Work with wholesalers and realtors to build your acquisitions pipeline. For example, wholesalers are great because generally their properties are off market and you get them at discounted prices. If you're working with a wholesaler, however, make sure they hold the assignable interest. Don't string yourself on a daisy chain only to find out they were never direct. We can always make money, but we won't make our time back.
Run your comps... I see many times wholesalers, realtors, and new investors go way too far with their comps in Detroit. Generally speaking, I go 0.25 miles out when looking at comparables and I never cross main roads when I comp. Prescreen the property. Look the property up on Google Maps and see how the block looks. If there are many vacancies on the street this may be an indicator of a bad area.
Be conservative about your numbers... calculate worst case scenario. What's your minimum ROI after all expenses? By calculating this, you temper your ability to perform and are able to recognize viable opportunities.
If you're looking to build a rental portfolio in Detroit, I would suggest utilizing government programs like section 8. There are many risks in Detroit, the last thing an investor should worry about in Detroit is whether or not their rent is paid. Granted section 8 does have more red tape. But in my opinion, it is a much better alternative. When buying section 8 properties in Detroit, you can verify the rental amounts through the HAP contracts. Also when you do decide to sell your section 8 portfolio, your end buyer will be relieved to see that all the rents are in place and backed up.
This is just the tip of the iceberg. It is a quick guide to understanding the landscape that is Detroit.
