Detroit as a market can be tricky for the novice investor. For the well planned it is the ideal place to Cash flow. Mum and Dad Investors who have executed their strategy very well own 50-100 rentals and have created a solid income stream. It depends on the team that they are partnering with on the ground. Whilst there are many good ones, there are some that bring disrepute to the Detroit investor market place. Location is the key. Bad areas attract bad tenants. And we will have a continous stream of bad news and headaches for the investors. A quick look at the market where a Good property in a Good location can be purchased for the following numbers:
Price - 45,000
Rent - 850 p.m (10,200 p.a.)
Management fee - 816 p.a. (8% management fee)
City Taxes - 1150 p.a.
Insurance - 560 p.a.
Maintenance - 600 p.a. (American Home Shield Warranty)
Free Cash Flow - 7074 p.a.
A word of caution - This could be an ideal situation.
But many fail to see this outcome as they are working with the wrong property management and do not have a process in place for rent collections. As a landlord you would need your PM sending out the 7 day late payment notices as a set process and rule of thumb. Communication with the tenant is critical.
