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All Forum Posts by: Joe Hammel

Joe Hammel has started 7 posts and replied 601 times.

Post: Looking to invest. Not very many options locally.

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

Cashflowing on your first househack while still living there is awesome! Since you mentioned living in a pretty remote area, needing to stay there for work, and wanting to househack, you’ve got some fairly tight parameters when you’re aiming for instant cashflow. Right off the bat, your inventory will already be limited since you’re looking for a multifamily property in a more rural setting, so it may take longer for something to hit the market that meets your househacking criteria. The other aspect to consider is that the market has changed significantly from 2021, so finding a househack with year one cashflow won’t be as easy now as it was then. However, househacking is still one of my favorite investing strategies because it’s such a smart long-term equity play. Especially with you only being 25, if you hold on to that multifamily and let it appreciate over time, you’ll gain a ton of equity from that investment. While it’s not year one cashflow, it’s still a great investment overall, which is why the “perfect deal” is so subjective to each individual investor’s goals.

If your goals right now are more geared towards cashflow, then investing OOS could be a great next move for you. OOS investing can come with more risk, so you’ll need to do your own due diligence to pick a market that best suits your goals, and find a team that you trust to help you execute and provide thorough information about that market. One thing you can do is find a local investor group after choosing your market and gain more insight from locals already investing in the area(s) you’re interested in. As you’re researching markets, it really depends on what your strategy and goals are. For example, if you’re looking for immediate cashflow vs longterm appreciation vs sweat equity, then that will help determine what market will fit your needs the best.

Anyway, here is some info we put together on the suburbs of Detroit that seems to help when OOS investors are trying to decide on which market to invest in:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

Post: Deal Analysis- everything is a negative cash flow

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

The budget you're using seems reasonable, and it’s great that you’re using the BP calculators when analyzing deals. What defines a “good” deal is pretty subjective to each individual investor and their goals (cashflow, sweat equity, long-term appreciation, etc.) If your goal is instant monthly cashflow, which it sounds like yours is, then it’s important to look at the big picture of each deal and all the factors that come into play:

  • The market: If you’re looking in A class areas, it'll be harder to find deals that cashflow. The higher the property class, the harder it’ll be to cashflow simply because of the price/rent ratio. The property taxes in those higher grade areas are usually pretty high for an investor, which adds additional strain to your potential cashflow there. While it’s still possible, it’s more difficult to find deals that pencil out in those markets. You mentioned looking OOS, which could be a great option for you being located in California. 
  • Reserves: I'm not sure how much exactly you've been budgeting out for your maintenance, capex, and vacancy, but all of those things will factor into your ability to cashflow as well.
  • Appreciation/Total ROI: Appreciation goes hand-in-hand with the market you pick and is one factor that plays into your total ROI. If that market has been seeing steady year over year appreciation, then it can still be a good investment even if it's not necessarily cashflowing day one. Another factor to consider is if you're looking for something turnkey or if you're open to sweat equity.

While it can be difficult to find “good” deals in this market, it’s definitely not impossible if you know where to look. It comes down to give and take. If you’re not willing to sacrifice location, then your cashflow may suffer a bit at the beginning as you wait for longterm appreciation and rent growth. If you’re not willing to give up immediate cashflow, then you may need to be more flexible when picking your market. But it’s also important to note the other factors that can make a good deal too, besides just immediate cashflow.

Here’s how we typically run our deals in the Metro Detroit area to give you an example. If you do it right, it’s arguably the best market to invest:

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years. Here is a picture of my portfolio if you/anyone is curious.

Post: good locations to start doing research in

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666
Quote from @Sean Kaczmarczyk:
Quote from @Joe Hammel:

Investing out of state can definitely feel intimidating, especially if it’s your first time investing! It sounds like you’re already taking the right steps to educate yourself before taking that leap.

When it comes to building your team it comes down to your own due diligence. Once you pick a market, you’ll be able to look more into specific people/companies there. One thing you can do is find a local investor group after choosing your market and ask people in that group for feedback on anyone you’re thinking of working with.

As you’re researching markets, it really depends on what your strategy and goals are. For example, if you’re looking for immediate cashflow vs longterm appreciation vs sweat equity, then that will help determine what market will fit your needs the best.

Anyway, here is some info we put together on the suburbs of Detroit that seems to help when OOS investors are trying to decide on which market to invest in:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

 This is helpful to see @Joe Hammel. I have a few friends who have been in and around Michigan. it was one of the markets I looked at when I first started considering out-of-state investing and listening to the BiggerPockets podcasts. I would love to connect sometime to go over more of your experience if you are willing. Thank you again for the advice!


 Glad you found it helpful, Sean. Happy to connect!

Post: Yay or nay Boston Edison, Dexter Lynwood & Russell Woods?

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

It’s not quite as straightforward as listing a bunch of blocks to stay away from, since it’s so large and intricate. It’s more so, when looking at a specific property, reviewing the area and giving insight on yes/no it matches what you’re looking. (I have to word that a certain way to stay compliant)

We have some GCs we can recommend.

Have you tried the BP agent finder?

Post: good locations to start doing research in

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

Investing out of state can definitely feel intimidating, especially if it’s your first time investing! It sounds like you’re already taking the right steps to educate yourself before taking that leap.

When it comes to building your team it comes down to your own due diligence. Once you pick a market, you’ll be able to look more into specific people/companies there. One thing you can do is find a local investor group after choosing your market and ask people in that group for feedback on anyone you’re thinking of working with.

As you’re researching markets, it really depends on what your strategy and goals are. For example, if you’re looking for immediate cashflow vs longterm appreciation vs sweat equity, then that will help determine what market will fit your needs the best.

Anyway, here is some info we put together on the suburbs of Detroit that seems to help when OOS investors are trying to decide on which market to invest in:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

Post: HELP! - Partner and I have about $40k available for first investment

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

Sounds like you've done a great job of doing your research and leaning into the best investing strategy for your specific situation so far! Since you won't be relying on W-2 income, DSCR is definitely a good route for you and your partner. With the $40k cash you have, you're in a great position to start.

The next steps would be narrowing down your goals (monthly cashflow vs. long term appreciation vs. sweat equity, etc.), the best strategy for achieving your specific goals, and the markets that work for you and your numbers.

Since you’re looking out of state, here’s some info we’ve put together on the suburbs of Detroit that seems to help when OOS investors are trying to decide on which market to invest in:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

Post: Out of state cash flowing rental markets

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666
Quote from @Dan H.:
Quote from @Joe Hammel:
Quote from @Dan H.:
Quote from @Joe Hammel:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

On a sustained basis your cash flow is a farce.   The vacancy rate you use in about 25% of the Detroit city vacancy rate.  Note sure how you derive your maintenance/cap ex but I am certain it did not use lifespan and replacement costs of all the properties components.

good luck

None of my properties in my personal portfolio are in Detroit Proper. They’re in cities on the outskirts of Detroit. It's why I reference “Metro Detroit”.


I’m an above average manager keeping my personal vacancy rate down rather than using a large poor quality PM which drives the average vacancy significantly higher.


You’re incorrect in your assumption that I did not consider lifespan and replacement costs. I have done that math. While it’s impossible to estimate perfectly, I’ve used what I feel is a good number for my specific portfolio. It changes based on property size, age, components age, condition, skill/knowledge on repairs, resources, etc.


I’m a licensed builder with a general contracting company which keeps those costs lower for my portfolio as well.


I know hundreds of other efficient contractors further driving my costs below average (I happily share this list with investors as well)


My personal portfolio is simply an example of what’s possible. It’s on the individual and their portfolio to find their exact numbers.


I hope this context helps.

>I’m an above average manager keeping my personal vacancy rate down rather than using a large poor quality PM which drives the average vacancy significantly higher.

I agree it is possible to do better than the average vacancy rate (which is over 20% in 2023 for the city of Detroit https://smartasset.com/data-studies/vacant-houses-2023), but 1) vacancy rates do not include delinquent rents and I see no entry in your spreadsheet for delinquent rents and Detroit is high on list of delinquency rents 2) vacancy rates not include tenant turnover time 3) your underwriting should be conservative.  No 3rd party would consider using 5% in market where the city’s vacancy rate is over 20%.

 >You’re incorrect in your assumption that I did not consider lifespan and replacement costs. I have done that math

Then you did it wrong.  You have a maintenance/cap ex as low as $86/month.

What lifespan did you put on the unit’s roof?  What cost for the roof?  If we use 20 year asphalt shingle lifespan and $5k cost for a little unit (this is a cheap roof replacement).  This equates to $20.83/month just for the roof.  Do this for all items. I guarantee that your total sustained cost will be much higher than $86/month.   I have seen the AOA maintenance numbers and in large count apartments their maintenance (not including items outside the apartment) are about what you are using as your total including your exterior.   I suspect that $86/month is over $300/month maintenance/cap ex sustained cost.

By the way I have my own maintenance staff.   I employ 2 people as their primary employer and another 3 part time.   I understand it is possible to get cheaper labor than LL that have an unrelated w2 and have to hire contractors for virtually everything.

how about you post your spreadsheet of costs and lifespan similar to what you did for your cash flow?  

Good luck


Feels kinda like you’re more interested in just attacking me, Dan. I'm not sure why. It’s difficult to have a constructive conversation when you clearly don’t read or acknowledge my responses. You do you buddy. Best of luck.

Post: Out of state cash flowing rental markets

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666
Quote from @Dan H.:
Quote from @Joe Hammel:

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

On a sustained basis your cash flow is a farce.   The vacancy rate you use in about 25% of the Detroit city vacancy rate.  Note sure how you derive your maintenance/cap ex but I am certain it did not use lifespan and replacement costs of all the properties components.

good luck

None of my properties in my personal portfolio are in Detroit Proper. They’re in cities on the outskirts of Detroit. It's why I reference “Metro Detroit”.


I’m an above average manager keeping my personal vacancy rate down rather than using a large poor quality PM which drives the average vacancy significantly higher.


You’re incorrect in your assumption that I did not consider lifespan and replacement costs. I have done that math. While it’s impossible to estimate perfectly, I’ve used what I feel is a good number for my specific portfolio. It changes based on property size, age, components age, condition, skill/knowledge on repairs, resources, etc.


I’m a licensed builder with a general contracting company which keeps those costs lower for my portfolio as well.


I know hundreds of other efficient contractors further driving my costs below average (I happily share this list with investors as well)


My personal portfolio is simply an example of what’s possible. It’s on the individual and their portfolio to find their exact numbers.


I hope this context helps.

Post: Looking for our first investment property

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

Building out your core four and the rest of your network is a great first step, and a hugely important one at that. You and your partner being local contractors definitely puts you at an advantage for the way you’re looking to get into investing.

To give some insight on some of your questions:

  • As I’m sure you know, Detroit is extremely block by block. With you specifically looking for a distressed property, finding the right area will be very nuanced. Basically, you’re looking for the worst house in the best neighborhood. So you’ll want to look at the values of the surrounding properties, drive the area, and do as much due diligence as you can. A good agent should be fluent in the market and able to give you some data on that as well.
  • To vet deals, the more data you can get the better. Once you've seen and analyzed a handful of deals in neighborhoods you like, you'll have a better idea of what the purchase price, cashflow, and ARV is going to look like for you. We use the BP calculator as well as a custom total ROI calculator to run numbers.
  • Like I mentioned, building a strong team will be the foundation of your investment. It seems like you’re already doing your due diligence on here and asking the right questions to get you started. You could also join some local investor groups for more insight and recommendations.
  • Any investment is going to come with some level of risk, and it’s impossible to avoid making mistakes altogether, especially with a rehab. You’re going to have things come up. That being said, as long as you have a strong team, do your due diligence, and find the right deal for you in a location that works, then you’ve already won most of the battle right there. You’ll be 10x more equipped to deal with whatever comes up with having that solid foundation. The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those. We have found what works and repeat it as much as funds allow, which helps avoid a lot of common “rookie” mistakes.

We have a lot of clients having success in the suburbs and ring cities:

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

Post: Out of state cash flowing rental markets

Joe Hammel
Posted
  • Real Estate Agent
  • Metro Detroit, MI
  • Posts 611
  • Votes 666

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I personally make well over $100k/yr cash flow from my portfolio here. All of which, I’ve purchased within the last 5 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 4-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

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