My wife and I have made a couple of trips to Detroit. There are a lot of good neighborhoods but, if you haven't been there, be wary of what someone is trying to sell you. It literally changes street to street. While you may be able to find a deal, find property management, good luck trying to find reliable and responsive contracting work. I'm not a fan of these services but, we received zero response from inquiries made on Thumbtack, Houzz, Home Advisor, etc. and there is very little online presence from contractors that handle metro Detroit. I'm assuming no one wants to provide the itemized estimate I've requested.
Also, I wouldn't explicitly cite this as evidence but, I've seen a lot of "deals" on the MLS that are rehabs that are half done and now the owner is trying to get out. No idea what the actual reason is but, if they weren't able to follow through, do you want to take on that risk?
Turnkey companies have people they work with but, they typically guard the people they work with so they can charge additional fees (obviously). The problem is you don't know if you're getting quality, licensed work or whoever was in the Home Depot lot that day. We saw really bad work when we did a tour with one turnkey company there - not what I would want for a home I would want to own - hoping to achieve appreciation - and not the kind of work that would attract the quality of tenant that we're personally looking for.
Also, it's important to consider the micro/macro factors that introduce risk. There's not a lot of money for realtors in these $25-50K deals so you'll need to find someone really hungry who will really give your deal full attention. You'll likely need to find someone who's offering additional services to make it worth their while and hope that they don't get distracted by the next investor with a stack of cash burning a hole in their pocket.
As pointed out by a colleague, there is a LOT of inventory there. Investors are coming in globally for the promise of cheap homes that rent for $700-900. What's likely not part of the sales pitch is that rents are rising faster than incomes (I wonder why?). We're seeing some evidence of potential economic instability nationally (i.e. stock market correction) that may affect an area that's still in recovery. If the population is declining as some in this threat have argued, is the timing right to invest with the additional instability that an election year brings?
I think there was a time when you could buy an amazing house in a great neighborhood for $20-30K and see $100,000 appreciation - I have a few of neighborhoods in mind - but, I think the market is starting to level out at this point. There's no evidence that price per square foot has increased dramatically - consistently - over the last three years within the better neighborhoods we've been looking in. MLS listings are artificially high in my opinion. You really need a great wholesaler to bring you a great deal.
All that being said, I think there is opportunity in Detroit but you better have a good team in place and you better have a great grasp of where you're investing. I would question why people are so ready to promote Detroit as the next gold rush if they're already making so much money there - I would argue they need to keep the money to keep flowing. If that's potentially true, you should ask what the nature of the demand is - is it organic and sustainable or is it being driven by speculation? Why would you want to live in Detroit? What is there (employer mix, entertainment, quality of life) that would provide value to you as a resident that supports long-term sustainability and growth? I believe long-term that great ROI is possible but, it could be expensive in the short-term if you don't invest with eyes wide open. Just because you read a book on long-distance real estate investing, it doesn't mean that you can easily execute that strategy in Detroit.
