All Forum Posts by: Marvin Rice

I live just north of Detroit. I know landlords who do well with City rentals. They are specialists. They know how to pick the neighborhoods (there are very nice neighborhoods in Detroit), how to pick the tenants, how to collect rent, and how to protect the properties. I have had a couple instances when I found myself in possession of some Detroit rentals. I did not wish to manage them since they were in my IRA and though my property manager was pretty good I did not wish to hold these properties. I sold them quickly.

I live a few miles from Detroit. I could easily drive by my properties to check whether they were being managed well but I did not wish to. It is possible to run rentals profitably in the City from a distance but it is much more difficult. You must get a good property manager--there are some but how are you going to know if they are communicating in a timely manner. If they delay by a day (maybe less) removing the furnace and water heater when a tenant moves out it is likely that someone else will do it for you. Rental prep can be much more expensive and difficult in the City.

The Detroit suburbs offer much better scenarios. The homes cost more (they were quite inexpensive a few years ago but many areas have recovered strongly) but it is usually easier to sell them or refinance them if one wishes to. There are more well qualified tenants and I have never felt compelled to remove the furnace and place it in storage when I had a tenant move out of one of my suburban homes.

Be careful of those anecdotal stories of people killing it ($6k purchase, $1k/mo in rent). If you don't know the area yet, you're likely to end up getting fleeced. Not saying the above didn't actually happen, but there are far more stories of people losing their shirts than the other way around in Detroit, because so many out of town investors were trying to cash in on the low prices, and they relied on infrastructure they couldn't fully vet. 

You might be better off looking in places just north of Detroit (Eastpoint, Hazel Park, Ferndale, Oak Park, Royal Oak, Madison Heights, Warren, etc.) or south west (Dearborn, Wyandotte, Allen Park, Inkster, Taylor, Westland, etc.). Once you have a good sense for what it takes to do your own due diligence, then maybe revisit Detroit proper.  

I currently own a 2 bed one 1 bath. I bought it as a flip, replaced everything with high quality materials and put in back on the market. I thought with the beautiful reno and the price per foot I was asking compared to all the comps that it was a total win. But what I found was the market for 2 beds is very limited compared to 3. Families want 3 beds. I have had it on the market for 5 months. Hoping to unload it this spring and never buy one less than 3 beds again.

I personally like 2 bedroom single family homes.  I have 4 of them.  Older couples whose kids are grown seem to like them.  I've also gotten a couple small families.  But the older couples, they tend to not want to move.  That's a good thing.  Also they tend to be quieter, not throw loud parties or have too many people over, or cause a lot of wear and tear on the house.

You can't advertise specifically for "older couples only".  But if a couple like that comes along, and they qualify, then great.

I agree with everyone up above. If you buy a 2/1 I would make sure it has a garage. Otherwise I would probably not buy it. Sometimes there is a room with a window that could be turned into a bedroom by adding a closet, good way to add value by making it a 3/1. Best of luck!