Originally posted by @Bill B.:
So per the original poster, is the first property a bad deal as it doesn’t meet the 2% rule? And we can agree the second one would be a horrible investment as it’s rented at less than 1% of current value ($875 rent on $130k is less than 0.7%. A ratio btw that I agree can make money depending on taxes/insurance/maintenance. But the point of the original poster was do you need 2%?)
And I assume you aren’t selling either of these properties as you believe they aren’t outliers or cherry picked examples but good average examples of the Detroit market past and future. The kind of returns anyone can get today. As it would be hard for the OP to go back in time 10 years to purchase properties. Having gone up 30x and 110x in value in only 10 years I assume you believe these properties will again. So those two properties will be worth $15 million and $10 million in 10 more years.
I was going by the 87.5 percent rule
The average home buyer cannot buy the 1588 sq ft condos downtown for $675,000
I'm two miles from downtown 1/4 mile from Canada There is still excellent opportunity as the prohibitive prices expand into adjacent neighborhoods.
Dan Gilbert (Quicken Loans) owns more than 100 buildings downtown and is currently building 4 more 1 is costing him around $800,000,000.00 for the one building Hudson's Department Store Site
It was supposed to be the 23rd tallest building in the US but it got shorter with his massive stroke and Covid 19
There are areas that I think will come back faster than my area did ( buy for $10k put $20k into it worth $150-$200k in three years)
The only point I was making was I NEVER understood why people cited Detroit as an example of good cash flow but no appreciation.
The appreciation has been unbeatable. The $1000 example was bought 4 years ago not 10.
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