All Forum Posts by: Travis Biziorek

This is what I was getting at. True Detroiters are getting squeezed by both sides. Downtown continues to get pricier and those higher prices are pushing outward. Detroit suburbs continue to get pricier and those prices are pushing inward. 

There seems to be a psychological barrier at the $1,000/mo mark for SFHs near 7 and 8 Mile. I think we'll see that break in the next year or two. 

My question is: what happens to true Detroiters as it becomes increasingly difficult to find the rent figures they've been accustomed to for years?

Hi Alessandra,

Welcome to the wonderful world of Detroit investing. Ashley's podcast sure has created a bit of buzz. Let me try to answer some of your questions.

First, you should begin by outlining your goals. Detroit has been primarily a cash flow driven market for many years now. That opportunity definitely still exists. You can buy dumps for $15k-$20k and rent them for $700/mo. In ten years they'll probably still be $15k-$20k dumps renting for $700/mo. That's not my style both because I don't want to be a slum lord and because I'm not investing in Detroit purely for cash flow.

Yes, I know Ashley bought dumps in that price range and fixed them up and now they're worth more. But she also bought them years ago. The $15k-$20k dumps Ashley was purchasing years ago are probably worth $35k-$40k today. If you're buying at the $15k-$20k range now, IMO it's the garbage nobody really wants and won't perform well for you. But again, if you are purely looking for cash flow it could be your strategy.

The next step up is $35k-$50k places IMO. These still cash flow nicely with rents anywhere from $800-$900/mo and, if you do a ton of research and buy in smart locations, they will appreciate nicely as Detroit continues to gain steam. There's some serious competition at this level though because these places generally only needs light to medium rehab ($5k-$10k). And if you don't have the ability to buy them all cash, a lot of these deals aren't going to be accessible to you (most require all cash purchases).

The next step up are $55k-$80k places. IMO these need major rehab work and are only attractive in "hot" areas where flippers can turn around and resell them for $100k+ to retail buyers. Obviously, this is competitive; it's not something I focus on.

Anything selling for $70k or more doesn't make a ton of sense as an investment property IMO unless it's something like a duplex, tri, or quad. 

So assuming you figure out your goal and strategy you can start doing your market research. That you'll likely need to do on your own unless you can offer some value to a partner here on the ground.

I'd be shocked if anyone is going to just offer their time, expertise, and hard work to you simply because you asked (I personally won't). I'm not trying to be rude, just honest. I spent more than 4 hours driving different neighborhoods the other night, something I plan to do at least every other week. And that's on top of the countless hours I spend analyzing properties, networking, going to meetups, and reading up on all things Detroit. 

You need to either out compete someone like me or have something attractive enough to offer to partner. 

Hope that helps.

 Absolutely. I talk about this with friends all the time. You can look at it from a micro level (neighborhoods) or macro one (cities). From a macro perspective you see it in the suburbs with folks getting priced out of certain areas (like Troy), moving to places like Royal Oak and Ferndale until those get too pricey, and now moving to areas like Hazel park and Hamtramck.

On the other side you have downtown seeing massive corporate investment, and rents/housing prices are rising quickly. IMO this creates an interesting effect where people who want to live closer to downtown are getting pushed increasingly further out to other Detroit neighborhoods while you have people who want to be in the suburbs who will (again, IMO) eventually start buying into Detroit neighborhoods. 

I believe it's not a matter of if this will happen but when.

That said, there are many areas in Detroit that are going to require serious investment, likely from the corporate or government side of things. There's still a lot that needs to be done. But right now there seems to be a mental barrier at the $1,000/month rent price unless you're downtown or in a niche area like the University District. I think we're going to see this change soon and the $1,000+ monthly rents are going to be common.

 Yeah, it's definitely not all bad and there are spots I'd be willing to buy into. In fact, I am. We've got an accepted offer on a home in Morningside as of today. 

 I spent about an hour driving Morningside last night. The area is a lot rougher than I expected. Lots of boarded up homes and vacant land. There are only a handful of streets I'd buy on right now.

It really surprised me because I didn't get the same vibe researching online at all and it really readjusted my view on that neighborhood. I think there's potential there but it's a ways out yet.

Hey Jerrel, I'm not a fan of wholesalers for a number of reasons.

First, like you mentioned, they don't seem capable of analyzing a deal. If you can't do this you simply won't have success... at least not any repeatable success. Sure, you may sell one or two deals to an uneducated buyer, but they'll have a poor experience and never be a repeat customer for you.

I can't tell you how many "wholesale" deals I've been sent for $30k or $50k that need $10k-$15k of work and would still be worth $30k to $50k. I will never do that deal because it leaves zero equity for me when I literally do all the work.

Second, wholesalers are lazy. I get the same listings and large lists of properties from different wholesalers. Sometimes these guys are trying to just sell stuff from the MLS. It's pretty pathetic and shows zero effort.

Third, they take zero time to get to know their customers (cash buyers) and rely on a spray and prey method. Finding a bunch of garbage "deals" and spamming a list of cash buyers might work once in awhile, but again you aren't going to have repeat success with this method. You would do far better finding a handful of serious buyers, talking to them to get to know what they're buying and what they want to buy, and going out in those areas and finding them screaming deals.

If you can do that, you'll have a repeatable process and work far less. I'm happy to properly compensate a wholesaler for doing the leg work in finding me a deal. The problem is I have yet to find a wholesaler that has brought me something I'd buy either because it doesn't fit my strategy or because it's not actually a true wholesale deal.

Check out Todd Chunn and his crew over at Vylla: https://www.vylla.com/

They do a ton of wholesaling and have "boiler room" days where they cold call leads. If you're looking for mentorship that's likely a great place to start.

Hey Kirk, I've had such a difficult time finding a solid investor agent that I decided to get my license myself. I should have it in a week or two. My primary reason for getting it is so I have the flexibility to view houses, make offers, etc. on my own time. But I am open to helping a handful of other folks depending on their goals.

 I've been considering simply having a security system in place for vacant homes. Any experience doing that, Michael?

Not entirely sure, but I believe as long as the loan amount is at least $25k they would. Not sure it's worth the PMI, higher rate, etc. doing that though.

Hi @Matt Franklin, I'm sorry to hear about your troubles. That sucks. Taylor isn't actually Detroit, but a suburb of Detroit. Regardless, I'm glad you triggered my keyword alert for Detroit anyway.

I don't think your problems are unique. Property management firms are notoriously terrible in this area. I haven't actually used one yet but there are two seemingly solid ones I've found during my research. Again, I can't vouch for these guys personally because i haven't used them. I'll send you the info via PM.