Hi BiggerPockets,
I’m thinking of buying a piece of property in Detroit, MI (hear me out now) that could eventually house a 4plex. I know real estate investors have some negative feelings about Detroit but there are some positives to this market because of the manufacturing industry growth in this city. Here are some facts about the property.
-selling price is $300k
-PD zoned
-prime location
-empty lot (city water/sewage/electric but not hooked up yet)
-Detroit city property tax rate is high
I'd like to hear some opinions on this (agents, contractors, lenders). The reason I'm thinking of a 4plex is because I'd like to use an FHA construction to permanent loan with a 3.5% down payment. Despite the high property price, if I'm able to build at $125/sqft then I'd be looking at around $800k for land acquisition and building costs. Even with these expenses, the property still produces cash flow at 3.5% cap rate.
I’ll be living in one of the units so that reduces the chances of vacancy by a quarter. Also, I feel like the land value itself will only go up in the future due to its location.
I’m curious to know what you guys think of this.
Regards,
Tommy
