I’ve been on an ancestry kick lately. My main goal involved finding out more about my grandfather—a former minor league baseball player-turned-coal miner who passed in 1973. But, he didn’t turn out to be the most interesting family member I found. Come to find out, my uncle a few generations back sought his fortune by migrating west from Pennsylvania to Cripple Creek, Colorado, where he actually unearthed and owned a vein of gold—the earliest recorded incidence of pure entrepreneurship in my clan.
That early pioneer spirit has flowed down through quite a few generations as here I sit in Michigan slicing out my own piece of the pie through buying and selling homes. The mid-1800s must have been an interesting time as we all know from the “gold fever’ chronicled in cinema and literature. In today’s digital scrum, techies have made their way to Silicon Valley in search of private equity and unicorn status. Oil and natural gas exploration have boosted the Texas and Pennsylvania economies, and my less exciting venture has proven quite successful, also. Indeed, the rest of the nation has taken notice of the plentiful opportunities in Detroit real estate investing. There may not be gold in the Motor City but budding investors can certainly make a nice living following my investment strategy lead.
Investing in Detroit Real Estate
There was a time, during the wane of the U.S. auto industry when real estate investing professionals looked to buy properties in every major metro market but Detroit. The population decreased, unemployment rose, and the Wayne County seat developed a reputation for crime and urban blight. But, times have changed. Detroit, with the widest range of national home prices, spells opportunity for investors from the low end of the spectrum up to the median at the high end.
Despite tremendous growth in the market, it’s not too late to mine some property gems from the landscape of one of the most populous cities in the United States. In fact, the party appears to be roaring. In order to punch a ticket to the bash, you’ll need to stick to your budget and determine whether flips or buy-and-hold strategies might fit the bill for your investing goals. Here are some of the strategies I’ve used recently.
- Flipping in Affordable Neighborhoods. One of my purchases took place in Bagley mostly because I didn’t have a lot of capital on hand at the time to plunk down on an investment property. This neighborhood still happens to be one of Detroit’s most affordable locales. In my case, there were enough dwellings that needed some TLC so a buy, renovate, and sell plan marked my foray into this market. My challenge involved finding sellers who needed to exit their homes quickly and weren’t opposed to negotiating price. But, that’s where my real estate investing lead generation tools and resources came into play.
- Buy-and-hold in Mid-level Markets. I subsequently had some luck in Boston-Edison where a variety of home styles and price ranges exist. I tailor my approach in these types of neighborhoods toward professionals looking for a little space and young couples starting families. I find these folks to be a bit more stable than lower-end renters who tend to jump around rather than occupying a single-family home for my target of 3-5 years. In most cases, I look to unload these properties in 10 years or so—enough time to weather any economic cycles that inevitably occur. Of course, my main objective is to buy these properties at rock-bottom price points and hope the rising tide of the Detroit market turns a profit for me.
- Upscale Rentals. As with most major cities, luxury condos sit smack in the middle of the Downtown and Midtown areas. Prices trend toward the higher end of the range in Detroit so these were opportunities I sought after my portfolio had generated enough capital to comfortably dole out some higher dollar amounts. I tend to adopt a very long time horizon with these rentals and I’m still not sure when or if I’ll sell. The high median rents and encouraging appreciation in median home values keep me raking in the income and possibly earmarking these exclusive properties for some type of succession plan. Demand for these units is so strong that the idea of foregoing cash flow doesn’t immediately appeal to me. To boot, maintenance and repair costs have stayed manageable with more affluent renters.
Hitting the Motherlode With Detroit Real Estate
The days of prospecting for riches haven’t ended by any means. Certainly, you can still pan for gold but the likelihood of cashing in is slim. Real estate investing in Detroit has treated me quite well but, like my great-granduncle, it took me a few years before I found my own treasure. I just needed some pointers on exactly where to look for undervalued homes in Motown.
That’s why I became a HomeVestors® franchisee. The nationally-known and trusted “We Buy Ugly Houses” advertising campaign has delivered many motivated sellers to my door. HomeVestors®’ tried-and-true system for generating qualified leads on distressed properties has made all the difference between filling my pockets and coming up empty.
See how a HomeVestors® franchise can help you get better leads on Detroit real estate investment opportunities by getting in touch today.
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