I love stopping into Astro Coffee for a cup of joe on Tuesdays. I can always count on good coffee and plenty of great conversations about investing in real estate. Since I’m the resident old-timer in the neighborhood, I’m asked a lot about both the local market here in Detroit and what I think of different markets around the country. Last week I met a young couple—Seth and Kerry—who wanted to discuss the best places to buy rental property in the Midwest since they have just relocated here. This week I ran into an old friend and former corporate comrade, Alton, who wanted to explore flipping houses in Detroit as a part of his retirement plan. Since buying homes to renovate and resell is my preferred investment niche, that was a conversation worth several cups of coffee.
The Market for House Flipping in Detroit
Becoming a real estate investor is a serious undertaking anywhere and at any time. But, because Detroit has ping-ponged between the place to avoid investing in at any cost and the place to push your money towards at every chance, buying investment property here is no joke. Not only is it critical to have a full grasp on what you’re doing so that you can realize the best possible returns on any one deal, it’s important to get a grip on what’s happening in the market so that you can improve your shot at making a good business out of flipping houses overall.
When speaking with Alton, he noted that he was already seeing an economic shift in Detroit’s landscape and was curious about whether, and how, it might be impacting the city’s housing market. His observation is a keen one. With well-established high-end food chains, like Whole Foods, moving in and members of the “Big Three” automakers, like Ford, coming home, employment opportunities are again on the rise. And, more jobs for more people almost always equals greater stability in the housing market. In fact, with Detroit’s drop in unemployment—now at only 4.2%, according to the Bureau of Labor Statistics—has come a decline in foreclosures. So, it’s easy to conclude that when homeowners can afford to meet their financial obligations, they often do.
The numerous efforts at the city level and within individual neighborhoods to revitalize Detroit hasn’t hurt, either. The Detroit Land Bank Authority (DLBA), for example, has helped to remove blight and improve safety by returning vacant, abandoned, and foreclosed properties to good use by selling them to investors for renovation or demolition. So far, more than 1,700 properties have been sold. Non-profits at the community level are doing the same, helping to bring neighborhoods like Fitzgerald and North End into up-and-coming status. And, plans for improving streets, creating more green space, and attracting new commercial and retail enterprises are in the works all over the city. These projects, which are successfully enhancing the look and feel of Detroit for current residents, are also generating jobs and renewed interest in those looking for a hip, affordable, family-friendly place to call home.
The growing attraction of Detroit, however, has put a squeeze on housing inventory which has, in turn, caused a surge in median home sales prices. By the second quarter of 2018, the city saw a 48% increase in year-over-year gains from the same time last year, according to analysis reported by Crain’s Detroit Business. And, the average days on the market dropped by almost 13%. So, by all accounts, people are clamoring to get in. In some neighborhoods, like Indian Village and University District, they’re also willing to pay a lot—up to half a million dollars—for the privilege to do so. But, even in areas where homes are still less than $100,000, like East English Village, demand is high and the prices potentially getting higher.
But, neither high prices nor low inventory means that you’ve missed your opportunity to make a decent living as an investor in Detroit real estate. Provided you’ve got plenty of off-market leads on distressed homeowners who may need to unload their properties fast, how much money you can make flipping houses will largely be up to you. And, since foreclosure starts are up again in the Motor City, you may have even more chances to connect with distressed homeowners if the rate of foreclosures coming down the pipe spikes again. You’ll only know this, though, if you make it a point to keep up with local market trends in addition to implementing a solid lead-finding strategy.
Of course, local markets can shift and change in step with, or in contrast to, what’s happening nationally. That makes keeping your finger on the pulse of real estate investing trends in town and beyond a key component of ensuring your investment business thrives. And, one of the best sources of information about the opportunities and options before you is your network. If you don’t already have one you can count on for giving you good investment directions, this old-timer knows where you can easily get one.
How to Drive Your Detroit Investment Business Forward
My jump from a desk job in the corporate world to buying, rehabbing, and selling homes in some of the Detroit neighborhoods where I grew up was big. I didn’t know the first thing about flipping houses, nor did I have any idea how to properly gauge what was happening in the marketplace or what that might mean for my professional real estate investing business. But, I was able to fast-track my knowledge by becoming an independently owned and operated HomeVestors® franchisee. It wasn’t just the week-long comprehensive initial training or the one-on-one mentoring with a Development Agent that helped me get where I needed to be, either. My network of regional franchisees, all of whom I had immediate access to once I opened my doors, proved to be an invaluable resource for understanding my local market and seeing opportunities that I might have otherwise missed. It’s a built-in support system that helps me grow my knowledge while I expand my business. And, somewhere over our third or fourth cup of coffee, Alton decided he wanted to do the same.
Drive your professional real estate investment business forward now and keep it successfully going by contacting HomeVestors® to learn about becoming a Detroit franchisee today!
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