In the housing market, perhaps no city in the United States is as legendary as Detroit. The city’s housing market is one of the extremes. In blossoming areas, you can find houses worth $80k selling for $160k. In other areas, you can find houses going for $500.
When it comes to investing in our local market, the emptor needs more caveat. Success in the city’s real estate requires a mix of risk tolerance, diligence, and patience. However, the potential rewards are unmatched all around the US.
Savvy investors are working with Detroit Property Managers/Real Estate Firms to make profitable buys.
Why should you invest?
High Rent-to-Value Ratio
According to a report by BiggerPockets, Detroit’s rent-to-value ratio is the second-highest in the country at just over 8.5%. This means investors are more likely to recoup their initial money back quickly and start generating profits.
However, you should be aware of the risks of investing in a market where a $500 purchase can end up being worth $80k. Most homes for sale in Detroit are loaded with debts, which have to be paid before anything can be done with them. Some sellers may also not be forthright about the debts their houses have.
To be safe, work with local real estate agents in Detroit to carry out due diligence on the homes you are interested in purchasing.
Detroit is Growing
The Metro Detroit area is a mix of wealthy, fast-growing areas as well as underserved areas. With the city growing, you can find homes in areas that will attract tenants and buyers as the economy keeps going up.
Since the 2007-2008 economic recession, the Metro Detroit area has been trending upwards, and it is evident it will be in this trajectory for some time. Finding affordable homes for sale in the area is easier than in most cities around the country.
Low Entrance Requirement
Detroit’s housing market is probably the easiest to enter for anyone looking to dabble in real estate investment. With houses going for less than $500, nothing should stop you from investing. This is unlike the case with investing in other cities where houses are consistently priced at near their actual value.
If you are looking for a chance to turn a small investment into a decent amount of cash flow, Detroit offers you the opportunity.
The American Lifestyle
Detroit offers an enviable lifestyle for both tenants and homeowners. The city is home to professional sports teams like Detroit Red Wings (hockey), Detroit Lions (football), Detroit Pistons (basketball) and Detroit Tigers (baseball). If you love sports, Detroit has you covered.
It’s not just sports that make the city worth investing in. There’s good ‘ol beer from Atwater Brewing Company, the famous Coney Island, and a lot more in the city.
With the collapse of the auto industry, Detroit had to shift its economic strategy. One of the areas the City of Detroit is focused on is real estate. The City has demolished deteriorated and abandoned homes to revitalize the housing market of the downtown and midtown suburbs.
Various significant projects are also being undertaken. For example, there is The Cuts, which is a series of narrow parks that connect inland neighborhoods to the river. With the raft of development projects initiated in Detroit, there is no question whether the real estate market is recovering, but how fast.
For more on this topic, read Why Invest in Detroit?
While Detroit has had its fair share of challenges, it is rising past them. The city is one of the best investment destinations.
The following article was submitted by Palmer Moving & Storage, a local moving company servicing Detroit, Michigan.