It really started off with a boom from my perspective, from what I've been
looking at, it started off over the boom of investors realizing that they can
capitalize on buying really cheap housing. You're listening to Carrie Lutz's Financial Survival Network,
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Financial Survival Network now more than ever, And welcome. You are listening to
watching the Financial Survival Network. I'm your host, Carrie letz A. We're
midway through April. The world hasn't ended yet, but looks like we're getting
pretty close. But in the meantime, if you've got investible funds, we've
got a place for you to think about that you probably never thought about before.
You're going to be shocked when you hear it. You're not going to
believe Detroit, Na dare sure Reef is with us now. Nadair, It's
great to have you on the show. So Detroit, like you know,
is like the last place I would be thinking of buying a property. And
yet things have changed there, haven't they. Yeah for sure. Well,
first off, thanks so much for having me on the show. Second off,
yeah, I would say a lot has changed there, right. I
mean, we were talking briefly before this started about what makes detroitvit a viable
or a good option for investors to look into. I mentioned some of the
key points being, you know, a low entry price point, the ability
to source deals with a good good amount of equity, the fastest appreciation rate
in the country right now, and the strong returns annually from a rental perspective.
But you know, add to the fact of all the redevelopment going down
on downtown, how it's stretching into Midtown and Corktown, how certain commercial spaces
are being tapped into on the east and west side in certain subdivisions. Just
got a lot going on right now. It's pretty remarkable because that city was
given up for dead, you know. And it's funny because around the turn
of the century, the twentieth from the nineteenth to the twentieth century, you
know, in the thirties forties, Detroit was the richest city in the country.
Wow, yeah, for sure. Yeah, So how did all this
happen. Well, I think it really started off with a boom from my
perspective, from what I've been looking at, it started off over the boom
of investors realizing that they became capitalize on buying really cheap housing and providing lower
income housing. And so when I first stepped into the marketplace, you know,
properties were going for like twenty thirty thousand turn key, right, And
so I think it it became an option for investors that were getting price out
of their local marketplace to start putting their funds in assets in Detroit, real
estate in Detroit, and I think that just continued to drive up prices.
And then once you know, aside from all the redevelopment, once you know,
you started to see news pop up of major industries kind of looking into
Detroit as a viable option. I mean Google has an office downtown, Rocket
Mortgages headquartered downtown. All these companies are starting to look into like maybe migrating
into Detroit. It just kind of fueled that even more. Right, So,
give us an idea of some of the returns you've been the experiencing there.
I mean, on average, the strategy behind it is we're going into
c class blocks, and I say blocks because Detroit is literally a block by
block marketplace. Right, things can rapidly change from street A street B.
Average price points are anywhere from eighty five to ninety five thousand all in,
and we're renting them from an average of twelve hundred to thirteen hundred a month.
Generally, after all expenses, you can expect anywhere from about a ten
to thirteen percent return, obviously, not factoring in capex maintenance repairs. Kinderally
are investors for fact twenty percent for that. Yeah, so it sounds like
the returns are good. How risky is it though? Great question. I
think a lot of people tend to focus on the pros and try to forget
about the cause or the risks. It's definitely more risky than say in New
York City or a Miami or a Los Angeles. You know, obviously,
when investing in real estate, you have to be mentally prepared for the fact
that you might run across a non paying tenant. Another thing you need to
run across or think about, is you know, a lot of these homes
are older homes, right, They're built in the nineteen tens, thirties,
and so Unfortunately, the values don't allow us to do full gut renovations right
now because the renolds would exceed the value of the property itself, right,
And so a lot of people are doing mostly cosmetic updates a few mechanicals dalbinized
plumbing, to packs, maybe an electrical panel being spot out, And so
you need to kind of start preparing yourself to you know, for the first
six months to a year after doing your reno, you might have an increase
in maintenance or repair calls. That's something to keep in mind. Yeah,
I could see that being the case. So and then, like, it's
my perception that Detroit's not like a tenant landlord friendly jurisdiction. Is that so?
Yeah, I mean it's definitely more in favor of the tenant, right,
But like we were talking about earlier, I mean comparing it to a
city like New York, it's definitely more favorable, right. Average eviction to
turn around time is anywhere from three to four months, three months being if
the tenant moves out on the day a judge would order them to move out.
In additional thirty days have to apply for a writ and call off the
bailiff to get out there. Right, So I can go from threedom okay,
so cash on cash return, can you hit into the teens for sure?
Okay? And so it kind of reminds me of Buffalo. Buffalo is
a city given up for dead. I mean, I wouldn't live there.
The weather, it's so horrible. But I have a lot of a lot
of friends who live there. I don't blame them in the least, but
yeah, so it's a large influx of the of people move in, you
know, people coming from other countries. The state actually puts some money into
meaningful places like healthcare Tesla. They got them to open a factory there,
although I don't think it's really ever reached its target there. Kind of the
same thing. It's a it's located on Lake Erie, right, So I
guess Detroit's with Detroit's on Lake Michigan, I guess us. But both former
industrial cities in decline, the rust belt, literally the epitome of the rust
belt, and yet they've made a turnaround. So maybe maybe this can happen
anyplace. Huh, Yeah, I'd say so, but I think yeah,
I would agree with you. So the question is is it too late for
you to get in on the land rush in in Detroit or is it just
starting a great question? Well, I gets asked a lot. I definitely
don't think it's too late. I mean, we are seeing a significant amount
of increase in values. I think last year was around eight point seven percent
increase in property values across across the city, which is way higher than the
national average. However, we're still sub a hundred k when when we're looking
at average points. I think we ran a graph the other week it looked
like the average price point was around eighty four thousand for a Turkey home let's
say, right, so at some point we'll exceed that on a thousand mark
and it you know, as we continue to increase, it gets more and
more difficult for two reasons. Either the rents don't follow as rabbits at a
rapid rate and the returns start to diminish, or you just get it out.
But as of right now, I think it's actually a great time to
enter. You're not having to struggle like a lot of us did that entered
seven years ago or eight years ago. But you're also not paying a huge
premium yet, right Yeah, Because I know the real estate prices in Buffalo
went totally gaga. There was a lot of new construction, and is there
a new construction going on? There is anybody building houses in Detroit? Yet
obviously in Metro Detroit they are in this city itself. For Detroit proper as
we call it, there are a few subdivisions where you see some new construction
popping up, but not as much across the board. And it leads into
the next conversation of you know, right right now, basically for the most
part of the city, land doesn't have real value. You're essentially buying the
structure on the land because it costs too much to build relative to you know,
what you can sell or what the property's worth, right, and so
at this second, it doesn't make any financial sense to build in a lot
of subdivisions, but there are certain ones getting targeted for that, so you
think that's going to happen though obviously the prices have to go up and rents
have to go up. What's your average rental and what are your properties there?
Well anywhere it can go anywhere from eleven hundred and thirteen hundred, so
the rents have really got up. Huh yeah. Yeah. So when we
started, it was like I think like six or seven hundred dollars a month,
and that's not too far back and you're talking about let's five years ago.
Is that like seven or eight hundred dollars a month? Right? So,
uh, what's what's the unemployment situation like in Detroit these days? Yeah,
so you have a lot of new businesses opening up, and obviously as
more companies continue to come into Detroit, it's not providing opportunity and more jobs
in Detroit, right, Like Rocket Mortgage has been a huge company that has
provided a lot of jobs for people or the locals. That's that's nice to
hear, you know, because it was once a great city here, and
it's nice that it's getting a renaissance. And hey, like I said,
if Buffalo can come back from the brink of extinction, then so can Detroit.
And the weather in the summer there is really nice, isn't it?
One of my favorite places to be in for the summer? Winter not so
much, but come with far right exactly, but Michigan summers are some of
the best summers that I've had. Yeah, beautiful, I mean the lake
and it's really really nice there. So all right, so people want to
find out more about what you're doing there in the there and want to connect
with you and find out more. How do you do that? Yeah,
easiest way is to hop onto our website invest in upside dot com and on
there they'll have a bunch of information, post blogs daily, they'll be able
to read out Bond Detroit and then obviously they can contact us through there.
All right, Hey, appreciate you coming on. He got a question or
comment, to just shoot us an email kl at Carrie Loots dot com.
And while you're at the site to take a look at our free newsletter subscribe.
Really appreciate you coming on the there. Good luck and help make Detroit
great again. Yeah, thanks so much for having me, Thanks for listening
to carry Letz's Financial Survival Network your solution to today's trying times. For the
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