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We just do a lot of business in Detroit thats all. Our clients are happy with their returns. I, like you, am using this forum to educate people here about differnt RE markets thats all. I will be posting articles soon about Atlanta, Houston, Orlando, Dallas, and some others soon. I am busy with my business so I only pop in here every once in a while.
We do get those types of return because we are a small boutique firm. WE handle every aspect our selves. We are Americans,we live here in the states. We are the ones picking the tenants, cherry picking properties at foreclosure sales, etc. We have a lot more control over the entire process since we are here. We get properties at far far below market value and then even with the extra equity put in both in cash and sweat, our prices still are at or below market value. I think we have an edge because we are here. If I was shopping for a home in Australia, I would at a disadvantage or someone who is located there. Just my 2 cents. Personally,I am getting tired of this particular thread, Florida , Atlanta, And Texas are great places too. I was just disagreeing with you a little on Detroit. Anyways, have a nice day…
Hi
Yes we have an office on the ground in Detroit. There is both higher risk and reward in Detroit. Many of our clients have paid of their investments in 5 years doubling their equity.We manage our properties and hand pick stable responsible tenants. You have to be hands on, especially in Detroit. We buy properties, rehab them, and then get tenants for them before we sell them to the public.
Again answering the question, why would you buy in a 'second rate market' its about returns. We average about 22% net returns. Our clients are putting more cash in the pockets from day one. Dont' get me wrong, we are in Atlanta, Florida, Dallas, and Houston too. But the winner as far as highest returns on investment if Detroit. I know its not the sexy choice but the numbers don't lie.
Thanks'
Josh
I will agree with you in so far as to never invest in something that you do not understand, that by the way is Warren Buffett's motto. Texas and Florida are definitely good markets, I'd throw in Atlanta. What makes these appealing is that there is a migration of people moving from the North to the South. As the population ages and there are many baby boomers hiting retirement age, many are migrating South for retirement. When you combine this with the large numbers of young people moving south to places like Texas where there has been an employment boom, the South looks very appealing.
But, Detroit is nice due to low cost of entry price points. When you throw section8 ( government financed rent), it makes it even more appealing. While you may not see a great rise in valuations, you can still find excellent cash flow and very low cap rates.
Hi Nigel
I know Detroit is definitely not a sexy place. But the fact remains that people need a place to live even in Detroit. The US government is willing to subsidize apartments for the poor. The houses are dirt cheap, but the income is guaranteed by Uncle Sam. As long as, you have good tenants, things will go very well. This applies to IP in general, you need to have good tenants. With my company, we personally handpick our tenants so it is very stable. Our investors buy homes that pay for themselves within 3 to 5 years. After that all those profits are going directly into their pockets. How can this be a bad thing? If you are looking to buy and flip Detroit is not going to be for you, but if you want an extremely inexpensive price point to enter into the IP world with an incredible ROI, Detroit should be considered.
The property market has definitely stabilized. I am here in the US. I have seen the prices drop by 40% from the top of the bubble in '07.
There is still some excess inventory that is laying around, but this has been due to a couple of factors.
- The banks have been slow to lend in the current environment. They are sitting on their cash.
- There have been both institutional and governmental policies delaying the foreclosure process.
The sad fact is that in the regulatory environment before the RE market crashed banking institutions were pushed to make these types of loans to unqualified buyers. These people should never have had loans in the first place. All this bloat needs to be cleared of the table. That being said, prices have stabilized and excess inventory is being cleared away. The US is a large diverse market with different regions and economic circumstances. Some areas are rebounding faster than others.
This is where the great opportunity lies, in getting into markets slightly ahead of the curve. When people lose their homes to foreclosure, they become renters. Rental income property is always going to be a tremendous opportunity.
