Detroit, Michigan is SHRINKING! Beware

While that is true – I wouldn’t necessarily give up on Detroit just yet. For some investors, it is a great fit.
I fully agree that there is no capital growth in Detroit – even if the auto makers come back, growth will be in the wealthy suburbs in Oakland County, just north of Detroit, as that is where all/most of the executives and key workers would like to live.

However, there are still some pockets in Detroit that are doing really well, and also don’t forget that the Section 8 program in Detroit is more generous than elsewhere in the country, and due to the job situation, there are more people waiting for a home using this program than anywhere else in the nation.

Granted, your insurance premium will be higher than anywhere else, but your income will be good – if you’re looking for capital growth or a “trophy” home, I can point you to 49 other states, but if you’re looking for income, then Detroit might be the place.

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Absolutely agree with previous poster, as far as that any funds you invest into Detroit should be all cash deals. However, I’m also of the opinion that you should employ this strategy pretty much nationwide, unless you are really buying at the higher end of the market, at which point you might wish to leverage.
We still really do not know where prices are headed, be that in Michigan, Florida, New York or any other state, so investing without leverage, while giving yourself an option to re-finance later on, is the best way to look at it in my opinion.
While not perfect, the Section 8 program provides a good income from the US Government, and in my opinion, it is as safe, if not safer, that private rentals in other parts of the country.

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Dan,
Thanks a lot for your views – like you said, it makes a lot of sense when someone from the city itself comments on the post.
Fully agree on the negative coverage vs. what is actually going on, I’ve been to Detroit quite a few times and I’ve been positively surprised, both by the opportunities, but also by the pride that still exists of being from Detroit.

You mention Dearborn and surrounding areas, we have also invested (mainly in rehabs for quick resale) in areas like Oak Park and other more affordable parts of oakland County as I just see them as more of a “safe bet”, are you familiar with those markets also?

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@nigel

Sounds like you are not big on Detroit at all

There are a lot of areas of the USA that are great for investing – depending on the investor. Some areas are poised for quicker capital gains than Detroit – but at a higher price point of course. So when you say other areas of the US are “far better” what are you referring to? What area and what type of investor in mind?

Have you spent much time in Detroit or Michigan to learn the market? Being based in Michigan really provides a great understanding of the market, trends, and specific areas to invest in.

As they say, there is more than one way to skin a cat – same goes for real estate investing!

@ Nigel:
I don’t want to sound like a broken record here, but every single city in the U.S. will have many different markets, all with different characteristics. We operate nationwide and have done so for the last six years, and Michigan is one of the states where our investors have the most success. I can also personally assure you that none of the deals we sell (or enter into for ourselves) are in areas where “nobody lives” but in areas that are really no different from other areas in cities across the country.

@ Dan:
Yes Oakland County is great and a beautiful place to be, we’re actually considering moving up there in a while!
How many deals – well, we got into Michigan middle of last year, and it’s higher than 20 and less than 99

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Nigel,
That’s your opinion, and you’re entitled to that. But rather than just racking down on Detroit (and yes, I did laugh to myself when you based your research on 8 mile) why don’t you tell people what to do then? I know you are pushing your assumable mortgages and I don’t mind that, but you still did not answer what has been asked by numerous people of you, how you get the bank to sign off on those deals, as even back in the good days the banks were very reluctant to agree to let anyone assume financing, never mind an out of country investor?

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I am being a bit tongue and cheek regarding the 8 mile comment however a market with half the population since 1950, a 29% umenployment is not a great place to put your money. I deal in Texas which to me is far safer
I believe you can make money anywhere. However I have not seen to many good people on the ground. I have been involved in the US market since 2005 and even ran a real estate firm in Texas. However you may be great operators

Hi Nigel, I see that you have been dealing in Texas for numerous years. I am just at the start of my US property investment journey and from the research that I have done I can see that Texas has the most stable housing market in the US. Are there banks/financiers that will provide finance to Australians? What sort of LVR do they provide? How strong is the rental market? Thanks in advance.

After reading all these comments, a couple of things stand out very clearly. The first is that Detroit Dan and High Income Property both have a great insight into the Detroit market for how it is panning out today and in the near future. The second thing is that Nigel Kibel is full of it when it comes to talking about anything other than his own property spruiking in Texas, so why dont you stick to what you are good at Nigel and Im sure you are very good at it. Stay in Texas, do a great job but stop spreading all this demographic BS about areas you have little knowledge of it seems.

Suburbs mentioned such as Dearborn, Dearborn Heights and Redford as mentioned by Detroit Dan are excellent little pockets of Detroit to invest in as are Livonia and the Uni District and a couple or others. Have a look at this post for pictures of the houses in these suburbs .http://www.theblockblog.com/america/detroit-dodging-the-bullet/ – not exactly the slummy picture painted of Detroit by all and sundry.

Sure there are other areas one can invest in in the US – too many in fact, but hey stop bagging people and their choices in favour of your little slice of pie in cowboy country. Most investors are not complete idiots and will have at least looked at the stats for Detroit and Michigan and will make up their own mind. They don't need you to be stupidly quoting rapper movies to add to the negative hype.

Ian
http://theblockblog.com
Free Property Investment Info, Tools and Resources for Investors with A Sense of Humour.

It sounds to me that you also have a vested interest in your comments
As I have mentioned before I do not get clients from Property investing .com

Secondly I do not bag people but wish to point out the issues of investing in some areas. I have also been to the United States on many occasions and even ran a real estates firm in Texas. So after 6 years of investing there I also think I have some idea of what I am talking about.

If you have comments to make about Texas then please make them. I have always said if there is evidence that Texas is a bad place to invest then present the information. To me a city that has lost 50% of its population since 1950 is not a good place to invest. If Dan is providing a personal services and is working on the ground then people may be able to make some short term money. Quite frankly your comments are rude and I do not make rude comments about people. My comments about the rapper were meant in jest. However if people make claims that a city is a great place to invest they should also hear both sides. My experience is that many investors do no where near enough research when buying property. The same thing happened 6 years ago and many Australians lost money.

I would agree do your research very carefully. If you are going to invest in a city like Detroit then go there and see it for yourself. In my view there are safer places to invest. However go there and make up your own mind. I encourage of my clients to Visit Texas and do there own due diligence.