I know I just posted about a similar topic, but with me being someone who has taken some serious losses in the city of Detroit when it comes to real estate, I just want to help you avoid some of my mistakes.
Look, as an investor, you can make some good money, but if you don’t know what you’re doing, you can and will lose your shirt investing in properties anywhere, but especially here in the Detroit area.
Here are a few other tips to surviving in the city of Detroit as an investor.
Know How to Market
Detroit has a lot of investors, largely due to the low prices on properties.
A lot of investors think it’s easy; just buy, renovate, and find a Section 8 tenant that’ll provide some reliable monthly income.
Let me tell you, it doesn’t always go that smooth. There are only so many Section 8 vouchers out there, and the pool of quality section 8 tenants is growing
smaller by the day.
With it being a renter’s market, people with vouchers can be picky with the house they decide to move in.
You’d better know how to market your property.
Marketing means more than just taking a few pictures and putting it on Craigslist (although that can work, if you’re lucky).
To really make your property stand out from the rest, though, I’m talking about staging the home; giving it some good curb appeal by doing some landscaping, and knowing the little amenities you should upgrade or improve that’ll make it more pleasing to the eye.
To me, this is one of the worst parts about buying some of the cheap property in Detroit for sale today. I could be wrong (feel free to do your own research on this), but I’ve heard numerous times that Detroit has one of the steepest millage rates in the country.
When you’re crunching your numbers, make sure you factor in taxes. And when you do, don’t rely on the taxes that the previous owner paid, because unless you know for sure,the previous owner could’ve had that property Homesteaded.
You will be renting the home as an investment property, so your taxes won’t be as low as they were for someone who had the property as their primary residence.
Decrease in Police/Firefighters
It’s no secret that the city of Detroit is in trouble financially. They’re laying off hundreds of firefighters, and earlier this year, they laid off over 100 police officers.
I mention this, because this intensifies the issue that was already there, which is slow-to-no responses when it comes to anything short of a shooting or a violent crime.
A few years ago, I had a tenant skip out on me without letting me know. I found out just hours after they vacated the house (and left it unlocked, of course), only to discover that my hot water tank and furnace were stolen.
I called the police, and was told to drive to a local police station to file a report! I was pissed! I couldn’t believe it.
Anyways, this is another reason why if you’re going to rent properties in Detroit, and you don’t live here, you’d better have a property manager that is really on-top of things, because the police probably won’t be of much help if something happens.
Again, I’m not trying to deter you, I just want to make sure you cross your t’s and dot your i’s if you decide to invest here.
All the best.
For more tips on making (and saving money) as an investor in Metro Detroit, download our FREE “Real Estate 101” guide. Details are in the right pane.