Detroit, Michigan has long had a reputation for being an economically ruined city. In recent years, however, there has been an upswing in the market. It is currently one of the best cities in which to buy property.
According to MLive.com, Detroit was recently named the 7th most impressive turnaround town in all of the United States. In the same survey, Detroit was called "most noteworthy" because, in spite of a city still plagued by bankruptcies and other economic problems, the housing market continues to improve. In the last year, a quarter of all of the homes for sale have been purchased.
The rest of the US wishes it had that kind of growth.
Not only are houses being bought up at a fantastic rate, the rental market is also thriving. Over the course of 2012, the average rental price for a two bedroom apartment went up almost eight percent. It has gone up almost five more percent so far in 2013 and there is still a quarter left to go.
So what does this mean for you, the hopeful real estate investor?
It means that Detroit, no matter where you live now, is definitely a city worth exploring. If you really want to get a return on your investments, youÃ¢â¬â¢ll invest in a multi-family structure like this one.
Consider that listing for a moment. The asking price for the entire building is $298K. With the current rental rates, and after operating and other normal expenses, the building promises a return of almost $67K. This means that, if you incur no major debts and even if you keep the rental rates where they are, provided you keep 100% occupancy, you can pay off that building in about 4.5 years. At that point, you can sell the building for a massive profit or you can stay on, manage the property and create a stable income for yourself.
If you do decide to get into the property management game, the brain trust at Metro Property Group (one of MichiganÃ¢â¬â¢s most prominent real estate companies, specializing in buying and improving problematic homes) is adamant that you understand what it is you are getting into. In an article for Segment.com, they urge the importance of asset monitoring to help maximize investment returns.
What does this mean?
It means that you need to make sure that you know what youÃ¢â¬â¢re getting into and that as a property managerÃ¢â¬âyou have to know what is going on in your buildings. You canÃ¢â¬â¢t simply buy an apartment building, walk away and come back in a few years expecting everything to be perfect.
You can, of course, monitor the property yourself. Being on site helps considerably - you donÃ¢â¬â¢t have to worry about a manager sugar coating or glossing over problems. Still, unless you already have experience in property management, you canÃ¢â¬â¢t expect to smoothly jump into a landlord situation. It might be in your best interest to hire a professional management company to help you keep tabs on things... but that is another article for another time.
The point is - Detroit deserves your attention. Housing prices are low, the rental market is phenomenal - the possibility for massive profits is high!