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  #41  
Old Posted Aug 13, 2019, 7:54 PM
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Originally Posted by jd3189 View Post
Exactly, which is why I don't understand people here being apprehensive about investing in Detroit.
Because most of us here are thousands of miles away from Detroit and have no relationship to the place.

Most of us here have equally interesting areas closer to our hometowns.

If I decided to go for it (which I don't 100% rule out), I'd choose Bombed-Out Albany over Detroit, for convenience and proximity.

I'm sure others in the thread would choose Bombed-Out Chicago or Bombed-Out Philly over Detroit, for the exact same reasons.

There's no reason to go to a distant city if you can find the same characteristics closer to you. That distance means wasted money and time and much looser management and control.
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  #42  
Old Posted Aug 13, 2019, 8:04 PM
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Originally Posted by lio45 View Post
That distance means wasted money and time and much looser management and control.
and also much less "lay of the land" on the ground experience and knowledge.

i know chicago.

i don't know detroit.
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  #43  
Old Posted Aug 13, 2019, 8:07 PM
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Originally Posted by Sun Belt View Post
Would you invest in Detroit?

Would you buy this single family home, currently listed for $25,000 [probably room to negotiate]? You scrape up 20% down and your principle + interest is under $100/month -- no need to worry about an HOA either.

link,: https://www.zillow.com/homedetails/6...88670773_zpid/

Aerial view of the neighborhood:
https://www.google.com/maps/place/60...!4d-83.0358125
No.

Especially not that address; looking at the area, it's right across the street from a check cashing place. At least where I live, those tend to be in sketchy neighborhoods.
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  #44  
Old Posted Aug 13, 2019, 8:21 PM
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Originally Posted by Crawford View Post
There are beautiful, potentially undervalued areas in Detroit. If you're optimistic about the city's prospects, it would make sense to concentrate on the region's favored quarter, which is roughly North/Northwest.

This slice of Detroit has lots of formerly medium-to-high end neighborhoods that have languished for 50 years. There are no factories, giant freeways or noxious uses. The neighborhoods are rundown but have pretty good bones. The best suburbs are minutes away. It's generally the old Jewish-WASP corridor, though African American since the 70's.

Bagley Neighborhood: Used to be Jewish, still middle class black, still looks pretty good. Terrible schools, limited retail and some safety issues, though-

https://www.google.com/maps/@42.4253...7i16384!8i8192
Wow, I'd never explored Bagley before but that is a massive collection of solid pre-war housing stock. How are they so consistently well-maintained when they go for $150,000 on zillow? Apart from the wider streets and more sparse tree cover, they remind me of houses you'd see here in Forest Hill that would easily go for $2 million+.
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  #45  
Old Posted Aug 13, 2019, 9:02 PM
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Originally Posted by suburbanite View Post
Wow, I'd never explored Bagley before but that is a massive collection of solid pre-war housing stock. How are they so consistently well-maintained when they go for $150,000 on zillow? Apart from the wider streets and more sparse tree cover, they remind me of houses you'd see here in Forest Hill that would easily go for $2 million+.
Wow, they go for 150k? They went for 30k in the last recession, so huge improvement. But that's after 10 years of record auto industry profits, and tons of "Detroit has turned the corner" hype.

Keep in mind that 150k is a pretty "normal" price for Metro Detroit. A bit on the low(er) end, but a 98% African American neighborhood with high taxes, high crime and poor schools isn't typically gonna have high property values, even if the houses have great bones.

And yeah, Toronto SFH values are insane. I'm blown away by the values in the posh parts along Yonge.
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  #46  
Old Posted Aug 13, 2019, 9:20 PM
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Also, again, there are the same types of neighborhoods in the suburbs, but with excellent schools and services, and no safety issues, so the Detroit neighborhoods are at a competitive disadvantage. Metro Detroit has a ton of upper-middle, 1920's-1950's housing without the issues in Detroit proper

If you want something resembling Bagley, many folks would go to Berkley, which will be 2x the price:
https://www.google.com/maps/@42.5090...7i16384!8i8192

And upper class types might gravitate to Birmingham, which will have equivalent homes at 4-5x the price:
https://www.google.com/maps/@42.5514...7i13312!8i6656
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  #47  
Old Posted Aug 13, 2019, 9:20 PM
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Originally Posted by suburbanite View Post
Wow, I'd never explored Bagley before but that is a massive collection of solid pre-war housing stock. How are they so consistently well-maintained when they go for $150,000 on zillow? Apart from the wider streets and more sparse tree cover, they remind me of houses you'd see here in Forest Hill that would easily go for $2 million+.
Most of them are probably owner occupied. When a Detroit neighborhood has a high percentage of renters, it typically signals that the neighborhood is going into decline.

But these are just suburban neighborhoods at a discount, or stepping stones to the suburbs. The real energy in Detroit over the next decade is going to be seen in rebuilding the multi-family neighborhoods in the core.
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  #48  
Old Posted Aug 13, 2019, 9:26 PM
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I'm more surprised by the quality of the facades and general cleanliness than the overall price. Assuming they were purchased for <$100,000 in what's seen as a less desirable city nieghbourhood with problems, it's surprising that the household wealth is there to support the upkeep and repairs that come from owning a decently large prewar home.

My sense of what's a normal income/house price ratio is probably skewed though. I guess there's no reason to assume a family in Bagley isn't earning >50% of their home's value every year. The opposite of the "house-rich, income poor" in many distorted markets.
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  #49  
Old Posted Aug 13, 2019, 11:18 PM
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Quote:
Originally Posted by Sun Belt View Post
Would you invest in Detroit?

Would you buy this single family home, currently listed for $25,000 [probably room to negotiate]? You scrape up 20% down and your principle + interest is under $100/month -- no need to worry about an HOA either.

link,: https://www.zillow.com/homedetails/6...88670773_zpid/

Aerial view of the neighborhood:
https://www.google.com/maps/place/60...!4d-83.0358125
That particular house, no.

But there are other parts of Detroit I'd be happy to invest in.
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  #50  
Old Posted Aug 14, 2019, 12:12 AM
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Originally Posted by Sun Belt View Post
Would you invest in Detroit?

Would you buy this single family home, currently listed for $25,000 [probably room to negotiate]? You scrape up 20% down and your principle + interest is under $100/month -- no need to worry about an HOA either.

link,: https://www.zillow.com/homedetails/6...88670773_zpid/

Aerial view of the neighborhood:
https://www.google.com/maps/place/60...!4d-83.0358125
Having personally spent time in this neighborhood on multiple occasions, I wouldn't invest in this specific house.

Instead I would tear it down and turn it into a strip mall with the adjacent lots, possibly even that church if I could get a hold of it. That location has more value as a shopping area because of the GM factory across the freeway and being directly next to the off-ramp. As a residential neighborhood, it's functionally obsolete because of the freeway and being so close to other industrial sites.

Overall, that neighborhood should be rezoned into commercial/light industrial land use as the freeway, railways, and road layouts are better suited for it. However, that's highly unpopular with local residents, especially those that still reside in that neighborhood who almost definitely don't make enough money to easily transition to another location.

Otherwise, that $25,000 would be better spent on a home like these:
https://www.zillow.com/homedetails/8...88172165_zpid/

https://www.zillow.com/homedetails/1...88488611_zpid/

https://www.zillow.com/homedetails/1...88581603_zpid/

Obviously, you need a lot more than $25,000 to make these desirable, but they're in relatively stable neighborhoods or near to more desirable areas with decent amenities. It's not guaranteed you'd make a profit in the short term, but you have a far better chance than a house in the middle of a neighborhood that's incredibly vacant.
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  #51  
Old Posted Aug 14, 2019, 12:17 AM
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Originally Posted by suburbanite View Post
I'm more surprised by the quality of the facades and general cleanliness than the overall price. Assuming they were purchased for <$100,000 in what's seen as a less desirable city nieghbourhood with problems, it's surprising that the household wealth is there to support the upkeep and repairs that come from owning a decently large prewar home.

My sense of what's a normal income/house price ratio is probably skewed though. I guess there's no reason to assume a family in Bagley isn't earning >50% of their home's value every year. The opposite of the "house-rich, income poor" in many distorted markets.
It's not a less desirable neighborhood. It's a predominantly black middle-class neighborhood. The residents probably either work in city government, the school system, or for one of the Big Three. Maybe some health care professionals as well.
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  #52  
Old Posted Aug 14, 2019, 12:28 AM
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Originally Posted by lio45 View Post
Oh! That's interesting, and it makes the thread even more relevant.

Why Detroit then (over, say, Blighted Philly or Blighted St. Louis)?

Are you young and mobile and single enough that you could uproot yourself and move to Detroit?

Can you do some work yourself?

If you've answered yes to both these questions, you could probably follow a path similar to the one I followed for myself, and end up with a sizable real estate portfolio reasonably early in your life.
Detroit for obvious reasons, it's cheap and there is a huge potential for future profit given the city is teetering on a big turn around -- similar to how I view stocks. You have the most potential if you buy bargain stocks, versus buying Apple or something. Apple might go up 10%, but that slightly less known stock might go up 200% over the same period.

Would I want to invest in Orange County? No. It's more risky because it requires a ton of capital upfront and the potential gains are much lower than if you risked the same amount of money in other markets.

-----

I could uproot myself rather easily. I wouldn't uproot to live in Detroit though and you wouldn't have to. You can get a pretty good ROI even with a property management company, if you wanted a hands off approach.

These guys I mentioned in my OP were a couple good friends of my brother in his MBA class, living 2,000 miles away from Detroit. At the time they were buying properties under $10,000, quick cosmetic renovation and put it up for lease to be sold at a later date for profit.
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  #53  
Old Posted Aug 14, 2019, 12:31 AM
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Having personally spent time in this neighborhood on multiple occasions, I wouldn't invest in this specific house.
And that specific house was just an example to be used for the thread.
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  #54  
Old Posted Aug 14, 2019, 1:01 AM
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I'm bullish on what's left of Detroit's pre-war rowhouses and multi-family housing stock.

For instance, this rowhouse last sold for $13K: https://www.zillow.com/homedetails/6...88518980_zpid/

But it's about a mile from this area, where row houses sell for +$200K: https://www.zillow.com/homedetails/6...83772356_zpid/
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  #55  
Old Posted Aug 14, 2019, 1:04 AM
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Originally Posted by suburbanite View Post
I'm more surprised by the quality of the facades and general cleanliness than the overall price. Assuming they were purchased for <$100,000 in what's seen as a less desirable city nieghbourhood with problems, it's surprising that the household wealth is there to support the upkeep and repairs that come from owning a decently large prewar home.

My sense of what's a normal income/house price ratio is probably skewed though. I guess there's no reason to assume a family in Bagley isn't earning >50% of their home's value every year. The opposite of the "house-rich, income poor" in many distorted markets.
Exactly. Probably many Bagley households have incomes comparable to their home values. Until 20 years ago, the strong majority of the region's professional class AAs lived in NW Detroit, and it's still probably the biggest regional concentration. Probably lots of lawyers, medical professionals, and managerial positions.

Many AA households have high incomes but low wealth related to white counterparts in the same income range, so don't have the same home budget. The fact that black neighborhoods don't appreciate in value much has been devastating for intergenerational black wealth. A Bagley home may only be worth 150k, but the first black household may have paid 75k for it back in 1970. In contrast I know very modest income white households living in multi-million dollar homes, thanks to home appreciation and intergenerational wealth transfers.
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  #56  
Old Posted Aug 14, 2019, 1:36 AM
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Originally Posted by Sun Belt View Post
I wouldn't uproot to live in Detroit though and you wouldn't have to. You can get a pretty good ROI even with a property management company, if you wanted a hands off approach.
Hahaha. Try it (especially in a bombed-out Detroit 'hood!) and get back to me (and this thread) in a few years.

Meanwhile I'm posting this right away for your benefit:
Told you so.
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  #57  
Old Posted Aug 14, 2019, 1:43 AM
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Originally Posted by animatedmartian View Post
Having personally spent time in this neighborhood on multiple occasions, I wouldn't invest in this specific house.

Instead I would tear it down and turn it into a strip mall with the adjacent lots, possibly even that church if I could get a hold of it.
I believe the entire block (between the freeway service drive, Ellery, and Holborn) is for sale, but that's $50k asking price for both houses.

I think the vacant lot on the NW corner of Ellery and Holborn belongs to 3569 Holborn, but I'm not sure. (Does Detroit have public property records? That would answer the question.)

Zillow link showing the properties
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  #58  
Old Posted Aug 14, 2019, 1:48 AM
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Originally Posted by Crawford View Post
A Bagley home may only be worth 150k, but the first black household may have paid 75k for it back in 1970.
That's horrible. For a quick example of contrast over the same timeframe, my grandpa bought his land in the early 1970s for $8k and resold it a few years ago for $600k. And it wasn't a particularly good nor special investment.
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  #59  
Old Posted Aug 14, 2019, 2:11 AM
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Originally Posted by Crawford View Post
Exactly. Probably many Bagley households have incomes comparable to their home values. Until 20 years ago, the strong majority of the region's professional class AAs lived in NW Detroit, and it's still probably the biggest regional concentration. Probably lots of lawyers, medical professionals, and managerial positions.

Many AA households have high incomes but low wealth related to white counterparts in the same income range, so don't have the same home budget. The fact that black neighborhoods don't appreciate in value much has been devastating for intergenerational black wealth. A Bagley home may only be worth 150k, but the first black household may have paid 75k for it back in 1970. In contrast I know very modest income white households living in multi-million dollar homes, thanks to home appreciation and intergenerational wealth transfers.
What's stopping a household with full replacement value income (who presumably hold little mortgage debt) from moving into the next tier of neighbourhoods with better schools and safety?

Is it a cultural thing? You would think people would climb the housing ladder as their financial situation allowed, particularly because it's seen as a strong wealth accumulator.
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  #60  
Old Posted Aug 14, 2019, 2:58 AM
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invest like buy a cheap property and hope it appreciates without doing any work or flip a house and sell it for a profit? two very different scenarios in that city. id flip a house but id never buy a cheap home and just sit on it and id never ever be a landlord in a run down neighborhood. id rather just find a cool house in a borderline neighborhood and live in it. say north corktown or parts of east english village.
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