Does buying multifamily homes in Detroit a good idea ? Prices are very low vs the incomes. Anyone can help ?

I'm a Canadian looking to escape from a crazy real market in most of the Canadian provinces. Prices are high, incomes are low. Non sense... Detroit seems to offer good deals. What do you think ? Thanks for your time.
In Buying Property - Asked by Fred S. - Mar 6, 2012
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Lender/Mortgage Broker
New York, NY

Fred, Yes this is a good idea if you go into it with the right expectations. It is a long term investment, the chances are increased property value over a 10 year period is very slim, but you will be able to make a good income if you buy larger buildings(over 10 units at least).
RJ Dillon
JG Capital, LLC

Mar 6, 2012
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Sean T.
Utica, MI


Mar 6, 2012
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Alex J.
Plano, TX

I understand that the Detroit economy is on the upswing. As in all real estate investments, you need to look at the market conditions in the area that you plan on making your investments. Jobs are the #1 driver for commercial real estate. You need to look for job growth, population growth and all of the other market based indicators of a good multifamily investment.

Mar 21, 2012
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Jeff R.
Lender/Mortgage Broker
Birmingham, MI

Dont do it! It always looks so great on paper. The potential returns are amazing, but you should think of it as buying a property in a third world nation. I grew up in Metro Detroit. Ive know so many people that lost money. The only people that have succeeded are very aggresive/shady.
Forget about getting financing. Its red lined like crazy.

Apr 6, 2012
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Matthew U.
Redondo Beach, CA

The trick to multifamily investing is to look at the demographics. Can the demographics afford the rent? Are the demographics improving so that they could afford double the rent if the are improved over time? How easy is it for change to occur? Is it in the clear path of development or a long shot?
The barrier to enter that market is low. If this is the only place you can afford to start, you may not have other choices. Make some money, get experience, and then take your winnings and leave for a different city.
You can make money in any city. But, are you able to manage the property hands on? Can you handle the management yourself if this was put to you? What are the chances that something violent could happen to you if you were trying to collect late rent? Many of my investors consider this when then own. In San Diego there are areas where the risk of something violent happening is high and professional management is needed and expensive and their are areas where such a risk is low. I have known of managers who got shot when they were collecting rents. This is a valid question to consider before purchasing in a rough neighborhood. You can loose your investment if your tenants are managing you. However, I don't know Detroit or the specific area that you are looking at. When I have clients who are looking to purchase in an area I suggest that they drive around the area at night and during the day. If you see a police officer flag them down and ask them. Remember police officers work for landlords, landlords pay lots of property taxes. Police departments usually have all types of programs in different areas to handle various acts. You could learn a lot from trusting the guys who know the tenant population at its core. Good luck!
Matthew Udewitz

Jun 1, 2012
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