I’ve been buying rental houses here in the suburbs now for seven years.
And nearly the entire time I’ve been telling anyone and everyone to stay away from the city of Detroit if they wanted to own rental properties.
A few listened. Fortunately for them.
The rest, however did not. And now most of that group is now out of real estate altogether.
Detroit is a cesspool of crime and gangs. And because of that buying and owning in Detroit isn’t child’s play.
It’s hands on. It’s time consuming. It’s dangerous. And it costs a fortune after you buy.
What, nobody every told you that it cost a lot of money to own rental properties in Detroit? Funny how that is! All you ever hear is how cheap the houses are. For good reason.
You see, getting your first house in Detroit, with or without a first Section 8 renter looks and sounds great at closing.
But have you ever seen the damage that the typical Detroit renter will do to a house in under a year? I have. Trust me when I tell you that you don’t ever want to see it. It will literally turn your stomach.
What happens is that they’ll live in your house until it gets too filthy and beat-up even for them, then your renter, the one that you thought would live there forever, will stop paying rent, then move.
Leaving you to clean up the mess and repair the damage.
And oh by the way – the small security deposit they paid won’t cover the damage. And very few Detroit renters are collectable, so good luck taking them to court to get them to pay for the damages. (The court in Detroit is also so tenant friendly that it’s extremely difficult if not impossible to get money judgements even if they are collectable.)
Then after they move and your house is vacant, your house will get stripped within days of anything of value that the tenants didn’t take with them.
So every time you have a vacancy of even a week in Detroit, you run the very real risk of needing nearly a full rehab done on the house before you can re-rent.
And your cash flow won’t cover the cost either.
In addition, the property manager that I work with – and he’s the best in the metro area in my opinion – just stopped managing anything in the city of Detroit.
Dozens of houses and dozens of apartment units. Cancelled. He gave up a ton of money by doing that.
So I asked him why. He said it was because he was tired of his rent collectors getting shot at.
Personally I didn’t need another reason to stay away from rental houses in Detroit.
Hopefully this will be enough to convince you too to focus on the suburbs.
Tune in tomorrow for STEP 2: Focus on SCHOOL DISTRICTS