Renting out Property in Detroit

[softailrider]

Any landlords here?
I am thinking of purchasing a couple of properties. They are in an area we know and like and we have a couple of potential tenants.
The tenants are good people [[not related), however with the economy the way it is, I want the make sure the properties are available to those who can pay.
A co-worker mentioned renting out on week to week basis since its easier to evict someone. I had never heard of it until now. Has anyone ever heard of this?

Former landlord here - I've had dozens of rental properties in several different parts of the city over the past 3 decades. My advice would be to look for a different investment. While Detroit is very lax about inspections of rental properties [[ just about non-existent I think ) It's a horrible business now - insurance is sky high, property taxes are insane. Your average Detroit renter knows how to play the system like a piano - it's get the first months rent and security deposit and then the chase begins, the chase doesn't end until you throw them out then the cycle starts again. Of course when you have a vacant house you better pay somebody to stay there, if you don't your friendly neighbors will pick the place clean so fast it'll make your head spin.

I could go on and on, let's just say you better get your ducks in a row before you spend any money on rental property in Detroit

[48205to24]

Former landlord here - I've had dozens of rental properties in several different parts of the city over the past 3 decades. My advice would be to look for a different investment. While Detroit is very lax about inspections of rental properties [[ just about non-existent I think ) It's a horrible business now - insurance is sky high, property taxes are insane. Your average Detroit renter knows how to play the system like a piano - it's get the first months rent and security deposit and then the chase begins, the chase doesn't end until you throw them out then the cycle starts again. Of course when you have a vacant house you better pay somebody to stay there, if you don't your friendly neighbors will pick the place clean so fast it'll make your head spin.

I could go on and on, let's just say you better get your ducks in a row before you spend any money on rental property in Detroit

We chose the neighborhoods in Detroit because a lot of investors wont bother with it. Many that do already have a negative attitude toward the people and the area. We dont have that yet. We made some connections in some of the areas we like so we know the neighbors want the neighborhood to succeed. We screened potential tenants first and we will start with short term leases. People who do not need a place but want a place and/or people who will be leaving in a year or so. These tenants may not be available forever, but we have a couple of choices now. Hopefully we can get one the houses soon enough to get started.
Like I said we have family who own property in Detroit, they have good tenants now but went through a lot drama to get them. I am hoping doing things a little different from the beginning will change the odds.
Living in the neighborhoods with its high taxes, insurance, etc is not fiscally responsible either but I do it because I grew up here and I love the city.
Hopefully finding a strategy to successfully invest in the neighborhoods without banks and vouchers will encourage other young people to do so.
Pass or fail, as long as we dont owe a mortgage on the place I am good.

[Richard]

We chose the neighborhoods in Detroit because a lot of investors wont bother with it. Many that do already have a negative attitude toward the people and the area. We dont have that yet. We made some connections in some of the areas we like so we know the neighbors want the neighborhood to succeed. We screened potential tenants first and we will start with short term leases. People who do not need a place but want a place and/or people who will be leaving in a year or so. These tenants may not be available forever, but we have a couple of choices now. Hopefully we can get one the houses soon enough to get started.
Like I said we have family who own property in Detroit, they have good tenants now but went through a lot drama to get them. I am hoping doing things a little different from the beginning will change the odds.
Living in the neighborhoods with its high taxes, insurance, etc is not fiscally responsible either but I do it because I grew up here and I love the city.
Hopefully finding a strategy to successfully invest in the neighborhoods without banks and vouchers will encourage other young people to do so.
Pass or fail, as long as we dont owe a mortgage on the place I am good.

you are talking about putting something like this in a neighborhood then it will make the neighborhood become more transient,would you like to live next to a house that changes tenants weekly?

Lots of cities have removed the weekly rental aspect because of that as it is hard to stabilize a neighborhood with weekly rentals.

Been there done that back in the 80s Orlando ,take a house and chop it up into many sleeping rooms with shared baths [[flop house) nice return but rules are subject to change at any given moment.

Orlando in the 90s saw many a UK owner buying houses for weekly rentals up to $3000 a week ,rules changed and they ended up dumping the house and everything inside for pennies on the dollar.

Weekly rentals equaled hotel status and were subject to bed tax.

If you are baseing the numbers on weekly rentals then it takes three weeks to evict where is the gain?
With a hotel it is a closed end contract at 12 pm it is over,cops can remove but the trick would be how to classify a single family home as a hotel?

Neighborhoods need home owners not people comming in and creating more stress with weekly rentals,why not buy a house in a nice neighborhood ,charge a fair rent and credit check the tenants?

You may have interest now but what happens if they are gone you still have to pay the bills and when somebody maybe not so ice comes along with cash it may be not so easy to say no.

lots of old motels up for sale cheap,but still more of an investment then what you are trying to do but then you have to spend money to make money.
It is hard enough

[Wesley Mouch]

Any landlords here?
I am thinking of purchasing a couple of properties. They are in an area we know and like and we have a couple of potential tenants.
The tenants are good people [[not related), however with the economy the way it is, I want the make sure the properties are available to those who can pay.
A co-worker mentioned renting out on week to week basis since its easier to evict someone. I had never heard of it until now. Has anyone ever heard of this?

Am a landlord. Detroit is not the place to cut your teeth.

[Cliffy]

This honestly sounds like a disaster. You're going to end up getting garbage with week to week and what happens when they come in and tear up your house and don't pay. Yeah, you can evict them but you might have to do 4k worth of repairs. You're better off putting that money into Coca Cola and Verizon and collect dividends. My family had a rental in a good neighborhood and you really don't make as much as you think after insurance, property taxes, misc. repairs etc...

[Hamtragedy]

As a landlord who has a few in Hamtramck and Detroit, [[I also do work for a guy who has 15 left), and a contractor, I can tell you unequivically to do your investment elsewhere.

1. Are you buying on your block? No. Don't bother
2. The renter pool is atrocious. Those good renters who in good faith bought a house in the late 90 early 2000s lost their houses, got spit out to the bottom of the rental pool. Many left for the brighter pastures of suburbia or Georgia.
3. Do you know that the average beginning lead inspection starts at 500 for a 1300-1500' sq. house, for the first inspection only, and there is usually a second one, because no matter what you do, you will not "pass" your first? Do you know that, not even to remediate, but stabilize lead paint, you could start paying a EPA lead certified contractor usually a minimum of 2000? Use a certified one or you are wasting your money.
4. This lead cert is part of the registration [[annual), inspection [[annual) with the COD. Change annual to anal at any time.
5. You will have a hard time finding anyone to underwrite a homeownbers ins policy [[even fire only) unless you are in one of a few select neighborhoods, or have an existing policy in effect within the COD? $$$$$$
6..Your city property tax bills will in no way get the servicio you are paying for [[streetllights anyone).
7. an eviction in the COD requires a dumpster, at your cost, [[$300) in addition to the other $400 + court related costs, before the bailiff even shows up


Hey, I'm a good landlord. My lawns are cut, flowers, nice interiors, cute, well maintained, new roofs, and I got good renters. But a low low low profit margin. if average rent just outside of Rosedale [[example but true). is not much over 650, that's not a lot left over. Same as Hamtramck, [[more local enforcement but not as strict to register, and its for 3 yrs.

Consider wisely.

[Dumpling]

Am a landlord. Detroit is not the place to cut your teeth.

I second Wesley Mouch on this. However, there are rental
companies doing a steady business in Detroit, difficulties
and all. If I were to go into this business in Detroit
[[a MASSIVE if) I would try to find two or three of these
that seem to be well run and have stability, then talk to
people connected with them to get some insight on what
it takes for them to do business. They often do need to
spend time in court to request an eviction, and that's the
easy part of the work. My area in Detroit has resident
thieves but there's not enough housing demand in my
specific area to dislodge them. Which is a vicious cycle!..
Please be sure to care for your properties - rake the gutter,
mow the lawn, pick up the litter often; bonus points for
taking care of the vacant ones next to them. Thanks
so much for this. Do not leave your house vacant without
immediate security response if at all possible. I taped a
realtor's cell phone number to my cell phone and did call
him more than once. [[That house survived but only because
multiple neighbors watched over it until it was bought; it
also had a security alarm).

[Casual]

Any landlords here?
I am thinking of purchasing a couple of properties. They are in an area we know and like and we have a couple of potential tenants.
The tenants are good people [[not related), however with the economy the way it is, I want the make sure the properties are available to those who can pay.
A co-worker mentioned renting out on week to week basis since its easier to evict someone. I had never heard of it until now. Has anyone ever heard of this?

]

go here and watch his videos. you should also contact him.

https://www.youtube.com/user/proshea01

[Richard]

As a landlord who has a few in Hamtramck and Detroit, [[I also do work for a guy who has 15 left), and a contractor, I can tell you unequivically to do your investment elsewhere.

Do you see at the minimum of 6% ROI through the years long term?

[48205to24]

I understand all of the points here. However, I have seen some successes in Detroit neighborhoods too.
I agree its a risk, and I would not expect anyone on this board to advise investing outside of midtown/etc. Like I told my uncle "We both have full time jobs and are familiar with general construction and home renovation, so if it fails, we will start over try something new. We promise."
[[Guess I should have known this thread would go in this direction)

[Hamtragedy]

Do you see at the minimum of 6% ROI through the years long term?

Yes. The friend who has 15 left has done it as his sole occupation for the last 25 years. The last 5 years have been as rough as possible, and if he was not free and clear on all of them, next to impossible. All his properties are on his block or in his neighborhood within 4 blocks. Mine were on my block, but I'm the only one with a lawn mower and edger so I cut half of my block, cuz it makes my properties look good.

As for the return, it ain't gonna happen over night.

Rental Income 650/mo x12 = 7800 [[if you can get 12 months straight)
Prop Tax = 2000-3000
Ins = 1200-1500

Say 4000 left.

minus:
Mortgage Principal
Mortgage interest
10-15% Maint Fee

Cost of new roof [[tear off) 4000-7000 [[2 for me)
Cost of new roof [[second layer) 2500-4500 [[is there a garage?) [[2 of those)
Cost of new furnace. 2000+ [[1 for me)
Cost of new boiler . 5000+ [[2 for me)
Cost of new electrical panel to 100 amp [[insurance co. will bill you higher for 60 Amp) 1000 [[did it myself).
New bath no tile 1000 [[done several)
new bath tile floor 2000 [[done several)
new bath tile thruout 4000-6000 or way more [[did those in a couple of my own)

I'm not saying it can't be done. I guess my first point of living on the block is as important as having a stake in your community. Grandmont Rosedale were nearly decimated when the market originally tumbled, because people started buying those houses for pennies on the dollar, but they didn't have the resources nor interest in stabilzing those houses. So they fell into disrepair even more, got scrapped, and it dragged the entire neighborhood down even further. Luckily, those houses are being salvaged but only thru GRDC.

This city is a tough rental market if you're not in midtown [[apparently). Would you make 6% ROI if you include all the hours and headache you put into it during the first five years? If you have a mortgage, I doubt it. But you did say long term, so yeah, if you have a stabilized block of houses, sure. But it's taken me a while

[softailrider]

Yes. The friend who has 15 left has done it as his sole occupation for the last 25 years. The last 5 years have been as rough as possible, and if he was not free and clear on all of them, next to impossible. All his properties are on his block or in his neighborhood within 4 blocks. Mine were on my block, but I'm the only one with a lawn mower and edger so I cut half of my block, cuz it makes my properties look good.

As for the return, it ain't gonna happen over night.

Rental Income 650/mo x12 = 7800 [[if you can get 12 months straight)
Prop Tax = 2000-3000
Ins = 1200-1500

Say 4000 left.

minus:
Mortgage Principal
Mortgage interest
10-15% Maint Fee

Cost of new roof [[tear off) 4000-7000 [[2 for me)
Cost of new roof [[second layer) 2500-4500 [[is there a garage?) [[2 of those)
Cost of new furnace. 2000+ [[1 for me)
Cost of new boiler . 5000+ [[2 for me)
Cost of new electrical panel to 100 amp [[insurance co. will bill you higher for 60 Amp) 1000 [[did it myself).
New bath no tile 1000 [[done several)
new bath tile floor 2000 [[done several)
new bath tile thruout 4000-6000 or way more [[did those in a couple of my own)

I'm not saying it can't be done. I guess my first point of living on the block is as important as having a stake in your community. Grandmont Rosedale were nearly decimated when the market originally tumbled, because people started buying those houses for pennies on the dollar, but they didn't have the resources nor interest in stabilzing those houses. So they fell into disrepair even more, got scrapped, and it dragged the entire neighborhood down even further. Luckily, those houses are being salvaged but only thru GRDC.

This city is a tough rental market if you're not in midtown [[apparently). Would you make 6% ROI if you include all the hours and headache you put into it during the first five years? If you have a mortgage, I doubt it. But you did say long term, so yeah, if you have a stabilized block of houses, sure. But it's taken me a while

Sounds like a lot of work for a 6 percent gain on your money. Why not put those dollars in a very conservative mix of 50% stock funds and 50% bond funds? Most years you'll beat that 6 percent and not leave yourself exposed to a whole lot of problems.

[sumas]

If you have a heart of stone, do it! You can make a bit of change

I have 4 tenants that I have let ride because the thought of homelessness makes me ill! I am owed $1,000's of dollars. All are now back on their feet after a few years.

Guess what, zero gratitude and still zero rent. I am doing eviction notices today. Want to, but can't is one thing, can but won't, is totally different.

Totally, will never rent again!

[48205to24]

We did a few years of research and saving to offest some of the risk and appease the naysayers. We are going to start with two houses and buy more or change strategy depending on the success rate. Eventually when we retire [[30 years, 25 if early) this will be full time. We still have the traditional retirment plans as well.

Our biggest critic right now is our uncle [[although all of his properties are in Detroit, none in the burbs-another story)
He got a second mortage the house he was living in and bought a 2 family in a decent neighborhood. Used the rent from one flat to cover the mortgage/insurance payment, used rent from the other flat to pay maintenance and the rest profit. The profit was used to eventually purchase another 2 family [[not so good neighborhood, not so good tenants) The second 2 family end up costing money. He still has one the two family flats and a couple other homes all with good tenants.

Our strategy is to purchase the houses cash and pay for reno up front. Rent from the house for the first year or so will be used to recoup the money used for renovations. We found potential tenants early, enough that if some lose interest before we get the houses we still have others. However, as soon as the house passes inspections we want tenants moving in. I like tenants that remind me of myself a little bit-like to pay on time and honor agreements in return for good service and nice things, that may be discriminatory but if we run out of those options that would change. Have you looked at some of th houses for rent in Detroit? I have done walk throughs lately to see whats out there and my question is who do you expect to agree to rent out your place if the carpet smells? The fixtures are older than me. The landlords are old and grumpy and the neighbors frown at him/her [[No reflection on anyone here). People dont want to deal with that unless they are desperate or have no other choice.

We are using contractors that have worked on our home and that of others we know, they do good work and have given good prices [[to us) and we hope to continue good relationships with them. Tile work, carpet, drywall, some electricity, paint, etc we can do ourselves. We do a pretty good job too. The only things would really scare us away is a house that needs more a lot of major work, and has water damage, mold, foundation issues etc.
We know people in the areas we are looking at, they're are actually a lot people watching houses and would like someone to come in fix it up and rent it to people who will not terrorize the neighborhood. You know the one vacant house on a nice block or group of blocks and everyone is scared who will come and buy it. Unfortunately, some of these houses are hard to access, it may be HUD and HUD is slow to sell to investors-they will sit for a while before we see them. By that time they can have it.

It will probably be 0% return for the first 2 years depending on the amount of work needed to fix the property up and the occupancy rate. But thats better than a 30 year mortgage. Once thats over, 33% goes toward taxes/ins/maint, 33% toward next house, 33% profit/savings. We hope to add another house every 3-5 years in the same area and if successful encourage other people we know who are home owners in that area to do that same. I dont have a heart of stone so I wont be renting to people who are friends and and family or people I feel sorry for. I like month to month lease and if they dont agree to it no deal. My husband is no nonsense and doesnt like to waste money or deal with drama. We know people who come up to Detroit from Ohio short term for work and hope to rent to them between occupancies if it comes to that.

I think as long as we are open to adjustments, keep it slow and steady and dont get the 'big head' and go out and buy 4 or 5 cheap houses at once because they seem to be a good deal, we'll be ok.

My siblings watched me by house when everyone said you are too young, wait till you are married, dont buy in Detroit[[they might have been right about this one),rent first you dont know anything about a house. 10 years later I am halfway done with the mortgage, married and my sibs saw this success and went out got houses [[not as nice as mine) for better prices some in the burbs some not.
So I am hoping to do something a little different so that others in a similiar situation can see that it can be done instead of adopting standards and stereotypes others impose on them. Also network and build relationships with the right people so that there is support if things dont go the way you planned them to.

[48205to24]

If you have a heart of stone, do it! You can make a bit of change

I have 4 tenants that I have let ride because the thought of homelessness makes me ill! I am owed $1,000's of dollars. All are now back on their feet after a few years.

Guess what, zero gratitude and still zero rent. I am doing eviction notices today. Want to, but can't is one thing, can but won't, is totally different.

Totally, will never rent again!

Sumas, thats terrible. However, there are soooo many programs for people on hard times in Detroit, especially those with children. Business is business they would have been ok.
Have you ever thought about a starting a nonprofit and using your properties as a shelter of some sort? You are already familiar with grant writing and you already have properties, at least you will break even.

[sumas]

48205to24. great screen name. Yep have thought of that and yes I actually have two non profits. Different agendas though. I make no money off of them so do not think I am playing a system.

[sumas]

Very interested in transitioning kids going out of the foster care system. Made a few calls and get none back.

Don't care much about making money but would like to break even. So it goes.

We do a lot of community work and love my city.

[Zacha341]

Yep. Being soft as a landlord will get your teeth kicked in financially, etc.

A family member attempted rental property [[a small apartment building in Detroit), it just became too much and he had to sell. He was threatened, had to carry a gun openly just to conduct standard business on his property, washers and dryers were destroyed regularly, break-ins one tenant upon another...

And had way too many of the 'three-month-rent' folks who can come up with the first and last months for security monies, but have no intention on paying beyond that. Then they hold you up in the courts for 6 months, then off they go to the next property. You're left with with damaged property / zero payment.

Granted it was a bad area he was in - but this ain't for the faint of heart.

If you have a heart of stone, do it! You can make a bit of change

I have 4 tenants that I have let ride because the thought of homelessness makes me ill! I am owed $1,000's of dollars. All are now back on their feet after a few years.

Guess what, zero gratitude and still zero rent. I am doing eviction notices today. Want to, but can't is one thing, can but won't, is totally different.

Totally, will never rent again!

[48205to24]

48205to24. great screen name. Yep have thought of that and yes I actually have two non profits. Different agendas though. I make no money off of them so do not think I am playing a system.

I know you arent making money off them, I know thats not your personality. It seems hard for people who want to start nonprofits to get the support they need from government, organizations etc. I know people who wanted to start nonprofits to provide housing for the physically and behaviorally disabled. Counselors, doctors, case workers, organizations already in the industry -none were interested in helping people they did not know or people new to nonprofits. Smaller ones didnt want the competition.

Maybe you can use the success of your other two nonprofits to leverage support for a new one. Its a great idea and there is definitely a need.

[Hamtragedy]

Hey, even if you keep them tip-top, once you run out of friends to rent to, that first month's water bill from a running toilet [[$300) is enough to break even the most well intended tenants. We do all plumbing repairs with no questions asked, and even then, tenants don't call. When they do finally call, after the kitchen sink clogs and they dump dishwater down the toilet/bathtub, and those no longer work, is when we get the call.

It's doable. Good Luck