Is it a good time to purchase property/real estate in Detroit?

So I will be moving to the Detroit-Windsor area this summer.

Since I am Canadian citizen, plan to live in Windsor, work in downtown Detroit. My plan is to rent in Windsor for myself.

But I am also thinking off buying property in detroit [[downtown?) as an investment. Like an apartment or condo [[1 bedroom), and renting it out to someone.

Is this a good idea? And if it is,

1) How much would a 1 bedroom in downtown area cost?
2) What is a good area to buy right now?
3) We would probably plan to sell in 3-5 years, is it worth it as an investment?


Or am I wasting my time and should stick to renting my own spot in Windsor?

Thanks!

I am no real estate expert, but it seems to me that we are due for another recession or at least a down tic in the economy soon. Detroit prices are at all-time highs for places in the downtown area. If you are looking on the periphery there may be deals to be had if you buy a house, do minor upgrades, then rent it out, but It is my guess that five years from now the prices for condos or apartments will be lower due to inventory and the economy slowing down.

I have been thinking about purchasing property myself, but I think I will be waiting for the market to soften a bit. That is just me though.

It would be very risky. Since there is a shortage of condos downtown until more new construction comes online and the market sorts itself out you may be buying at peak prices. Most new builds downtown are rental apartments and you don't sound like the guy who wants to manage and maintain an older property outside the core. You need to a lot of appreciation to flip a property in a few years, cover your costs and make money.

Edit: Took me a while to post. Sounds like Southen agrees.

Downtown is a good buy in my opinion. More specifically, Capital Park should attract high rent but you’re going to pay. Keep HOA’s in mind and consider taxes since you won’t be homesteading.

Personally, I think we are far away from a massive correction remotely resembling what we saw >10 years ago. That was a once in a lifetime supercycle correction that rocked global markets, similar to the Great Depression. There will off course be mild corrections but I truly think we are at the cusp of a major RE boom in Detroit. The likes that we’ve never seen before.

Good luck in your search and keep us updated.

Also... if you buy a house or condo... be aware that many new constructions are in NEZ [[Neighborhood Enterprise Zones)... which keeps property taxes at an artificially low price for 12-15 years. So a property that gives you $2000 in annual property taxes now... will jump up possibly 10 fold in 12-15 years. Fair warning... make sure to ask about whether any property you buy is in a NEZ....

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Originally Posted by SammyS

Personally, I think we are far away from a massive correction remotely resembling what we saw >10 years ago. That was a once in a lifetime supercycle correction that rocked global markets, similar to the Great Depression. There will off course be mild corrections but I truly think we are at the cusp of a major RE boom in Detroit. The likes that we’ve never seen before.

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I go back and forth on this very point. I don't think we are going to see a recession like the last one, but can the new enthusiasm for living in the city help curtail the effects of another recession? No matter what the economy is there is a lack of urban living in southeast Michigan, which may help Detroit continue redeveloping even if things slow down nationally.

Thanks for quick responses.

I'm intrigued/surprised by initial responses. I'm moving from the Northeast, and we all think Detroit is a "boomtown" for buying property...perhaps not, or I've just missed the boat?

Depending on ones ability a duplex or twin flat,I guess that is what you guys call them,that needs a little refreshing.

Rent out one side so there is no worries about somebody looking after if you are away,hopefully something where the one side covers the mortgage.

Maybe it is closer up there but most find it hard to rent out properties in another city,if something came up would you be able to drop everything to tend to it?

I also agree Now is not the time to buy something that recently sold if it is peaked.

2010-2014 was the true window for deals, but profits can still be made

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Originally Posted by blitz2014

Thanks for quick responses.

I'm intrigued/surprised by initial responses. I'm moving from the Northeast, and we all think Detroit is a "boomtown" for buying property...perhaps not, or I've just missed the boat?

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First of all, you should not be drawing a conclusion on such a big decision based on blog posts. Run your calculations, check occupancy rates, compare returns to NE cities like NY or Boston, speak to those with skin in the game and at a minimum, spend some time in the city and get a feel of it. Get very familiar with the direction Detroit is going. Who’s moving in? What will your competition look like?

You know what I’m talking about. If you’re serious, I can probably help you out.

The weird thing in Detroit is that there is virtually nothing to buy right now. I grew up here, then went to DC for 5 years, then Miami for 15 and my work just brought me back.
I rented out my house in FL and I’m renting here since there was no way I was going to buy anything without investigating for a few years.
Im renting right downtown and as far as I can tell, the only things you can buy inside the CBD loop are: Residences at Fort Shelby, Residences at Book Cadillac, Detroit City Club apts and Renaissance Center City Club. I could be wrong, but that’s all I could find.

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Originally Posted by blitz2014

Thanks for quick responses.

I'm intrigued/surprised by initial responses. I'm moving from the Northeast, and we all think Detroit is a "boomtown" for buying property...perhaps not, or I've just missed the boat?

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You're excluding yourself from an investment grade property in Detroit if downtown is the only place you'd consider. Downtown is the place to be right NOW and everyone knows it. If you're looking to invest and not be all in on a major rehab you need to think about where the the NEXT place to be?

If I were looking for an investment property that I could rent out without doing much work, then cash in on 4-6 years from now I would be shopping in places like Islandview, North Corktown, Virginia Park, Milwaukee Junction, and North End. These are areas that have the biggest upside, % wise that is.

The trend nationally is towards dense, walk-able, diverse, urban communities and I don't see a recession changing that. I'm betting that a good number of the young professionals living in apartments downtown right now will not be looking to move back to the bedroom communities many of them grew up in. Rather, they will look towards the neighborhoods I've listed for homes when they're looking to buy.

Very helpful advice! Thank you.

I'm going to check out those areas you mentioned.

Yes, I'm looking at cashing in, roughly 3-4 years....

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Originally Posted by K-slice

You're excluding yourself from an investment grade property in Detroit if downtown is the only place you'd consider. Downtown is the place to be right NOW and everyone knows it. If you're looking to invest and not be all in on a major rehab you need to think about where the the NEXT place to be?

If I were looking for an investment property that I could rent out without doing much work, then cash in on 4-6 years from now I would be shopping in places like Islandview, North Corktown, Virginia Park, Milwaukee Junction, and North End. These are areas that have the biggest upside, % wise that is.

The trend nationally is towards dense, walk-able, diverse, urban communities and I don't see a recession changing that. I'm betting that a good number of the young professionals living in apartments downtown right now will not be looking to move back to the bedroom communities many of them grew up in. Rather, they will look towards the neighborhoods I've listed for homes when they're looking to buy.

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You can also search for the cities future growth plan which is another tool to help,it shows targeted future objectives.

Some properties or areas that are or were residential today may be commercial later according to suggested zoning changes.

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Originally Posted by blitz2014

...But I am also thinking off buying property in detroit [[downtown?) as an investment. Like an apartment or condo [[1 bedroom), and renting it out to someone.

Is this a good idea? And if it is,
...
Or am I wasting my time and should stick to renting my own spot in Windsor? ...

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I wouldn't recommend Detroit real estate as the entry point for a Canadian investor.

Bullish on Detroit in the long-term. But if you are asking this question, it suggests you are not already in the RE market. Start with properties closer to home first. A few years ago, Windsor was a good market for rental property investment. [[No idea about how it is today.)

Real Estate, especially rental properties, should be down the list of investments. After a few local homes.

Further, the US dollar is strong right now. So you'd be buying expensive in expensive US dollars. And for both the purchase and sale, you will take a 2-3% hit each way. 4-6% loss there.

Currency risk. Another 'avoid'. 5-year range something like $0.95-1.45 CAD to buy USD. We're on the higher side right now. You can place your money on Trudeau and his pipeline track record if you really drink his Kool-aid.

Last, Canada seems lost economically. They are still pushing old ideas like carbon taxes, to control global warming. With no reduction in CO2 to show for it. The USA on the other hand is looking forward. Greatly increased domestic oil and gas production. Betting that current economic growth helps future CO2 control. And so far the USA is the world leader in reducing CO2 [[at scale). This actually is a vote in favour of US investment. But I'd do it in a more diversified way.

And that's my last. Diversify. Don't bet half your wealth on Detroit Real Estate. Buy a REIT, and keep it to 15% of your investment portfolio. Sure, bet on the USA if you wish. But better a Vanguard total US market index for about 25% at MOST.

Save US rental homes for your 6th rental house. Start in Canada.

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Originally Posted by hybridy

2010-2014 was the true window for deals, but profits can still be made

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That's true. I sold my Midtown duplex on W. Canfield between 2nd & 3rd in 2012. Compared to what I paid for it in 1998 I made a hefty profit. It's probably worth a lot more now but I was satisfied with what I sold it for.

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Originally Posted by Former_Detroiter

That's true. I sold my Midtown duplex on W. Canfield between 2nd & 3rd in 2012. Compared to what I paid for it in 1998 I made a hefty profit. It's probably worth a lot more now but I was satisfied with what I sold it for.

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I think hybrid meant 2010-2014 was the best buying opportunity and I would agree, not to say it’s bad now. Since 2012, properties in the hot areas have appreciated at least 3 fold.