I recently had dinner with friends who’ve decided to start a real estate investing company. Though Daniel and Ruby have one rental near the University District, they’re hoping to take their part-time investing venture full-time by buying and renovating homes in other up and coming Detroit neighborhoods. We’ve all enjoyed watching Detroit transform over the last several years and, as a full-time real estate investor, I’m proud that I’ve taken part in that transformation. Wanting to do the same while growing their real estate portfolio, they asked where it is that I thought they should buy next.
It’s a familiar topic of discussion and one that I frequently have with another friend and fellow investor, Sami Abdallah. Sami, who is an independently owned and operated HomeVestors® franchisee, like me, has worked in the real estate industry for over ten years. He’s been investing in Detroit real estate as a franchisee for almost as long. So, we both have a lot to say on the subject of where to invest next in Detroit’s changing market. And, I was happy to share our latest thoughts with two of Detroit’s newest investors.
Which Up and Coming Neighborhoods in Detroit Should You Invest In?
Detroit has had a long, often painful, crawl back from the edge of near financial ruin. It was one of the hardest hit cities during the housing crisis, but the troubles began long before—around the time the “Big Three” automakers left to seek cheaper pastures. And, unfortunately, the problems persisted. Without jobs or the hope of finding new ones, people abandoned the homes they could no longer afford. Entire neighborhoods emptied out and, as a result of the diminished tax base, so did the city’s ability to take care of them. In 2013, Detroit filed for the largest municipal bankruptcy in U.S. history. For those of us who’ve lived here our entire lives, that the city has been able to turn this around at all is remarkable—and a huge point of pride.
There are a variety of factors that contributed to Detroit’s rise from the ashes, not the least of which were folks like Sami who decided to invest in Detroit real estate. Though Sami doesn’t like to take any credit personally, his ongoing effort to buy and rehab houses in promising areas around the city has had as much to do with revitalizing neighborhoods as the influx of more job opportunities, improved infrastructure, and falling crime rates. He, and investors like him, have helped to reduce neighborhood blight, increase property values, and provide homes to families that would have otherwise been laid to waste.
But, while some areas have changed radically, like downtown and midtown, and others have stabilized, like Indian Village and Rosedale Park, some neighborhoods are still on the cusp of transition. It’s in these areas that Sami and I are taking a closer look. And, if you’re interested in making a positive social impact by investing in real estate, in addition to a potentially good living, you might want to take a look, too. Here they are:
- Fitzgerald. Only a short commute from downtown and surrounded by relative affluence, Fitzgerald hasn’t yet seen the kind of economic resurgence that other Detroit areas have—but, that may soon change. City officials are working hand-in-hand with community members to turn every inch of publicly-owned land and buildings into parks and green spaces that are accessible to all. Plans are also in the works to renovate over 100 vacant or abandoned homes, improve streets, and develop more retail and commercial space. So, though the residents of Fitzgerald still currently suffer from a low average income and a high unemployment rate, the addition of new jobs should help to shift that considerably. As the economic—and literal—landscape of the area begins to change, property values should also get a much-needed boost. It’s high-time for buying low there right now.
- North End. North End, which borders the gentrifying New Center to the south and can be reached from downtown Detroit in less than 15 minutes, is also poised to experience a comeback. Thanks to development initiatives spearheaded by local nonprofits, plans are in the works to build over a dozen new single-family residences and renovate others this year alone. The goal, which comes on the heels of the city’s push to reduce neighborhood blight by demolishing more than 3,000 homes, is to revitalize the area by creating livable space where there was formerly none. And, a much-needed side effect of reaching that goal will likely be a safer, more desirable neighborhood—especially for those who can afford to buy a home, but not necessarily in nearby hot spots. But, because every up and coming neighborhood eventually becomes the latest and greatest thing, the low entry point for currently investing in real estate here won’t last long.
- West Village. West Village, adjacent to both the popular neighborhood of Island View and the relatively stable one of Indian Village, has been on its own upswing for a few years. Its location is especially ideal for Millennials, being close to trendy downtown and the Rivertown-Warehouse district. But, it’s also highly walkable with a family-friendly vibe, which appeals to parents young and old. And, since the city is planning to include West Village in its effort to continue revamping the streets, parks, housing, and retail opportunities in multiple neighborhoods, the time to buy, renovate, and sell houses in the area has probably never been better. Even though this neighborhood is gaining popularity, there is still time to get in on the action and be an integral part of furthering it. As a result, investors have already had their eye on West Village as a place where buyer demand, and potential returns, are likely to grow. So, you might want to get your hands on a few investment houses here while you still can.
An added benefit to investing in these Detroit neighborhoods and others around town is the opportunity to create diversification in your real estate portfolio. With Detroit’s poverty rate still ranking above the national average, not everyone can afford to buy—nor does everyone necessarily want to. So, buying property to hold in the “City of Renters,” as Daniel and Ruby did early on, can be just as prudent as buying homes to rehab and resell. And, no one knows this better than Sami. Buy-and-holds successfully make up somewhere between 60 and 70 percent of his current portfolio.
But, whether you’re looking to diversify or to specialize, as I do, in buying, renovating, and selling homes for profit, you’ve got to have leads that convert in order to find the deals that count. Otherwise, you’re just spinning your investment wheels in Motor City, going nowhere and helping no one.
Finding Qualified Leads in Detroit’s Up and Coming Neighborhoods
Not too long after our dinner date, Daniel and Ruby decided to join me and Sami by becoming independently owned and operated HomeVestors® franchisees. Of the many advantages that being a HomeVestors® franchise brings, having access to motivated home seller leads ranks among the top—something that Daniel and Ruby needed if they hoped to expand their business into some of Detroit’s most promising neighborhoods. With the well-known and trusted “We Buy Ugly Houses®” marketing campaign, which reaches distressed Detroit homeowners through TV, radio, and print, franchisees get more than just qualified leads. We get great opportunities to rebuild neighborhoods as we build up our professional real estate investing businesses. It’s why Sami and I joined the team and how we and our fellow franchisees across 48 states have been able to buy over 95,000 homes nationwide since 1996.
Want to help Detroit neighborhoods become great again? Contact HomeVestors today!
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