Detroit. Just saying the word will get you a reaction wherever you are in the World. People respond to hearing Detroit with talk about automotive, cheap houses, and jokes about it being crime ridden. The sad part about the last one is that most people that talk bad about Detroit have no idea about the City and most have never even been to the City.
They respond to media reports and hearsay to formulate their opinion on what Detroit is.

Well, I’ve had enough of all of this talk about Detroit and explaining it one on one to everyone. Here is a list of the common myths and misconceptions that I hear from people about Detroit.

Detroit is all a Ghetto

The perception of Detroit from people that don’t know it is that Detroit is all a ghetto. The houses are all in terrible shape, everyone is unemployed, and the whole City is in general disrepair.

Saying that all of Detroit is a ghetto is like saying that all of Michigan is like Detroit. Detroit is like any other big City. There are good areas and there are bad areas. What people don’t understand is that there are EXCELLENT areas in Detroit. The houses in Northwest Detroit where we invest were built for the upper class back in the 1920′s and 1930′s. They are beautiful brick houses in great neighborhoods where people care about where they live. Houses are kept up, lawns are maintained, most families own their house, many are college educated, and many make $40,000 or more per year. Does this sound like a ghetto? There are areas that are not nice but they are no worse than areas in Chicago and other big cities.

Detroit is Crime Ridden and any house I invest in will never be safe

Security is a concern in any big city and Detroit is no exception. It is, however, not a war zone where you have to dodge bullets and everyone’s a hardened criminal. The areas that we invest in include people that are as averse to crime as you and I are and don’t want to live in a crime ridden area. There have been great strides taken in reducing crime and it’s working as estimates of violent crimes from 2006 to 2007 are down.

This goes back to the area you’re in. There are bad areas of Detroit that are not as safe as great neighborhoods in Northwest Detroit and Downtown. You need to find out what these areas are and invest there. Security on houses is a must with any vacant property (suburbs or City), which includes properly securing the doors and boarding up vacant houses that are getting rehabbed. It may be different from where you invest but crime and theft in good areas of Detroit do not need to be a big concern.

The houses are cheap but you can never get them rented or the rent is too low.

The rental market in Detroit is stronger than ever and rents are keeping steady. What happens when more people get foreclosed on and can’t get a mortgage for a new house, less people can qualify for a mortgage on a new house, and less people are buying houses just because of uncertainty in the overall economy? Hint: The answer is there are more renters in the market! What that means for cash flow investors is that houses are easier than ever to get rented out. Working with a qualified property manager that understands the area gets houses rented out quickly. Also, as people move from declining areas of Detroit, in the bad areas, to better areas like Northwest Detroit, there becomes even more demand for these houses as rentals.

I will be a slumlord if I invest in Detroit Properties

Being a slumlord is not determined by the area you invest in rather it is defined by the way that you maintain and manage your properties. I do not condone being a slumlord for moral and monetary reasons. First off, being a slumlord means that you do not fix-up the house very well, you cut corners, and generally make the house an undesirable and unsafe rental. Slumlords don’t fix things when they break and they usually can’t get a reputable management company to manage their properties because of this. What does that mean? It means that it is harder to get your house rented because you have to do everything yourself (i.e. not using a property manager) so you will most likely take longer and you have a less desirable house. How easy do you think it is to attract and retain tenants when they’re living in these conditions? Not very.

When you fix-up houses and maintain them like reputable Detroit investors do, you not only get it rented easier and retain tenants longer, but you make more money. You get higher rents and you get it rented quicker. There are slumlords in Detroit and many of them work in the bad areas of Detroit. Listening to their stories is probably where most of these myths and misconceptions are born.

The returns aren’t that great for the risk you take

The returns on Detroit investment properties are excellent when you invest in the right areas. On purely the cash flow and paying cash for properties, investors are seeing returns from 10%-15% annually. This is not taking into account equity, which is 50% on more for all properties we work with, and future growth. Rental rates in Northwest Detroit are anywhere from $850-$950 a month give or take. That’s excellent for being all in on a house less than $40,000!

You can’t invest in real estate and make money unless you do the work yourself or have great connections with professionals in Detroit

This myth is partially true but it’s not that you have to do all of the work yourself. Please do not think that you have to get out there and swing a hammer, clean a toilet or knock on a door to get rent. This is just not true. The returns above include management, vacancy reserves, and maintenance reserves just so you don’t have to do anything. Have qualified professionals that understand the area and what needs to be completed do the work. Where do you find these people?

Every person that purchases a house from Urban Detroit Wholesalers receives access to our exclusive list of real estate professionals that we use on each and every house that we invest in. We’re talking about reputable inspectors, general contractors, property managers, security companies, insurance providers, mortgage brokers, and absolutely everything else that you need or will ever need to take a house to a fixed up, rented, cash flowing, retirement providing asset! Not only that but we refer so many investors to these professionals that you not only can be assured that the job will be completed correctly the first time but you will also get the best price because of the volume. And… We also want you to be successful so we manage the rehabilitation and coordination with all of the professionals for you.

I know there will always be the naysayers on Detroit that refuse to listen to logic. What I say is good luck. Anyone else that’s willing to look through the veil of media doom and gloom and stereotypes that other have, join me in investing in this wonderful city.

Successfully Yours,
Jared Pomranky
Detroit Market Expert

Detroit real estate
Free Report on Detroit investment properties “how to”