Real estate investors are flocking to Detroit, because there are some of the best deals in the nation, and occupancy rates are rising and so are rents. After comparing the average sales price of homes to average monthly rents in nearly 1,600 counties, RealtyTrac found that Detroit's Wayne County offers landlords the best return on their investment in the nation. Investors that buy homes in the metro area can expect a 30% gross annual return from rents. That's triple the national average of 10%. (CNN)
One of the things that makes Detroit so attractive are the very-low prices investors pay for pretty sizable homes. Buyers paid an average of just $45,000 for homes in Wayne County in January, RealtyTrac found. Detroit's city limits, investors have been getting even more return on their investments. "We've got some steals here," said Rachel Saltmarshall, a real estate agent and immediate past president of the Detroit Association of Realtors. "There's a six-bedroom, 6,000 square-foot home in a historic district selling for $65,000.”
Homes are easy to rent. In and around the city's central business district, the occupancy rate has hit 98%, according to real estate agent Ryan Cooley. "People are getting frustrated because I can't find anything for them," he said. That has helped increase the rent. The average rent for a three-bedroom home in the area is about $1,100 a month, according to RealtyTrac. But in morepopular areas it can be much higher.
As a result, investors are heading to Detroit and the city has become one of the top places for Chinese speculators (As the Chinese economy continues to boom, Chinese are looking abroad to spend money on real estate.) "[One Chinese group I work with has] been buying about 20 houses a month," said Saltmarshall, a licensed builder who has been restoring properties in the area. Yet, there are trade-offs. While many of the older homes in Detroit are well-crafted, brick buildings with hardwood floors and leaded glass windows, many lack some of the essentials -- like plumbing and heating. RealtyTrac vice president Daren Blomquist also warned that buyers must factor in other expenses, such as taxes, maintenance costs and vacancy rates.
Still, the properties do require major renovations can sell for just a few thousand dollars and can be fixed up rather inexpensively. Area contractors work for less money in Detroit than in hotter markets like San Francisco or New York. Finding reliable tenants, especially in a city like Detroit, is another issue. Due to the high rate of unemployment, many tenants have bad credit and lack assets, unable sometimes, to even pay the security deposit. Neighborhood stability is always a consideration. "Until crime is under control, rentals won't go up in value much," said Saltmarshall.
If you would like information on your local real estate market, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.
Lang Premier Properties are Birmingham Realtors specializing in Oakland County Real Estate. Stephanie is an agent with Max Broock in Birmingham, Michigan. See what past clients have to say about Stephanie Lang. Lang Premier Properties looks out for your best interests when you purchase a new custom luxury home. We always recommend working with an experienced luxury real estate agent when buying a new luxury estate. you would like information on homes for sale, or are first time home buyer not working with a Realtor and would like to schedule a consultation with a qualified Oakland County and Macomb County Realtor, please complete the Lang Premier Properties contact form to have a real estate agent contact you.