Why Investing in Detroit Real Estate is Wise in 2017
Real estate can often be a profitable venture when the right circumstances are met. Finding these right circumstances requires adequate research, time, and effort—and often patience. While some areas of the real estate market may take a little more energy to find the right property, other markets are just ripe with hot investments.
One of the most profitable investment markets in the US is the Detroit Metro area.
Detroit has long been known as the automotive capital of the world. It is still home to General Motors, Ford Motor Company, and Chrysler. It is also home to over 100 different Fortune 500 companies such as Penske Automotive, Quicken Loans, Kellogg, Whirlpool, and Wal-Mart. The city has a vibrant corporate district with a blossoming job market. The compilation of these companies in one location have been drawing in new residents from across the nation for years—great news for investors.
As job markets grow and people begin to relocate for work, rental demands skyrocket. With an influx of new residents, the city’s overall growth begins to flourish as many new revitalization projects pop up across the Metro area—increasing home values and appreciation across the board.
What makes Detroit so profitable?
In addition to being the capital of the automotive industry, Detroit is one of the fastest growing industry hubs for businesses such as defense, healthcare, IT, logistics, and aerospace. The city’s economic structure is flourishing due to inventive programs offered by the state of Michigan; the Michigan Business Development Program, which provides financial help to businesses in the form of grants, loans, and other economic assistance. The state also boasts the lowest corporate income tax rate in the US, which comes in at a six percent rate. A strong business structure always leads to a strong job market.
While moving to Detroit is beneficial for businesses, it can also be advantageous for individuals. Personal income tax in the Metro area is also the lowest in the nation, coming in at only four and half percent. In addition to lower income taxes and a stronger economic business model, Michigan boasts one of the lowest cost of living rates in the entire Midwest.
As of now, the average household income in the Detroit Metro area is averaging at just over $50,000. With cost of living so low in the area, it allows small families to live quite comfortably on such an income.
For investors, there’s even better news.
The single-family three-bedroom home is averaging at around $65,000. With rental prices running at close to $900 a month, this allows for a great return on investment. Investors can purchase a fully renovated, turnkey property for $80,000 and begin seeing a monthly cash flow immediately upon closing.
Recent investments bring high hopes for Detroit’s real estate market
Detroit has been showing a steady stream of corporate, municipal, and private investments in the area over the last two years, with even more on the horizon. Dan Gilbert will be breaking ground on his Bedrock project in January of 2018, which is said to contribute 818,000 square feet of office space, 170,000 square feet of retail space, and 48,000 square feet of public space—in addition to its 482 residential units. Mayor Duggan recently announced a municipal project which will enrich several neighborhoods throughout the Detroit area by doubling commercial demolition efforts, enacting tougher policies for rental properties, and a concentrate on illegal dumping violations. Large tech-based companies such as LinkedIn, Microsoft, and Twitter are all increasing their presence and expanding the job opportunities in the area. While impressive, these investments are just the tip of the iceberg.
Each investment contributes to the Detroit market by increasing the number of available jobs on the market, beautifying the city, and cracking down on law-violations. These, in turn, increase property values and appeal to residential transplants.
With extremely low entry level costs and a high and fast return on investment, Detroit is beginning to draw in investors from across the globe. It has been deemed as one of the most profitable cities in the real estate market for investors for the last two years and doesn’t seem to show any signs of slowing yet.