My fourth rental property I ever purchased marked a lot of “firsts” for us. It was our first off market deal, and our first duplex. And it was the first time I’d heard of Russell Woods, an area I’ve really fallen in love with over the years.
I’ve nicknamed this property the Dougie Fresh Duplex, an homage to the previous owner who occupied the lower unit (more on this in a bit).
I paid just $62,000 for this property back in the summer of 2019. Today, nearly 5 years later, it’s probably worth about $150,000.
Beyond the appreciation, it’s generated over $50,000 in net cash flow for us.
Pretty amazing!
The “cash invested” line spikes with the initial cash purchase, then falls sharply after the cash out refinance. In this case we did delayed financing.
Any blip higher means we were investing capital into the property whether that be maintenance, mortgage payments, taxes, etc.
Once the cash invested line crosses zero and into negative territory, we’re essentially free rolling on the property. We literally have no cash left in the deal. That occurred in November 2021, a little over two years after closing.
The “debt” line in the chart above is our mortgage. You see this ever so slowly inching higher over time. This numbers starts in negative territory and moves higher as we make mortgage payments.
Initially, there was no debt because we paid cash. But once we refinanced that obviously changed!
Overall, it’s quite clear this property has been extremely good to us.
But it hasn’t been all rainbows and sunshine.
Let’s take a look at how this deal transpired, what I had to do to stabilize it, and what the last 5 years have looked like since purchase.
Finding My First Off Market Duplex
It was 10:30pm on a Wednesday night when a friend sent me a link to some photos of a Detroit duplex. I vividly remember the moment because I was brushing my teeth while swiping through the pictures.
It looked shockingly good!
It was an off-market deal being marketed by an agent I knew. And I was really liking what I saw but I hesitated to text him so late at night. Finally, I decided I better just do it. I had a feeling I may miss out if I didn’t.
To my surprise, he texted right back. And I was able to see the property the next morning.
Walking The Duplex
The agent and I were greeted by the owner. He had purchased the property just two years prior and had done a bunch of remodeling in the lower unit he was occupying.
While he’d left the bathroom original, everything else was well updated. I was pretty shocked.
We worked our way through the lower unit, and I braced for what must be a shit show upstairs in the other unit.
But again, I was pleasantly surprised here as well.
Although dated, the upper unit was in great overall condition. The carpet was ancient, we estimated 20 years, and things were dated, but that was really it.
We made our way to the basement and the attic, and that was all there was to it. As we wrapped up, the owner was raving about his plumber and offered me his contact info. He said, “Tell him Dougie Fresh sent you”.
It took everything I had to keep a straight face as this mid-50’s white guy, living in a C Class Detroit neighborhood referred to himself as Dougie Fresh.
I’ll never forget it.
Acting Fast
We left Dougie Fresh and walked across the street. The agent asked what I thought and I just remember scratching my head and saying, “This is a no-brainer, right?”.
We talked it over for a few minutes and I told him to send a purchase agreement and we’ll get it wrapped up.
That was it. No inspection, no appraisal, just an easy decision and transaction.
In hindsight, my willingness to move quickly on this deal was huge. I later found out, from multiple friends, that this was a highly sought after property.
Several active investors were clamoring to get it but I had already signed the purchase agreement before they were able to do anything. Good thing I decided to text at 10:30pm that night!
Using Delayed Financing
This deal was a great candidate for delayed financing.
The way I saw it, I had a long-term tenant upstairs. That means I wouldn’t be needing to put any money into that unit any time soon.
Downstairs was in fantastic shape and didn’t need any updating. Dougie Fresh was moving out and I’d be able to rent it with very little effort.
In short, I wasn’t going to need to put really any money into the property (or so I thought). So this made sense to do delayed financing.
The appraisal came back at $68,000. I won’t lie, I was a bit disappointed. I was really hoping for better but so few of these duplexes were transacting back then there just weren’t many comps.
I took my ~$43,500 (after closing costs) and went hunting for the next deal. That left us about $18,000 in the deal total.
But then came the real work.
Stabilizing The Property
Dougie Fresh needed a couple months to vacate the property. He was leaving the state. From what I could gather his wife had fled with their children and he was following in an attempt to do damage control.
Word on the street was Dougie Fresh was getting a little too fresh with some lady friends…
It definitely all added up, and it’s why he was in such a hurry to sell and get out of there.
I knew he needed some time to vacate well ahead of time. In fact, Dougie Fresh signed a two-month lease at $850 per month and presented me with a notice to vacate at closing.
So I had some time before I had to do anything.
But good ol’ Dougie Fresh left me a bit of a mess.
Free For Haul
Dougie had texted me that he was gone and everything was as agreed. But when I arrived at the property that wasn’t actually true.
He had left a LOT of furniture in the house. We had agreed that he would leave it empty.
While, over text message, he acted like this wasn’t a big deal and I should be grateful for the essentially brand new washer and dryer that he also left behind (I was), it was still an inconvenience.
So I took pictures of everything and threw an ad up on Facebook Marketplace for the next weekend. I called it a “FREE FOR HAUL” and said everything was free as long as they hauled it away.
It was a mad house! I had people show up with U-Hauls an hour before the designated time.
For about an hour and a half I walked around ensuring folks they could take things, telling them they could NOT take others (largely appliances), and playing referee as people fought over everything else.
Needless to say, the place was cleaned out pretty quick!
Lower Unit Open House
Shortly after the Free For Haul I was able to start marketing the property. We were well into October at this point and, while I can’t quite remember where we started marketing the property at, I believe it was $850/mo.
I wasn’t getting a ton of response so I dropped the price down to $800/mo and we started getting a lot of interest. I scheduled an open house… one date, one time and that’s it.
It was busy and there was a ton of interest. But one prospective tenant stood out.
How could she not?
She loved the place, let me know it, and posted up in a chair in the living room. She sat there the entire two hours, talking about where she was going to put her stuff, how she was going to decorate, etc.
What can I say, I loved it! While her background check included a recent bankruptcy, everything else seemed to check out. And I just got a good vibe from her.
Nearly five years later and she’s still in the unit today, never been late, often pays early, and is a dream of a tenant.
Top Unit Tenant Turnover
As all this was going down on the lower unit, the woman in the upper unit kindly let me know that she would be moving out.
UGH!
She was an older woman that had lived there for 12 years and had a steady job at GM. She was only paying I think $700/mo but I had already decided I was happy to keep her there.
I knew that as soon as she left I’d have to put some money into that unit.
But her parents were getting old and selling their two-story home on Oakman Boulevard for a small ranch in Redford. She planned on moving in to care for them.
So we had to do some updating and an unexpected tenant turnover. All we did was pull up the carpet, refinish the original hardwood floors, and paint the entire interior.
All in, we spent about $5,200.
We were well into December 2019 at this point and I recall debating whether to list the unit or simply wait until the new year.
We decided to list and, much to our surprise, signed a lease with a young college graduate that was moving from out of state to work at Quicken Loans.
It Didn’t Last
The upper unit tenant was young, white, and moving from out of state. His girlfriend joined him in May after she graduated.
I knew all this going into it. I also knew that living in a C Class Detroit neighborhood might not be a great fit for them. And I voiced my concern before he moved.
We decided on a six month lease at the time, and I wasn’t at all surprised when they decided not to renew and ended up getting a place in the suburbs.
Tip: Folks usually moving to the area from out of state don’t stay long. They generally need a place to land, end up getting their bearings, and ultimately find an area that’s a better fit for them.
So I was back to turning this unit again. Luckily, they left it in great shape and all I had to do was clean it.
Instead of holding an open house like I usually did in the past, I simply screened people online before setting up individual showings. In the end, I found a fantastic tenant that moved in late June of 2021.
The previous tenant on the six month lease had actually moved out a few weeks early which allowed me to find a new tenant before their lease was fully up. So in the end, I had zero vacancy on paper and had the unit rented for $850/mo again.
The Dougie Fresh Duplex Today
Today, the Dougie Fresh Duplex is pretty stable.
We’ve had maintenance requests here and there, but when you look at the performance chart from the first section, they are hardly noticeable.
This won’t last forever. Eventually we’ll have to do some big items like the roof. And I know it’s still cedar shake, so that will be expensive.
Both units are rented for $900/mo today while market rents are closer to $1,000/mo for these 3/1 units. We have not been as aggressive as we could be with raising rents. But both tenants are great and going on their 6th and 5th years with us.
We’ll likely increase rents to $925/mo when they come up for renewal this summer.
We are currently have a bit of trouble with our tenant in the upper unit. She’s been late with rent the last few months and we finally had to formally start the eviction process. But she paid her full balance before our initial court date and appears to be back on track now.
I plan to continue updating our progress and performance with this property once a year or so. Hopefully these write ups help give you an idea of what the process and results look like for Detroit rentals over time.