It’s no secret that Detroit has a bad reputation. When I moved to the Detroit Metro area in 2017 even the locals were telling me not to invest in the city! But when I looked at my goals, my timeline to reach them, and what the city had to offer I couldn’t resist. That and the crowd tends to be wrong.
And the crowd was incredibly anti-Detroit. It even got to the point where we’d been living in the area for awhile and an old high school friend had asked us if we’d been downtown yet.
“No, not yet”, I said.
“Oh, I get it… yeah, it can be… scary.”
“Huh?”, I said.
“Well, you know… dangerous. We’re happy to take you guys down sometime and show you around.”
I used to walk through San Francisco’s Tenderloin district on my way to work. I’ve been to some pretty uncomfortable spots in Oakland. I wasn’t too worried about downtown Detroit. Even still this is the picture that was in my head:
Instead, when Kaitlin and I finally did wrangle a babysitter and get downtown, this is what we found:
To say my brain was having a hard time reconciling what I’d been told with what I was processing in real-time would be an understatement.
Downtown is fun, vibrant, and full of the energy and bustle you’d expect in any major city. It was baffling. And we both looked at each other and knew the genie couldn’t stay in the bottle forever. Eventually others would see Detroit the way we were seeing it… with fresh, unbiased eyes and brimming with opportunity.
We soon started planning what would be a blitzkrieg of rental property buying that would forever positively impact our lives. But I’ll get in to all of that later. For now I want to tell you why I believe it’s still a fantastic time to invest in Detroit if you’re looking to build cash flow AND put yourself in the path of potential appreciation. That’s exactly what we did and the market in Detroit is as good as ever.
Let’s start from a top down perspective and drill down.
Detroit Has Cache & Global Reach
Say what you want about Detroit but the city has cache that has international reach. That’s powerful.
No, Detroit is not a “tier one” city, but people know it or at least know of it. It is the automotive capital of the world and, while Detroit has been hit with some pretty tough times, it still has name recognition you just won’t get with other non-tier one US cities.
Why does it matter?
Out of country investors want to put their money in a place they know or feel they understand. And there’s plenty of international money investing in Detroit and the real estate market there. I am constantly helping investors get started in Detroit and many of our buyers are investors from France, Argentina, Canada, etc.
Why not invest where you have the tailwind of international money on your side?
Detroit Is THE Top Cash Flow Market
Last year BiggerPockets ranked Detroit as the top cash flow market in the US. When I analyzed where we were going to invest I could not find a market that held a candle to the returns we might expect in Detroit.
I’m happy to say those expectations have NOT disappointed. Check out how some of my Detroit investments have performed over the years.
While cash flow is fantastic, I’ve also been seeing some extremely good appreciation. Many of our rental homes have appreciated 2-3x since purchasing them between 2019 and 2021.
Yes, some of that was the result of larger macro tailwinds, but much of it is simply being strategic about where we’re buying and putting ourselves in that path of potential appreciation (as I like to call it).
Detroit Is More Than Just Cash Flow
This is something I’ve known for years.
I saw what was happening in Detroit first-hand and I was certain the market was grossly misspriced. Appreciation was happening but it would accelerate.
That’s happened.
Detroit is crushing it on the appreciation front, unseating Miami as the highest appreciating market in the country.
Crazy, right?!
Ultimately, you don’t just want to invest for cash flow.
You want cash flow if you can get it, but you REALLY want a market that’s appreciating. Detroit checks all the boxes and I’m excited to see this trend continue.
Mike Duggan Is Killing It
Detroit’s leadership has continuously impressed me. Turning a city around that has been on the decline for 60+ years is no easy task, and Detroit finally has a strong leader after a checkered past with previous mayors.
I’ve seen Mayor Duggan speak on several occasions and even had the pleasure of meeting him at a neighborhood community meeting the other year.
He’s genuine, he shows up, makes himself available, a native Detroiter, and he’s smart. He’s been pragmatic with the city’s investment strategy and I believe, at this point, the Detroit “plan” is bigger than Mike Duggan. Meaning if he should cease to be mayor there’s too much momentum to reverse the work he’s done.
Each year Mayor Duggan does a State of the City Address. Here is the one from 2024:
It’s highly worth watching if you are even thinking about potentially investing in Detroit.
Even if you only watch the first 10-15 minutes I’m willing to bet you’ll find yourself getting pretty excited about Detroit’s future.
The mayor even gives a shout out to one of my personal projects toward the end at 1:24:46
Detroit’s Population Is Officially Growing
Mike Duggan has often said to judge him based on the population growth, making it his mission to reverse some nearly 70 years of decline.
Well, it’s finally happened!
The US Census Bureau recently reported Detroit’s first population increase in many decades. This trend is likely just getting started.
Obviously, it’s great that people are wanting to move into the city. But it’s also great from an investor perspective.
Many real estate investors filter for new markets based on population growth. That immediately disqualified as Detroit for potential investment.
Not anymore!
Detroit Is More Than The Auto Industry
Most people seem to think Detroit lives and dies by the automotive industry. While that may have been true, it’s no longer the case today.
Don’t get me wrong, Detroit is still very much married to the auto industry. And there’s been new life in this space with the emergence of electric and autonomous vehicle technologies.
But most folks don’t know that Quicken Loans is actually the largest employer in the city of Detroit while the Healthcare industry is also a large employer. Ally Financial is also headquartered in Detroit and tech companies are moving in as well.
Healthcare is also one of the major employing industries in Detroit. And it’s only growing.
The Henry Ford Health Center is planning a massive $2.5 billion expansion in Detroit proper.
Detroit is still the epicenter of the automotive industry but it’s also so much more.
Massive And Targeted Investment
In 2010 Dan Gilbert relocated the headquarters of Quicken Loans from the Detroit suburbs to downtown Detroit. That was the first of many moves the billionaire would make to directly invest and catalyze the revitalization efforts of downtown Detroit.
Since then, other companies have followed suit.
The instances are too numerous to name but a quick Google search will lead you down a rabbit hole. And while the investment in downtown has been aggressive and impactful, local Detroiters became disgruntled that the city wasn’t investing in their neighborhoods.
However, we’re now seeing the city take the same playbook that they used downtown and spread it across the city. They are targeting ten different neighborhoods across Detroit for investment and revitalization, dubbing this plan The Strategic Neighborhood Fund.
This is a massive undertaking that will likely take years or decades to fully realize. But strategically targeting these pockets to give the city’s massive footprint other hotspots to grow out from is extremely smart.
I have personally watched development in some of these areas start to take shape and communities are thrilled.
Check out my in-depth post on Detroit’s Strategic Neighborhood Fund and why it’s a catalyst for growth.
Detroit Is Brimming With Opportunity
I truly believe that. When considering all the positive things Detroit has to offer it’s difficult to find a better place to invest.
Does that mean it’s all rainbows and sunshine?
Absolutely not.
There are plenty of challenges with investing in Detroit. Crime is high. The city’s footprint is large, making it difficult to analyze by zip code as it truly is block by block. I plan to cover the drawbacks in an upcoming article.
But I still feel the value and opportunity far outweigh the risks. If you’re feeling like that too, let’s get in touch and see if investing in Detroit is right for you.