Real estate is an essential part of an investor’s portfolio. While many people are wary because of the downturn in 2008, studies have shown the return on investment (ROI) has steadily grown and is once again considered a gainful venture. The Real Estate industry in Southeast Michigan is particularly dynamic, with many properties being basically free (yes, free). Detroit’s recent bankruptcy, along with residual recession effects, have made many people turn to renting instead of buying homes. With federal aid, including $300 million in the fall of 2013, Detroit is finally tapping into money previously red-taped, including a project that will allow the city to demolish blighted homes and clear the way for new prospects. Savvy investors know this equals opportunity and opportunists are flocking to the area, including hedge funders who see the potential of investing now.
Investing in real estate in Michigan means a steady stream of profit from rented properties. When investors buy properties with the goal to rent them out, it creates a ripple of momentum in the local economy. The properties, to be profitable, must be renovated and the hiring of professionals for the renovation stimulates the economy—from project managers to appraisers to real estate professionals (each of which has their own employed teams). The investment in Michigan property is a full-circle stimulus. Investors play a large part in the beautification of neighborhoods, which leads to an increase in value of the neighborhood as a whole.
Marketing trends point toward an increase in housing prices, so the optimum investing time is now, while prices are still low and value is certain to increase over time. Though house prices have increased more than 40% in the past year according to RealComp, Metro Detroit properties are still less than 25% compared to the 2005-2006 peaks. The benefit of the 40% growth is the indication of an influx of renters, which equates more demand for properties. Investors are advised to act on buying properties and make the most of this rising trend while prices are still low in Southeast Michigan.
Numerous properties in Wayne, Oakland, and Macomb are economical, with Saginaw and Detroit placing in the top 20 rental markets of 2013. Buying properties and rehabilitating them as rental homes is a beneficial and lucrative addition to a diverse portfolio.
Additional benefits of investing in a property includes tax write-offs, which could allow investors a tax-free cash flow, potential tax deductions, and the ability to put money into a retirement fund. With just a bit of research, potential investors will see firsthand the statistics and news of the current real estate industry and the realization of value to be gained from acting on it. After all, Royal Oak just got ranked as one of the top ten cities for kids.