Detroit has been the number one investment city in the US for a number of years now with Cleveland following ranks in second place.
In 2018 it looks like things could start to change as prices increase in Detroit and with inventory running low Cleveland could take pole position this year, both sales and enquiries are increasing for the city.
Both of these cities provide the perfect investment model for the first time investor, low level entry point and good sustainable rent, some say these cities have led to an explosion in real estate investment in the US with buyers from every corner of the globe getting involved.
The best indicator of these markets is to look at the rent-to-value ratios, a three bedroom house in Detroit will rent for the same amount as a similar three bedroom house in St Petersburg Florida. In fact Detroit has the second highest rent-to-value ratio in the country at just over 8.5%. While Cleveland has a lower rent-to-value ratio it has a 95% occupancy level which makes its incredibly appealing to investors.
Deciding between the cities maybe challenging enough for a first time investor. Once they have decided on where to invest the next question is which neighbourhood to invest in ?
Like all cities you have good and distressed areas in Cleveland and Detroit, this fact coupled with the resurgence of re-development and active Council involvement can mist the decision.
1. Is this a distressed neighbourhood that is turning corner?
2. Is this my opportunity to see some appreciation?
There is no straight forward answer to this question, without stating the obvious and say only buy in the most expensive areas (which will mean a lower cap rate ) we have to use a basic set of rules to try and minimise the search.
Different companies use different models in order to achieve this, we have the Grade System, the Grid System, Market Analysis, Index Systems, Price Comparisons, Property Taxes, Ratio Values etc and the list goes on and on.
We also have a plethora of websites that gives us statistics on the liveability, crime rates, schools, employment rates etc. ( But which ones are correct? )
Choosing the best buy to let areas to invest in can seem like a minefield, but it doesn’t need to be, we adopt a simple transparent model which paves the way for successful investment.
We look at the most expensive areas and work backwards, we identify surrounding neighbourhoods which offer higher rent-to-value ratios and also offer the opportunity of capital appreciation.
DETROIT
If we take Grandmont Rosedale in Detroit as an example we can see that prices have surged in this area over the last three years but there are several surrounding blocks and streets that can also offer great properties at lower prices.
Surrounding neighbourhoods like Grandale, Warrendale and Grandville have increased in popularity as many investors realise they have now been priced out of the market.
While the West of Detroit has always been the most demanded by investors we can also see a similar situation on the East of Detroit, there are still many well priced neighbourhoods that offer well priced properties with good rent-to-value ratios. Morningside, East English Village, Denby, Regents Park to name just a few.
CLEVELAND OHIO
Moving this model to Cleveland again we pin point good surrounding neighbourhoods that offer the opportunity for capital appreciation.
Taking Buckeye Shaker as an example this neighbourhood is next to the highly sought after Shaker Heights, to purchase in Shaker Heights will cost you approximately 30% more but Buckeye Shaker takes advantage of local facilities and rental amounts are more or less on par with Shaker Heights, lower priced property with the same rents as Shaker Heights meaning a high ROI.
In the North of the city we can see this again with an area called North-Collinwood, this area is seen as a very strong investment area in Cleveland, it is right next to the Waterloo District, Euclid, Bratenahl which are all great areas but again are more highly priced.
But overall it is not just about choosing the right neighbourhood, you can build this picture up yourself. It is about the management companies, our on the ground staff who are from these cities, our on going due diligence before we market a property (we only choose one from every 20 properties) our 24 hour aftercare, our years of experience, our exclusive listings, our partnerships with the biggest US real estate companies, our partnerships with the best title companies, everything to ensure your property investment is a success.
If you would like more information on any of our great properties in Detroit are Cleveland, please contact any of the team at Global Investments Incorporated at invest@globalinvestmentsincorporated.com
