Investing in Rental Properties? Top 3 Best Detroit Neighborhoods to Expand Your Portfolio
If the City of Detroit isn’t on your list, then you’re missing out on amazing investment opportunities.
As a landlord or rental property investor, you look for property appreciation and good rental income to ensure a successful investment. Well, the City of Detroit hits the spot on both criteria, with property appreciation ranking in the top 40% nationwide and rent prices seeing double-digit increases.
Yes, the city is complex and requires expertise to navigate the common risks associated with the market and reap the promised rewards. But it’s completely doable, especially if you focus on the right areas.
With over two decades of living as residents and operating as a property management company in the City of Detroit, we’re giving you our top 3 recommendations on which Detroit neighborhood to invest in.
#1 Bagley
Boasting a pleasant living environment with well-kept properties, increasing rent, and growing property prices, Bagley provides solid cash flow and equity gains for the short- and long-term. The perfect balance of these two investment returns makes Bagley ideal for investors looking for immediate and future gains.
Here’s a snapshot of Bagley:
- General Property Conditions: Refurbished 76-year-old properties
- Average Rent: $700 per month, a tad lower than the city’s average
- Rent-to-Price Ratio: 7% with several gems surpassing 1%
- Median Property Value: $146,064, higher than the city’s average (see chart below)
- Property Appreciation: On the higher end of the spectrum (see map below)
- Potential Tenant Pool: Achieved higher education and has a higher income than the city
The area offers a variety of advantages that make it stand out among others in the city, such as its developing infrastructure, convenient location, and rapid growth potential. With these qualities combined, Bagley is a very viable option for those seeking to invest in rental properties within the city.
Get more investment information in our Deep Dive for Bagley.
#2 The North End
The North End of Detroit City is a quickly maturing area that landlords should be keeping an eye on. The rent-to-price ratio makes it a great option for cash flow investments, while the majority of residents are renters and they have been consistently paying their rent. In addition, the North End is next in line to benefit from the property price boom that has been occurring throughout Detroit.
Here’s a quick snapshot of The North End:
- General Property Conditions: Around 100 years old, mostly farmhouses and bungalows
- Average Rent: $816 per month, almost the same as the city’s average
- Rent-to-Price Ratio: 9%, very close to the 1% Rule
- Median Property Value: $112,296, increased by 6.7% compared to 2022 (see chart below)
- Property Appreciation: On the higher end of the appreciation spectrum (see map below)
- Potential Tenant Pool: More than half received a college diploma or associate’s degree and above
At present, most properties here are considered class C with a few class A gems. However, with expected growth over the next 5 to 10 years, many predict that it will eventually become a Class A area. As such, now is the perfect time to get in on the action before prices skyrocket and investors miss out on their chance at this lucrative opportunity.
If you want to learn more about The North End, check out our Deep Dive.
#3 East English Village
East English Village is an ideal place for rental investing, with so much opportunity. The prices of the properties are affordable and make for great cash-flow investments.
Moreover, the rent amount is higher than in other areas of the city. Even with the higher rent, most tenants pay their rent consistently. Properties here are also relatively new, avoiding the need for costly renovations that can be required in older properties. With all of these combined, it makes East English Village an excellent choice for rental investing.
Here’s a snapshot of East English Village to have a better understanding:
- General Property Conditions: 66 years old, a lot newer than the city’s average of 70-100 years
- Average Rent: $824 per month, very close to the city’s average
- Rent-to-Price Ratio: 8%, almost double the 1% minimum
- Median Property Value: $131,192, increased by 8.3% compared to last year (see chart below)
- Property Appreciation: In the middle of the appreciation spectrum (see map below)
- Potential Tenant Pool: Most of the adults residing in East English Village have completed some college degree or higher
East English Village is quickly establishing itself as a prime rental property investing destination. It’s located on the eastern edge of the city, and this area offers investors a unique opportunity to reap the benefits of an up-and-coming neighborhood with distinct potential. A local investor has even hailed it as a “rare gem”, showcasing its rare and valuable qualities.
We have an East English Village Deep Dive for more investment information.
Detroit Neighborhoods for Top-Tier Investment Returns
Overall, these 3 neighborhoods offer very affordable properties compared to other areas. They also have proper potential tenant pools that will take care of your property and pay rent on time, helping you avoid unnecessary costs like damage to your property or expensive eviction processes.
Of course, there are no “perfect” neighborhoods. But these ones offer fantastic investment opportunities. As long as you research the area in terms of rental income, appreciation value, and tenant pool, you’re on the right track to owning a successful rental property.
Our team of property managers has decades of experience operating in the Metro Detroit area. Feel free to get in touch with us for expert guidance into one of the country’s most famous real estate markets.