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SHOW NOTES FOR EPISODE 171: INVESTING IN DETROIT
It used to be that when someone would say they invested in Detroit real estate, the follow-up question would be, “Well, I have some Florida swamp land you might be interested in.” Not anymore! Like Florida real estate, Detroit real estate is no longer a laughing matter. Forbes magazine calls Detroit the most undervalued real estate market in America. In this episode, lifelong Detroit resident, entrepreneur, and president of Detroit-based Pioneer Homes Al Beahn, shares why he believes now is the time to invest for big returns in Detroit real estate.
What You Will Learn
- Fifteen reasons why Detroit is a great place to buy rental property
- What are the best sections of Detroit to invest in today?
- Where are the best places to live in Detroit?
- What is the biggest mistake most investors make when buying properties in Detroit?
- 9 things you must do to invest successfully in Detroit
- What you can do to get higher rents in Detroit
About Our Guest
Al Beahn
Al Beahn is a lifelong entrepreneur and the founder and CEO of Detroit-based Pioneer Homes, a leading source for cash flow turn-key rental properties in Detroit. In the past seven years, Al has closed more than 1,000 deals, valued in excess of $50 million, with clients from across six continents. He has been featured on Bloomberg and MSN Money. Al is recognized as the go-to expert on the Detroit rental market, hosts real estate investing seminars, and will soon be accepting enrollments for his new online course, ‘How to Flip Houses — With No Money or Credit’.
More About Al
- Career began in 2009
- Graduated from Central Michigan University
- Moved home upon graduation
- Living in parents basement
- Dad was putting on the pressure, “What are you going to do with your life?”
- Ran into a friend at a family party who was flipping houses and that inspired Al to try flipping
- Bought first home December 2009 when he was 22
- Bought for $27,000
- Did all the rehab upgrade himself
- Took 3 months to rehab
- Listed it in March 2010
- Took 27 days to get an offer
- Profited around $16,000
- Found a partner
- Started doing retail flips
The Business is Born
- People in metro Detroit started asking Al and his partner to find good rental properties
- Started doing turnkeys
- 100-200 properties per year
- One year, all foreign clientele
- Luck and timing have kept them strong in the Detroit market
- Al spent first few years in the field, working with the contractors, while his partner handled office/admin
Where They Find Their Properties
- MLS
- Off-market
- Marketing to absentee owners, other sellers
- Property managers
- Other investors
Why Detroit is a Good Place to Invest
- Bankruptcy really helped city start over
- Since the current mayor (Michael Duggan) was elected, Detroit has had a major turnaround
- Demolished 3-5,000 houses per year
- The city has attracted lots of new businesses downtown
- Purchased $20 billion of real estate
- 2016, 100,000 new jobs created
- Pistons basketball team brought downtown
- Last few markets in the country where you can still buy inexpensive real estate
- $40-50,000 properties renting for $850
- Nowhere near the peak
- In suburbs of Detroit, home values are back to where they were in 2005-2006
- Can still get homes at $70,000 that will appraise at $100,000
- The city of Detroit has targeted 15-20 different parts of the city where they want to go in and clean-up and improve property values. Here are a few links to articles referencing some of the areas the city is targeting:
- https://nextcity.org/daily/entry/detroit-expanded-plan-to-spread-the-wealth-to-neighborhoods
- http://www.crainsdetroit.com/article/20180510/news/660351/develop-detroit-plans-70-new-renovated-homes-in-north-end-grandmont
- http://www.crainsdetroit.com/article/20170405/news/170409919/fitzgerald-neighborhoods-4-million-plus-project-to-be-led-by-the
- Schools are improving
- Downtown is definitely happening, especially for upscale millennials
Hot Areas to buy in Detroit Right Now
- Stick to the west side
- Rosedale Park
- Grandmont
- Aviation
- Bagley
- North
- University District (flippers are buying homes for $100-150K and selling them for $200-250K
- 6-7 different zip codes they like to invest in
- Few small pockets on the east sides where he will buy in
- East English Village area
- MorningSide
- Values have increased significantly
- Certain downtown areas are also hot areas to invest
- $100-300 per foot
- He has a friend who buys and leases out executive style condos and penthouses downtown on AirBNB for $800 a night
Detroit’s Best Areas
- University District
- Green Acres
- Sherwood Forest
- $500,000 to $1,000,000 homes
- 4-5,000 square foot homes
- Near Downtown
- Boston-Edison
- Corktown
- Midtown Woodward
Biggest Mistake
- Not doing proper due diligence early on
- Running titles
Biggest Success
- Large wholesale deal in first few years of business
- 50 home package
- Was working with one of the largest turnkey buyers at the time
- Made a great profit
Typical Homes He Sells
- $45-50,000
- 3 bed / 1-2 bath
- Rents between $750-850
- Section 8 gets higher rents
Advice for Old Dawgs Looking to Invest in Real Estate
- “Best time to grow a tree was 20 years ago. The second best time is tomorrow”
- 9 things you must do to invest successfully in Detroit
- You need to make the commitment to get started
- Focus on due diligence
- Buy right
- Look for areas with better schools
- Pay attention to values
- Visit the market
- Check on employment
- Is it an area that is peaking or is there room for growth?
- Learn what the city is doing and where
What’s Ahead for His Business?
- Just continuing to ride the wave while he can
- Looking ahead to multifamily
Rap-It-Up
- Favorite real estate book: Tax-Free Wealth by Tom Wheelwright
- Favorite business book: The 10-X Rule by Grant Cardone
- Most valuable web site for success (other than your own): BiggerPockets.com
- Favorite app: Trulia and Blinkest
- Favorite quote: “You don’t have to tell me to run a mile because I will run two on my own.”
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Use the money to market for wholesaling.
How to Reach Al
- Company website: PioneerHomesUS.com
- Email: info@pioneerhomesUS.com
- Phone: 586-574-5939
IF YOU LIKED THIS PODCAST, we would love if you would go to iTunes, Stitcher, GooglePlay, iHeartRADIO and Spotify and Subscribe, Rate & Review our podcast. This will greatly help in sharing this podcast with others seeking to learn real estate investing as a means to achieve a successful retirement.
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2 comments. Leave new
Was the link discussed around 27 mins posted?
Amanda,
Thanks for your question. Yes, we accidentally left the links out but, thanks to you, they are back in now. Please look at item #13 under “What Detroit is a Good Place to Invest”
Blessings,
Bill