Detroit Real Estate Investing
- Jun 20, 2016
Since 2013, when Detroit declared bankruptcy, the city has been on a slow and steady decline. There are thousands of empty abandoned or burnt out buildings around the city, and urban decay has taken hold. This has resulted in municipal services being sparse and spread out around the city, making it hard for essential services to reach certain areas. The city has suggested demolishing some of the empty buildings and homes to reduce graffiti and squatting, in an attempt to move the small populations in to more populated areas. Over the last 10 years, over 9 billion dollars has been invested into stabilizing Detroit, from both government and independent sources. Rehabilitation of historic buildings has been a primary focus for the funding, to try and rebuild the downtown city structure. This will hopefully move more residence into the downtown core, so they can start to rebuild from the inside out, and be able to remove any of the smaller abandoned buildings in the future. But what does all this mean for the future in Detroit real estate investing? 2015 saw a huge jump in investor interest in Detroit, mainly focused on buying out large buildings in the downtown core. The likes of Quicken Loans, DDI Group, and JPMorgan Chase have all been investing heavily in Detroit. Real estate investing strategies mainly focus on an immediate return for big profit, but one might have to consider a lengthy investment in Detroit, but one that may yield a very large return in the future.
Investing in Detroit real estate in 2015 was for the big companies. The ones that could afford to sink millions of dollars into property and let it sit for a long period of time without worrying about bankruptcy themselves. The time is now for smaller companies and individuals to start thinking about Detroit real estate investing. Prices are low, and interest is building in response to the attention it is receiving in the news and on social media. That being said, it won’t receive the same sort of bidding competition as one would find in a big city such as New York or San Francisco. As the city continues to receive aid in its economic recovery, growth and development will see an upward trend. The city itself also has a rich history and background, especially with regards to the automotive industry. This benefits any new businesses as Detroit will retain a positive edge from a cultural perspective. For small businesses or individuals looking for purchase real estate, Detroit might hold a perfect opportunity. As the prices are very low, there is very little risk attached to purchases, letting companies expand and experiment with new projects. For the individuals, the creative types might look towards Detroit as an opportunity to set up a studio or loft to create music, art, or write. For small businesses, opening a restaurant chain or niche shop to experiment with different products or services sees Detroit as a prime opportunity. Investing in Detroit real estate in 2015 saw a 50% – 400% return on downtown properties, and 2016 promises to hold the same.
Investing in Detroit real estate in 2016 might appeal to those looking for tax incentives. Some properties may be eligible for the “New Market Tax Credit”, which is used to attract small business and development companies to depressed and lower class socioeconomic areas. Detroit currently falls into this category, so companies and individuals alike may be able to claim up to 39% tax credit for investing in Detroit real estate in 2016. The future is now for Detroit, with all the aid it is receiving to help the city rebuild after its bankruptcy. For investors, to turn a profit and become a part of the rebuild process, they should probably consider Detroit real estate investing.