Detroit is unique; enigmatic, beautiful, bountiful, dangerous, deadly… As I’ve learned, the rules that apply in the burbs don’t always apply here.
However, there are some tremendous opportunities to be had if you can find them. I wanted to share an overview of a Detroit house that I flipped in 2019 with my partner and pass on some of the lessons that I learned.
Long story short…
This is the “long story short”. The house was found as part of a driving for dollars campaign in a few neighborhoods we selected because they were “up-and-coming”. We (I was partnered up) drove the neighborhood looking for run down houses, skiptraced the addresses, cold called (looking for motivated sellers), and made offers after walkthroughs. This house was in very bad shape and had squatters in it as well. Sewage backup, animal feces, and a tarp roof to name a few. The owner lived out-of-state and had gotten the house through probate from an uncle. We later found out that the squatters were related somehow and believed that the seller was going to sell to them – but he sold to us without telling them.
The closing was in early May of ’19. We bought the house for $31K, estimated a 30K rehab with an after-repair value (ARV) of $140K. We financed the deal with hard money and believed we could turn it around in 2 months. Along the way we faced costs and delays: We tried to handle the eviction in a considerate way, we had contractors disappear, contractors that did appallingly substandard work, break-ins, and the distraction of other projects that dragged us down.
We hit problem after problem all year until finally listing just days before Thanksgiving (just in time for the slow season) and finally closed at 127K in April of ’20 – nearly a year later – after two price drops and 3K in concessions due to someone – possibly the buyer’s agent (pretty sure) – tampering with the house!?! And you know what?… That’s just how it goes in The D!
At the end of it all, we split about 20 grand after closing instead of walking away with the 60-70 we had planned on. Will I learn from this flip and handle the next one differently? Oh, you bet! But there are still some things about working in Detroit that I’m not going to be able to change. All I can do is try to mitigate them. The opportunities are definitely there, but they are… unique.