Have you been thinking about investing in Detroit real estate? We can help you learn more about which investments best match your style so you can make the best decision about where to put your money!
Some people want to be hands-on, handling their investments fulltime, without the use of a property manager or assistant. Others want to be as hands-off as possible, only collecting their dividends each quarter. Each investment type comes with its own set of pros and cons. What appeals to one person, may not appeal to another. Below we discuss a few different types of real estate investments so you can decide what is right for you when investing in real estate in Detroit.
Single-family investment properties in Detroit are typically the jumping-off point for real estate investors. Managing one unit on a structure they are familiar with will eliminate some of the unwanted expenses and frustrations investing in a larger property may cause novice buyers.
Multi-family properties will often rent for a lower price than their single-family counterparts, however with multiple units come more income-producing opportunities. Units with 2-4 units are considered multi-family. Anything with more units is an apartment building and classified as commercial property. Multi-family properties are great because even if one unit is vacant, you are likely still generating income from the other units. With a single-family house, when the unit is vacant, you aren’t generating any income at all.
Commercial real estate is often purchased by investors with a little more experience. You can’t use an FHA loan for a commercial property, which means your down payment on the property will need to be pretty significant. Many people work with a partner when buying commercial real estate for this very reason. You’ll also need to have knowledge of items not found in residential property such as the cooling systems and security features. You’ll also need to make sure you are calculating the numbers properly in order to receive a profit.
Land is a more passive investment as there are not really any costs to speak of. You will have property taxes, but these are much lower than the property taxes on a structure. With land, you can buy and choose to just hold it until it appreciates, you can buy and develop, you can flip it if it is located in an up and coming area, or you can possibly divide it into smaller lots and resell them at a profit.
Mobile homes are a great investment for someone with a lower down payment who wants to test the waters of real estate investment. It’s important to look at the location of the property, the vacancy rates, and the cost of repairs as these will differ from permanent structures.
REITs or real estate investment trusts are perfect for those who wish to want to invest without any hands-on activity. A REIT is a corporation that manages a portfolio of properties. Anyone can buy shares in a publically traded real estate portfolio. By investing in a REIT, you are able to own real estate without ever having to be a landlord. You will be able to invest in large-scale projects as well as smaller developments. There are many different types of REITs, so do your homework so you can choose the one that is right for you.
Investing in real estate is one of the best ways to build wealth. No matter which type of investment property you are interested in, our team is ready to answer all of the questions you have!