Priority Investment Group: Real Estate Investing in Detroit

5776 Devonshire St.

admin — Sun, 07 Feb 2010 06:08:36 +0000

3 Bedroom, 1 Bath 1288 Sq ft.

18650 Rosemont St.

admin — Sun, 07 Feb 2010 06:01:16 +0000

3 Bedrooms, 1 Bath, 1100 Square Feet

12114 Payton St.

admin — Sun, 07 Feb 2010 05:55:31 +0000

4 Bedrooms, 1 Bath, 1350 Square Feet

11034 Craft St.

admin — Sun, 07 Feb 2010 04:47:55 +0000

3 Bedrooms, 1 Bath, 1100 Square Feet

Commercial market may soon hit bottom

admin — Sat, 06 Feb 2010 02:27:53 +0000

BY JOHN GALLAGHER
FREE PRESS BUSINESS WRITER

Commercial real estate investors face another bleak year in 2010, but the market appears to be bottoming out nationally and in metro Detroit, a leading real estate firm said in its annual forecast Monday.

“Many have called commercial real estate ‘the next shoe to drop,’ but that’s really an exaggeration,” said Bob Bach, senior vice president and chief economist of Grubb & Ellis, which has an office in Southfield. “It implies that commercial real estate could wreak damage on the financial system equivalent to the subprime residential mortgage losses, which is highly unlikely because the value of outstanding commercial mortgages is a fraction of the value of outstanding residential mortgages.

“Nevertheless, losses will mount over the next several years. If banks aren’t lending because they’re coping with losses in their real estate portfolios, this could impede the economic recovery.”

Locally, a more stable, leaner automotive industry should encourage potential investors to give Michigan another look in 2010, the company’s annual forecast said. While rents and building occupancy are down, pricing is also at record-low levels, presenting opportunities for those willing to invest in the region.

The credit crunch and nationwide real estate crash affected all sectors of commercial real estate last year, including office, industrial and retail, both nationally and locally.

Commercial real estate, especially the office and industrial markets, closely tracks the broader economy. With Michigan’s automotive sector devastated in recent years and state unemployment topping 15% in 2009, it’s no surprise that metro Detroit has been posting some of the highest commercial vacancy rates and lowest rental rates in the nation.

In one stunning indicator of the local market woes, Grubb & Ellis reported that the dollar volume of investment in metro Detroit’s industrial real estate market fell to $32.7 million in 2009, a drop of 95% from the $600 million invested the year before.

Last Visit to Detroit

admin — Thu, 04 Feb 2010 02:22:35 +0000

We just got back from another trip to Detroit. We own a lot of properties there, and we like to go look at them. That’s right – we don’t just buy places to turn them over to other investors; we purchase every property for our own real estate portfolio. No one else in Detroit can say that. That’s why ours make money. That’s why we sell them rented. Because that’s how we own them: As cash-flowing investment properties. And when we go out to see our properties, check out the neighborhoods, meet with our management, research rental markets – we’re also doing it for our investors, because we’re all using the same management company. What do we have to report? Rentals are up four units in one week. Detroit, it’s cold but good.

Where to Stay in Detroit

admin — Thu, 04 Feb 2010 02:12:47 +0000

Downtown. In fact, and I don’t mind giving them the plug, we stay at the Holiday Inn Express Downtown Detroit. It’s a good hotel, right in the center of town, in an old building that they’ve renovated considerably. There’s a bar and restaurant on the ground floor, and there’s a free breakfast. A free breakfast with actual protein – eggs, bacon, sausage, omelettes – not all on the same day, but it’s a considerable perk compared to the cereal/bagel/juice breakfasts of some hotels. But the main reason we’re downtown isn’t the hotel, it’s because we’ve found that center of city acts as a barometer for the health of the city around it, the neighborhoods where our houses are located. It’s the city center that draws new businesses, tourists, and residents. Since we’ve been coming to Detroit we’ve seen an influx of new restaurants, condominiums, entertainment venues, even another casino, and now there’s a plan in the works to connect Detroit with Ann Arbor by train, but that’s another blog. In the meantime, when you come to Detroit to check on your properties or look for new ones, stay downtown and learn about the heart of the city.

The Importance of Good Management

admin — Fri, 02 Oct 2009 23:52:46 +0000

How important is management? For out of state investors, it’s at least as important as simply getting a good deal on your property in the first place. Especially for inexpensive homes, because, while the margin maybe great – 15% ROI is great – the actual income per house is in the hundreds of dollars. That means that the effect of vacancies is much greater, and, worse, that it’s easier to eat away at your monthly profits with seemingly small expenses – a rent collection visit, various repairs, call charges, equipment charges, even drive-by check-ups for trash. Let’s face it: managers of these properties might only be making $75 a month handling your property. And what we’ve seen in general is that even good management will tend to charge you more of these various when they have to venture into bad neighborhoods and spend too much time with the property as compared to other, easier, more profitable properties. Also, vacancy rate will kill you. Those properties which make you 15% don’t look so good at 50% vacancy.