Owning rental properties is a proven method of building wealth, and there has never been a better opportunity to buy and rent real estate than right now.

  • The U.S. foreclosure crisis has created a rare opportunity for purchasing properties at a fraction of their value.
  • In addition, the credit and housing crisis has forced thousands of families to rent houses instead of owning them: This is one of the best landlord markets in the last century.
  • For people with good credit, interest rates are still low. (We expect this to change soon.)
  • Real estate is a uniquely powerful investment because it uses leverage to increase profits. 
  • Real estate investment creates appreciation, income, and tax advantages.
  • Owning rental properties is not a big time commitment. Good properties run themselves. 

You have time to look for new properties, work in another business, or be with your family.
Obviously real estate can be a lucrative business and a powerful investment vehicle, but the secret to getting into the right markets is being willing to invest out of state. Every market in the U.S. is different, some better and some worse, and most investors probably aren’t currently living in the best city for real estate investment.

If you are forced to invest in only one area – your hometown, for example – you are locked into a real estate cycle beyond your control. You’re playing a waiting game. In order to find real estate bargains and the consistently high return that is necessary for a small business, investors must look for more favorable investment opportunities in other cities. Investing out of state has its own challenges, as you’re probably thinking. That’s what Priority Investment Group does. We’ve found the market, rehabbed the houses, and we simply sell you a quality, tenanted, cash-flowing house.

Real Estate Cycles
To explain how we have chosen Detroit for our current investment area, it is important to understand the basics of our Real Estate Cycle model (download our Power Point presentation about Real Estate cycles):

Real estate historically moves in cycles of boom and bust periods. This cycle nationally tends to be about an eighteen year period, and most investors are aware that the U.S. is currently experiencing dramatic drops in both real estate sales and property values. The last such drop in prices was in 1990 – eighteen years ago.

So, obviously, it seems like a terrific moment to buy real estate. The equation becomes more complicated, however, when the variations of local real estate markets are taken into account, and these local markets are much more difficult to predict, and, more importantly, do not always match the national trend. This is why it is so important to be prepared to invest in markets outside your home state.

Priority Investment Group has further broken down this real estate cycle into four distinct periods:

  • Decline Period: This is the period in which the supply of properties is high and still rising, values flatten out and then decrease, rents remain flat, but vacancy numbers increase. During this period rent incentives are common, but government incentives for investment and development have not yet begun.
  • Absorption Period: During Absorption, the real estate values have again become affordable, the supply of properties begins to decrease, and the demand for rentals begins to rise. Construction is at a low and this period is often marked by increased government efforts to bring businesses and investors into a community, although the local residents of the community tend to be unaware of the potential value of their real estate. This is the ideal time to buy into a market.
  • Growth Period: In the Growth Period, the supply of housing is low, demand is strong, and both rents and property values increase dramatically. The period is marked by increased construction and a feeling of exuberance in the real estate market.
  • Saturation Period: After all the construction in the late Growth Period, the supply of properties passes the demand, and the increase of property values slow. Vacancy rates begin to rise, and property sales slow but are still fueled by unwary buyers hoping to cash in on the recent dramatic appreciation of property values in the Growth Period. These are the investors who will lose when the cycle continues back into the Decline Period.

Priority Investment Group believes that Detroit is just entering the Absorption Period, making it an ideal place and time for investment. Add in the nation’s current low real estate prices and the changes taking place in the auto industry, and Detroit rental properties become a very rare opportunity.