Ep. 42: Investing in Detroit’s Recovery with Brent Maxwell

Like the city he calls home, Brent Maxwell was hit hard a decade ago when the economy crashed. And just like his city, his grit, will and determination allowed him to survive and rebuild. Today, Brent is the Managing Director of IPS Realty, where he helps others invest in Detroit’s booming neighborhoods, mainly on the East Side. He constantly monitors Detroit real estate, allowing him to identify the edge of hip areas and ride the wave. On this episode, he shares more about his experience, the city of Detroit and his best tips to find emerging areas.  

Key Market Insights

• Transition is happening in the areas beyond Detroit’s central business district
• There was a talent exodus in 2008, but now people are moving back or investing in Detroit
• Outside of Michigan Ave, saw gentrification and West Village on the East Side has experienced dramatic growth
• Had amassed $1MM portfolio on paper in 2007
• Avoided bankruptcy and decided to pay back debt on a monthly plan
• Started grinding, wholesaling and finding deals for other investors
• Not focused on the hottest areas, looking at the edge of hip and looking to ride the wave
• To find the path of progress, IPS looks at comps and data combined with the art of being apart of the neighborhoods, on the east side
• Most investors prefer the West Side, but he likes the East Side
• Areas in the primary parts of the city are at 110% of 2005 peak values
• Looking for values that are starting to percolate and seeing a curve with days on market, per sq foot costs, per door price
• Banks start taking interest in neighborhoods when homes begin to sale at $50k per door – allowing them to sell to homeowners
• For an investor, the difference between $100k house and $80k house is $20k, but for a homeowner it’s $110 per month
• Interest rates will go up and impact the market and may drive buyers who were looking at nice neighborhoods, may now look at adjacent neighborhoods such as Jefferson Mack
• With Tigers, Red Wings, Pistons, and Lions all downtown, there is a 50/50 chance for a sporting event any day in Detroit
• Detroit used to have 2 million people, now has just under 700,000
• City has a 50 year plan for the land in Detroit and the market is shifted in influence by what the city wants to happen – think tax incentives
• Sit and watch for an hour to understand the property and block
• Many investors are savvy, but can get blinded by the numbers and projected returns on paper
• Multifamily has a mitigation against theft as there are still people living in an occupied house
• Prefer single family in B and B-minus areas
• D area is war zone and lots of blight, C has a few vacancies, but most have care, B are older houses, more frame, less brick, lots of renters, A is all homeowners, upper middle class

Bull’s Eye Tips:

Winning Your Market: Buy and Hold

Tracking Market Changes: Check the market everyday

Daily Habit: Check comps daily

Resources:

Ep. 14: Detroit’s Ruin and Renaissance with Jeremy Burgess 

Crain’s Detroit 

Best Business Books:

Tools for Titans by Tim Ferris 

Digital Resources

MLS

Loopnet

AppFolio

Google Drive

Dropbox

Hubspot

Tweet This:

“Bloom where you’re planted”

“For an investor, the difference between $100k house and $80k house is $20k, but for a homeowner it’s $110 per month”

“Real estate moves slowly”

“I can fix a bad house, I can’t fix a bad block”

“Not focused on the hottest areas, looking at the edge of hip and looking to ride the wave”

Places to Grab a Bite:

Apparatus Room

Connect with Brent:

brent@ipsrealty.com

313-422-1333

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