Property Management

Safe and Sound: Implementing Top Security Measures for Detroit Rental Properties

by Scott Dylan
written by Scott Dylan

As a real estate investor in Detroit, you have the obligation of keeping your properties and any tenants in them as safe as possible. You must lower any legal and financial liability you bear as the properties’ owner by implementing measures designed to keep your investments safe. You can protect your properties effectively when you work with an experienced real estate investment company like Upside Investments and utilize these practical security measures.

Secured Entryways

If possible, you should utilize secured entryways on buildings in which you have invested in Detroit. Secured entryways can significantly reduce unauthorized access to your buildings. You can ensure your tenants receive either the code or a key to get into the buildings while barring them from giving key copies or the pass code to anyone else.

Secured entryways can keep out burglars and thieves. They can also make your properties in Detroit safer, instilling more peace of mind in your tenants. You additionally get peace of mind as the buildings’ owner that your investments are more secure.

Security Fencing

You can also make your investment properties in Detroit safer by investing in high-quality security fencing for them. You ultimately want to make your properties more difficult for burglars, vandals and other trespassers to breach. You want them to leave your properties alone because of how difficult it is to get past the security fencing.

You can also install a secured gate in the fencing to allow only your tenants and authorized people onto the properties. You can have a higher degree of confidence that your Detroit property investments remain safe even when you are not there to monitor them.

Doorbell Security Cameras

Doorbell security cameras are also coming in handy when helping investors secure their properties. These cameras are capable of recording around-the-clock so you always know what is going on with your properties, even when you are not physically present on them.

They also alert people inside of the buildings to anyone who is outside on the front porches, parking in the driveways or parking lots or walking around on the properties. Renters can alert you to unauthorized people. You can also use footage to press charges or make insurance claims.

Landscaping Trimming

Another practical way to enhance the security of your properties involves trimming the landscaping. Tall trees and wide bushes are ideal for trespassers to hide in and use to get into your buildings. They provide cover and may prevent anyone in the building or on the street from seeing trespassers trying to break into your properties.

By trimming back the landscaping, you may dissuade trespassers from trying to get on to the properties and into your buildings. You also make it easier for people in the buildings and passing or driving by on the street to take note of possible criminal activities.

Security Cameras

You can also install and use security cameras to keep watch over what is going on with your investment properties. You can aim these cameras in strategic directions, such as toward the doorways of your buildings or at the driveways. You can keep track of who is coming and going from your buildings and also get proof of any criminal activities that jeopardize your tenants and properties.

You can also install cameras in the hallways of your buildings. You can safeguard your properties without having to be there in person to monitor them.

Sufficient Lighting

Sufficient lighting can also dissuade would-be robbers and vandals from trying to break into any of your investment properties in Detroit. They typically prefer to work under the cover of darkness. They do not want anyone to see what they are doing and call the police on them.

Bright lights near the front and back doors, as well as in the halls and in and around the driveways or parking areas can deter criminals from breaching your properties. Lighting can be one of the more affordable and easier ways to secure your Detroit real estate investments.

Security Patrols

If you have the funds, you may invest in security patrols for your real estate investments in Detroit. Security patrols can be worth your money when you already have numerous businesses that operate on properties that you own. You minimize the risk of any of them getting broken into or vandalized and demonstrate to your commercial tenants that you prioritize their security.

Security patrols can also catch criminals in the act of harming your investment properties. You can press charges against trespassers and show to the community that you have taken meaningful steps to secure your real estate investments.

Community Engagement

Another simple way to elevate the security of your real estate investments is through community engagement. You can focus on networking with other property owners and businesses in the neighborhood to collaborate together to secure your properties.

You can do your part to ensure the properties of your neighbors remain safe. In turn, your neighbors may also keep an eye on your own investment properties, especially when you are out of town or not on the property yourself. This engagement creates a sort of neighborhood watch that can significantly increase your investments’ security.

Tenant Screening

Finally, when you lease out properties that you have invested in, you should screen your tenants carefully. You can avoid leasing to someone who has a criminal background or engages in criminal activities like selling drugs or hanging out with gang members.

You additionally can protect your properties by monitoring who lives in your units. By making sure your tenants do not have unauthorized guests or conceal who is living with them, you can reduce security risks to your rental properties and better protect other tenants who lease from you.

These practical steps can help you increase the security of your investment properties in Detroit. Identifying and using the best ones to use for your investments in Detroit can be a challenge. Reach out to us at Upside Investments to learn more about implementing the top security measures for your Detroit investments today.

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Uncovering Detroit’s Real Estate Renaissance: Why Investors Are Flocking Here

by Adam Luehrs
written by Adam Luehrs

Over the past five years, Detroit’s labor market and economy have improved considerably. The real estate market grew at a similar rate during the same period. After the COVID-19 pandemic, property prices started to rise. It’s now one of the fastest-appreciating markets in the country. Because of the positive economic and market signs, investors are flocking to Detroit. They’re able to acquire high-potential properties at low prices before renovating them and selling them at a profit. This guide explores the real estate renaissance in Detroit and explains how you can benefit from investing in this market.

Why You Should Invest in the Detroit Market

Detroit real estate investing is suitable for all types of investors because the city offers:

  • Decent population growth
  • Ample tax incentives
  • Lower prices than other large cities
  • A rising business sector

Business and population growth mean that more people are looking to buy homes and rent apartments. The low property prices mean that investors can improve their profit margins. While Detroit’s real estate prices are low, they’re much higher than they were five years ago. As for tax incentives, investors are able to benefit from depreciation when filing their tax returns.

Key Statistics to Consider

To understand why investors are choosing to put their money in Detroit, consider the following statistics:

  • Detroit is somewhat of a buyer’s market, which means that there’s more demand than supply
  • In March 2024, the median price for a home was $80,000, which is well below the nation’s median sale price of $420,000
  • Five years ago, the median sale price for a home in Detroit was $40,000, which means that it has doubled since then
  • Around 23.2% of homes were sold above the listing price in the past year, which is a YoY increase of 2.4 percentage points
  • Homes only remain on the market for 45 days, which is a drop from an average of 49 days a year ago
  • Detroit is an affordable place to work and live

Why Investors Find Detroit Real Estate Appealing

The Detroit real estate market is currently performing very well. The existing trends don’t show any signs of slowing down, which is why we believe that Detroit is going to be a key market to invest in for years to come. There are several reasons why Detroit is becoming more appealing among investors and residents alike.

For example, the local government has been trying to revitalize the city. Detroit is an older city that consisted of many run-down areas and dilapidated buildings for decades. However, major improvements have recently been made to these neighborhoods. These improvements have resulted in companies choosing to invest in the area, which bolsters the city’s property quality and appearance. It’s one of the main reasons why properties are appreciating.

Many new businesses now call Detroit home. While Detroit has always been the heart of the auto industry, it’s become increasingly popular among startup businesses and manufacturers. When more businesses come to the city, a higher number of families and young people require affordable housing, which Detroit offers in spades.

The city’s housing market is also growing healthier because of increases in the tenant population. People who don’t want to spend the money to buy a house turn to apartments and single-family homes to rent. High tenant demand is a boon to the city’s economy and housing market.

Finding the Right Detroit Property

If you’re considering investing in Detroit real estate, you’ll need to find the right properties. First, make sure you understand the current market dynamics. Detroit’s real estate market is somewhat unique. While properties are affordable, their values have been increasing steadily in recent months and years. There’s also a strong demand for rentals, which makes it easier for owners to consistently raise prices and earn a higher cash flow.

Always keep an eye on local economic trends when evaluating the strength of an investment. These trends include population growth, economic data, and employment rates. Knowing about economic downturns immediately when they happen allows you to properly time your investment decisions.

Create a Budget

Before investing, set a budget. Your budget allows you to identify the quality, condition, and type of property you’ll be able to invest in. Since Detroit property prices are inexpensive, you may be able to invest in single-family homes that you can use for long-term rentals. When creating a budget, consider the long-term costs that come with property taxes, renovations, and maintenance.

Identify High-demand Areas

To get the most out of your investment, focus on high-rent areas and neighborhoods. Locations with high renter demand often have great public transportation systems and an extensive list of amenities, which is why these places are appealing to potential renters. Keep in mind that locations with high rent rates might also come with expensive property costs. Choose the investment approach that’s best for your portfolio.

Choose the Right Location

Before you buy an investment property in Detroit, choose the right location. The best neighborhoods are often near local colleges or business hubs. Consider crime rates as well to ensure you purchase in a neighborhood that will be appealing to prospective tenants.

Hire Property Managers

It’s also highly recommended that you opt for professional property management. With a property management company on hand, you won’t need to handle tasks like collecting rent, handling legal issues, marketing the property, and screening tenants. You can earn passive income without even stepping on the property.

Hiring a property management company can be highly advantageous. For example, a professional company has comprehensive knowledge of the local market, including rental rates and real estate trends. They also understand how to manage maintenance, tenant issues, and daily operations without regularly encountering problems. Management companies like ours know what it takes to maintain strong tenant relations as well.

Detroit’s market has been improving consistently for the past five years. Even though property values have doubled since 2019, they are far below the national average. While the city still has affordable housing, it’s among the fastest-growing locations in the country. If you’re interested in creating rental properties out of single-family homes, Detroit is a great place to invest. Contact Upside Investments today to discuss your goals and start searching for the right properties.

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Real Estate Investing

Tax-Savvy Real Estate Investing: Leveraging Tax Advantages for Financial Growth

by Scott Dylan
written by Scott Dylan

As a real estate investor, you may find yourself worrying about how much you will have to pay in taxes and what kinds of damages the yearly tax bill can have on your portfolio. You may want to keep that amount as low as possible and keep more of your revenue for yourself.

Still, you must ensure you abide by all of the tax laws that pertain to your investments. You can use some simple strategies and consult with an experienced real estate investment service like Upside Investments to leverage your tax advantages for financial growth.

Invest in Real Estate for More than Just Wealth

As counterintuitive as it may sound, you should invest in real estate for more than just the wealth-growing opportunities. In fact, simply owning properties is only one aspect of successfully investing in real estate.

Part of cultivating the best advantages of your properties involves operating and managing them effectively. Even before you buy them, you should ask yourself if you are really ready to be a good steward of them. You should also consider if you are qualified to manage and operate them so you can get their full advantage.

Similarly, you should review how much time and money it can take to invest in and take the best care of your properties. They may require a significant amount of energy and resources to manage and take care of before you can leverage any tax benefits from them.

Use 1031 Exchange Laws

Another method of leveraging your tax advantages for financial growth is to use the 1031 exchange laws to your benefit. These laws help you strategically navigate depreciation of your properties. You can use them to swap one property for another without incurring a crippling tax burden.

Essentially, these laws let you shift the form of one of your properties without cashing in or incurring capital gains on it. When you exchange a depreciated property, you could trigger what is known as a depreciation recapture, which the IRS then taxes as ordinary income.

When you use 1031 exchange laws, you can sell one property and buy another without this depreciation recapture. You also defer capital gains and get the benefit of compounding interest at the same time. You avoid a tax burden that you may find challenging to pay right now.

Invest in Opportunity Free Zones

The federal government created what are known as Opportunity Free Zones in 2017. The IRS describes them as economic development resources that allow investors to buy distressed properties in the U.S. and grow their wealth.

They actually offer a number of tax advantages, such as not having to pay taxes on them if investors hang on to them for a minimum of 10 years. You also avoid the risk of depreciation recapture when you buy properties in opportunity free zones.

As an investor, you need to do your research and find opportunity free zones in cities and states in which you prefer to invest. You also need to understand the requirements and responsibilities that come with buying properties in them. You can find out more about opportunity free zones and the tax advantages that come with them on the IRS website.

Retain a CPA to Calculate Depreciation

As a real estate investor, you should also retain and work with an experienced certified public accountant to determine any depreciation of properties that you own and leverage tax advantages from them. Real estate depreciation essentially shelters your investment income during tax seasons. A CPA can determine quickly and reliably how much your properties have depreciated in value for the current tax year.

An experienced CPA can also advise you on matters like cost segregation analysis. This analysis allows you to identify opportunities to basically speed up the standard 25-year depreciation schedule. You may, in fact, get more depreciation value for your investments upfront when you depreciate some of them over a five-year schedule instead of the typical 25-year schedule.

Design and Implement a Solid Business Plan

You likewise need to create and utilize a solid business plan for the real estate that you invest in and add to your portfolio. Many first-time real estate investors make the mistake of proverbially playing it by ear instead of having a practical business plan in place when they buy properties. They risk losing money and gaining expensive tax burdens as a result.

Instead of making this rookie mistake, you should make a plan that involves outlining critical factors of your investments, such as how you will:

  • Increase their value
  • Maintain them
  • Operate them
  • Keep them competitive

You should also review your investments and identify what elements may need to be addressed first with them. As an investor, it can be critical that you have this plan in place before you seek out financing to buy them or even put down a deposit on them.

Rely on Professional Counsel

Finally, you can leverage tax advantages for financial growth of your investments when you rely on the professional counsel of real estate investing experts. These experts can include:

  • Tax attorneys
  • CPAs
  • Brokers
  • Real estate investment services

When you reach out to and consult with them, you can find out by what laws you must abide when investing in properties. You may avoid running afoul of city, county, state and federal tax laws and incurring fines and large tax bills that you find challenging to afford.

You can also learn how to transfer and trade properties so you avoid incurring capital gains that the IRS will tax as income. Rather than research these laws and try to figure them out on your own, you can build a team of real estate professionals, consult with them regularly and rely on the counsel they provide you.

Knowing how to leverage tax advantages for financial growth can be perplexing for even the most experienced of real estate investors. Do not navigate this complex process alone. Contact Upside Investments today to learn what financial and tax strategies to use for your properties.

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Nader's Detroit Survival GuideReal Estate Investing

Appraisal Values Vs Resale Values in the City of Detroit

by Nader Shariff
written by Nader Shariff

Right off the bat, let’s clarify something: navigating Detroit’s marketplace can be incredibly perplexing for those unfamiliar with it. I’ve actually seen more times than not investors who are not familiar with that market fall into the trap of analyzing “comps” in an area based on zip codes as opposed to focusing on specific blocks within specific subdivisions.

Did I lose you yet? Well, I cannot stress this enough, there is a difference between appraised values and resale values in the city of Detroit. Because Detroit is such a block-by-block marketplace, values and areas shift quickly and radically block-by-block. Unlike traditional marketplaces, when you are looking at comps from a traditional appraisal method of sales in the previous 6 months in a one block mile radius, you could often fetch higher values on paper than what your property might actually sell for. You cannot approach Detroit in the same way you would approach a market like Jackson Heights, New York, for example.

Let’s take the zip code 48224 for example. If you buy in close proximity to Morningside, there is a chance when running comps you could fetch comps with extremely high values because an appraiser is considering the whole mile radius, and Morningside or east English village may fall in that mile radius. So your 3 bedroom 1 bathroom bungalow that you bought in Moross-Morang could potentially fetch a substantially high appraisal value. Now anyone that is local knows, you cannot compare Moross-Morang to Morningside. But, if you are looking at this from out of state, you might get excited and think you’ve stumbled across gold. You might even consider that you could buy a property to fix and flip it due to the high comps you are seeing in this POSTAL CODE, but the reality is, you can’t.

Appraised values and resale values in Detroit are quite simply not one and the same. Tread lightly, and make sure you know what you are buying before you buy it. So the question becomes, how do you identify what the actual resale value of your property is in the city of Detroit?

Focus on Subdivisions vs Postal Codes

Focus on specific subdivisions as opposed to looking at zip codes when analyzing values. Detroit is more molded towards subdivisions as opposed to zip codes. In a zip code, there are strong subdivisions and weaker subdivisions. Let’s take 48205 as an example. 48205 is a notorious zip code in the city of Detroit, and many investors shy away from investing here due to the harsh reputation it has. But, even in this zip code, there are strong subdivisions. Take the Mohican region for example. This subdivision happens to be in 48205. Looking at the zip code from afar, you could actually end up missing out on a great opportunity to invest in a strong subdivision like the Mohican region. In short, it is best to focus on subdivisions when trying to identify comparables instead of looking at zip codes.

Break Down Strong Blocks Within That Subdivision

It’s important to ensure that you check out the whole subdivision as keeping in line with the block-by-block atmosphere of Detroit. Even strong subdivisions can have weak blocks. Morningside, for example, has a few rougher blocks. and of course. the closer you go south, towards Grosse Pointe, the hotter it can get. Same thing with Marygrove Fitzgerald. There are strong blocks and rough blocks. It is not that hard to identify, and just takes analyzing where most of the higher comps selling in the subdivision are located, along with actually taking the time to drive by the comps you are using, which leads me to my next point.

Scope the Block

Whether it is you or a trusted boots on the ground, make sure you are actually driving the block you are about to invest in. See how the block is being maintained. Is it up to par with the other blocks you are pulling comps from?

Similar Characteristics

Similar characteristics ensure you’re actually pulling comps that align with the subject properties characteristics. If you are buying a 3 Bedroom, 1 Bathroom 1200 Sq Ft bungalow, make sure you are actually finding properties that are similar in bedroom count, sq ft, and bathroom count.

As Close as You Can Get

Identify as many recent sales as you can on the block you are buying on and one to two blocks over. The closer you can get, the more you can ensure resale value. Narrow your search down to as many properties as you can in close proximity to the one you’re purchasing.

Rehab Matters

Make sure you are checking out the properties you are using as comparables and the types of renovations they have done to the property. For both resale and appraisal values, this will matter. You cannot compare a property that is done up with higher-end finishes to rental-grade finishes. It’s important to verify this.

Scope the Surrounding Areas, Suburban Cities, and Subdivisions

When it comes to resale values, you also might want to look around at what is around the subdivision you are about to invest in. Let’s take another look at the Morningside subdivision, what drove the values up in this area and what is moving people towards this area? Similar to the East English village subdivision, the close proximity to Grosse Pointe made these two subdivisions appealing to residents that wanted to live in Grosse Pointe but were priced out of the market. People realized that a few blocks over past Mack Ave you can go into the Detroit side of things and buy properties at ⅓ of the price of Grosse Pointe. So, this drove residents to consider these subdivisions as viable options. When you’re able to identify what is driving residents this way and demand, you’ll be able to have more faith and confidence in the comps you are seeing.

Work With Professionals That Have a Good Understanding of the Market

This goes without saying, but you must work with professionals that actually understand the Detroit marketplace. Using out-of-state turnkey providers or brokers who focus on suburbs in metro Detroit might not be the best option when trying to understand actual values in the marketplace. Ensure who you are working with when buying a property has a tight and strong grip on values in the marketplace along with a strong sales history. Of course, there are some investors that have no intention of selling their properties for a long time to come and are more interested in appraised values due to the appealing option of doing a refinance on their current property. In that regard, you should be able to identify comps by using a more traditional approach. In conclusion, the Detroit real estate market is a dynamic landscape with countless nuances to navigate. If you’re seeking expert guidance and support in your investment journey, look no further than Upside Investments. Our team is dedicated to helping you unlock the full potential of Detroit’s opportunities. Reach out today and let’s embark on your path to success together.

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Property ManagementReal Estate Investing

Demystifying Turnkey Property Investments: Debunking Myths and Empowering Investors

by Adam Luehrs
written by Adam Luehrs

In the world of real estate investing, there are some buzzwords that send investors, both experienced and new, into a frenzy. Thanks to the rise in popularity of reality TV shows, lots of people think that words like “fixer-upper” and “rehab” are signs that a property is a sure thing. Those who aren’t all that interested in remodeling a property before renting it out look for certain terms, too. One of those words is “turnkey.” While many people assume that finding a turnkey property means all you need to do is find a tenant, there’s much more to it than that. Knowing about some of the common myths about turnkey properties ensures that you’re setting yourself up for success in the competitive Detroit real estate market.

Myth #1: Turnkey Means Passive

Many people get into real estate investing because they’re looking for a passive way to build wealth. While real estate investing can be passive, there’s no such thing as a completely passive real estate investment. When you purchase stock in a company, you don’t suddenly become involved with the daily operations of that company. When you purchase a Detroit property, you’re going to find yourself involved, though the amount of involvement may vary.

Turnkey properties are those that don’t require any sort of rehab or repair after you purchase them. While they may be in good enough physical and cosmetic shape for you to rent the property out, this doesn’t mean that it’s a passive investment. Even if you choose to work with a property management company to handle advertising vacancies, perform maintenance and repairs, or collect rent, you’ll still want to be in touch with them, working alongside your chosen manager. At the very least, managing your money involves some level of involvement, which means that there’s no such thing as a completely passive real estate investment.

Myth #2: Turnkey Properties Aren’t as Profitable

Every investment you make is made with profits in mind. When you invest in a property, you want to make as much money as possible, turning the money that you put into the property into significantly more property. Different types of properties offer different returns, and you may have heard it said that turnkey properties simply aren’t as profitable as other options on the market. This is usually only true for experienced investors who have mastered the art of adding value to a property. If you’ve been in the real estate investing game for a long time and know how to fix and flip a property effectively and efficiently, you probably won’t find the same type of returns in a turnkey property. This is largely because properties that are rental-ready cost more than properties that you’ll need to spend months working on.

There’s no arguing that turnkey properties are more expensive, and initially, that’s going to cut into your profits. However, depending on the amount of work put into a rehab property, you may be able to charge a higher monthly rent for a turnkey property. Value-add investors typically opt for more affordable materials when rehabbing a property. Turnkey properties can be just as profitable in the long run as fix-and-flip homes. Most experts agree that choosing the right location is the most important part of maximizing profits, so if you can find a turnkey property in a spot that offers plenty of growth potential, you should still expect to turn a good profit.

Myth #3: Turnkey Properties Are Overpriced

In a lot of ways, this myth ties directly into Myth #2. People who aren’t interested in turnkey investments typically point to their higher up-front costs and say that you can’t generate positive equity in them because they’re all overpriced. This is untrue based on three undeniable truths about the real estate industry.

First of all, the market determines the cost of a property. If someone is selling a turnkey property in an area where similar homes are selling for $100,000 but they’re asking $250,000, they’re probably not going to be able to sell the property. The market will dictate that the home isn’t worth that much because other homes in the area that are similar in size and amenities offered aren’t selling for that much. Even if the asking price is too high, you don’t have to buy the overpriced property.

Secondly, turnkey buyers often have the advantage in negotiations because they regularly buy in bulk. If you’re buying turnkey properties from someone who wants to move out of their investments out of a certain area, you can usually get a better price by purchasing multiple properties at a wholesale price.

Finally, words like “never” and “all” simply don’t apply to the real estate industry. Every real estate transaction is unique, so saying that all turnkey properties are overpriced is simply not a viable take. There are undoubtedly some that are, but all of them are not.

Myth #4: Turnkey Properties are All Single-Family

As we already established, there is no “all” in real estate investing. The final myth further underscores that point. Lots of new investors have heard that they should avoid turnkey properties because they’re all single-family homes when that’s simply not the case. In the world of Detroit real estate investing, “turnkey” simply refers to a property that’s ready for tenants to move into.

These properties that don’t need any repairs are not all single-family properties. While you’ll obviously end up paying a higher up-front cost, you can find turnkey multifamily properties, commercial properties, and more. Even new construction and development investments are often referred to as turnkey properties. Don’t pigeonhole an entire class of investment based on such a baseless myth.

Work With the Detroit Turnkey Experts

The team at Upside Investments is not only familiar with turnkey properties, but we also know the Detroit real estate market. If you’re looking for a Detroit rental property that doesn’t need to be remodeled and rehabbed, let our team help you make the best investment for your personal strategy and the goals that you have in mind. Contact Upside Investments today to find out more about how we can help you find success as a real estate investor in Detroit.

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Real Estate Investing

Demystifying Michigan’s Proposal A: Understanding Property Tax Regulations

by Scott Dylan
written by Scott Dylan

When you plan on investing in the Michigan real estate market, you must consider what laws will directly impact your investments and what kind of toll those laws can have on your pocketbook. You especially must research constitutional amendments in the state that pertain to real estate.

One such constitution, Proposal A, can significantly influence any income you derive from properties you buy there. By researching and better understanding Proposal A, as well as working with an experienced real estate investment firm like Upside Investments, you can protect your portfolio and income you gain from your Michigan properties.

What is Proposal A in Michigan?

Proposal A is a state constitutional amendment that Michigan voters approved on March 15, 1994. Lawmakers at the time designed the amendment to limit property tax growth using a metric known as the Inflation Rate Multiplier, or IRM, until property ownership is transferred.

Before Proposal A, Michigan based taxes on properties on a metric called the State Equalized Value, or SEV. The SEV for a piece of property equaled 50 percent of the property’s true cash value. With Proposal A, Michigan now uses the taxable value of a piece of property to determine its taxes.

Further, under this amendment, the Michigan state tax commission now requires the assessing office to calculate the SEV for every property in the state within a certain timeframe. Property owners must know what their taxable statuses are on their properties by December 31, also known as Tax Day.

Additionally, each property in the state has a capped value, which is figured by multiplying the prior year’s taxable value with the adjustments for losses and additions by the IRM. This value cannot be increased by more than five percent.

The taxable value that property taxes are based on is the lowest value of either the capped value or SEV. As a rule under Proposal A, unless the SEV of the current year is less than the previous year’s taxable value multiplied by the IRM, the current year’s taxable value increases by five percent.

Proposal A and True Cash Value

Proposal A in Michigan defines true cash value as a property’s usual selling price. The actual selling price of a piece of property is not a controlling factor in true cash value or SEV that the assessing office determines. Even more, the assessing office will review all of the sales of applicable properties, excluding non-representative sales (such as foreclosure sales) from its assessment analyses when determining relevant assessment and sale charges.

Proposal A and Foreclosure Sales

As a real estate investor, you may be open to buying properties that are in foreclosure. You assume you can get them for pennies on the dollar, in many cases, and utilize them as solid sources of income.

However, before you buy foreclosed on properties in the state, you need to understand how Proposal A can affect them. In fact, this amendment takes into account that the sale of such properties does not include any distress from either the seller or buyer. It also precludes the assessing office in Michigan from considering foreclosure sales when determining these properties’ values for assessment reasons.

When it pertains to foreclosure properties in the state, the amendment stipulates that all distressed sales in Michigan involving mortgage foreclosure, or sales involving transfers to relocation companies, cannot be taken into account in the properties’ valuations. Foreclosure sales likewise cannot be utilized to indicate their value for market comparisons for current appeals or assessed values.

Disputing Assessments under Proposal A

Michigan allows property owners to dispute assessments under this proposal of their properties. If you do not agree with the assessing office’s final determination or believe other factors should come into play for it, you can contest its decision and potentially convince the assessing office to reconsider its decision. To start the process, you should contact the state’s assessing office, either in person or by mail.

Before you make contact with any questions or concerns, however, you should recall that, under this amendment, the SEV of your property is required to be at 50 percent of the market value. This fact stems, in part, because the neighborhood in which the property is located may have adjustments made to its value every year.

With that, you should base any appeals on the estimate of the current year’s market value that is lower than what the property’s SEV indicates. You have the right to request a free copy of your property’s appraisal card to learn what characteristics of the property determine its SEV. You likewise have the right to appeal the assessing office’s final decision in person or in by signed letter.

Using Proposal A to Your Advantage as a Real Estate Investor

As you study Proposal A in Michigan, you may have more questions than answers about how it relates to your properties and pocketbook. In fact, despite its complexity, you can use several strategies to use this constitutional state amendment to your advantage as a real estate investor.

For example, you can learn how the shift from Assessed Value, or AV, to Taxable Value, or TV, can impact any tax increases you may face as an investor. By researching it, you can prepare accordingly for predictable increases in taxes on properties in the state that you own.

Further, you should also understand how uncapping rules can impact your properties and property taxes. You especially need to consider this before you sell or transfer ownership of any of your properties to someone else.

Additionally, Proposal A got rid of roll ups that local governments could include in their millage rates when property values were less than inflation. As a property owner, you should know how the elimination of roll ups can impact the budget planning and tax rates in the neighborhood or city in which you own properties.

Proposal A can significantly impact the purchase and sales of investment properties in Michigan. As an investor, it is understandable that you would want to understand this state constitutional amendment better. At Upside Investments, we can explain this law to you fully. Investing in real estate in Michigan can be challenging. Upside Investments has the experience and expertise to help you today.

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Property ManagementReal Estate Investing

From Vacancy to Profit: Strategies for Maximizing Rental Income in Detroit

by Adam Luehrs
written by Adam Luehrs

The goal of every Detroit real estate investor is to turn a profit. In the same way that people who invest in the stock market want to choose the right stocks and get the most out of their money, the people who invest in the Detroit rental market want to put their money to work for them and earn a good return. The real estate market is complex, which means you need to go into every investment with a plan in place. Whether you’re new to the world of Detroit real estate or you’ve been in the game for a while, these tips can ensure that you’re generating as much profit as possible.

Establish an LLC

When you become a landlord, you’re not just investing in a piece of property. Instead, you’re starting a business that’s under your complete control. One of the biggest mistakes that new investors make is that they treat their real estate investments like they treat stocks and bonds. If you’re going to find success in the world of Detroit rental properties, you’re going to need to be involved. This actually starts before you put the first tenant in place.

Establish an LLC that “holds” the property and any subsequent properties that you add to your portfolio. LLCs are the most popular type of structure for real estate investors because they protect their personal finances in the event of a liability lawsuit or other financial issues. Also, LLCs are eligible for tax breaks that private property owners can’t get, allowing you to maximize profits.

Take Advantage of Tax Breaks

Speaking of tax breaks, they’re a great way to maximize your profits. So many landlords miss out on perfectly legal savings because they simply don’t know about them. Once you open your LLC, it’s a good idea to form a professional relationship with an accountant who understands real estate law, as they can guide you through the process of writing off every possible deduction. Detroit real estate investors can take advantage of several deductions including:

• Property taxes

• Travel expenses incurred while traveling to maintain or improve the property

• Improvements and repairs

• Mortgage interest

• Property depreciation

Choosing the Right Tenants

Real estate investors have a luxury that many business owners don’t have. In most cases, they can choose who they do business with. While there are plenty of state and federal laws that focus on discrimination, there are several ways that you can make sure you’re putting people in your Detroit rental property who are likely to pay their rent on time every month. Get written consent to run a credit check on an applicant, and have a minimum credit score requirement in place. Verify employment, and require a deposit. When you do your due diligence regarding tenant screening, you’re setting yourself up to generate a profit.

Making Your Property Tenant-Proof

Ideally, you’ll find a tenant who treats your property like it’s theirs. Unfortunately, we don’t live or invest in an ideal world, which means you need to have some measures in place that protect your property, and in turn, your profits. Many rookie investors assume that they’re ready to put a tenant in place as soon as the property is safe and clean enough to rent out. They think that a new coat of paint and a couple of new appliances have them in a position to make money. While those things certainly help, they’re only part of the equation. You need to have written policies in the lease that protect your property, such as prohibiting tenants from mounting their TV to the wall. If something happens and the brackets break, it will damage your wall, costing you money on repairs. You should also have door stops in place that protect the drywall behind your doors. These seemingly small threats have the potential to damage your property and cut into your profits.

Insurance, Insurance, Insurance

If you don’t already have homeowner’s insurance on your Detroit rental property, you need to take care of that as soon as possible. You can actually save on your insurance costs by requiring tenants to take out a policy that covers the contents of the property if they want to do that. This means that you can either take out a smaller policy to protect appliances that you own, or you can skip out on content insurance completely.

Add another layer of protection by investing in landlord liability insurance. While structuring your investment business as an LLC is a great way to protect your personal finances, having this added layer of protection is just good business, and helps you protect your profits in the event of a disaster. Successful investors are those who hope for the best but plan for the worst.

If It’s Not Documented, It’s Not Done

The most powerful tool that you have as a Detroit landlord is the lease agreement. With this in mind, it’s a good idea to work with a real estate attorney to draw up a lease that protects you against any sort of claim that may be made by a disgruntled tenant. While you aren’t looking for a chance to give your tenant anything less than a great rental experience, this is another way of planning for the worst. Make sure that the lease agreement covers everything that you’re responsible for and everything that’s expected of the tenant. When there’s no room for interpretation, you don’t have to worry about dealing with any sort of frivolous claims. Most tenants are good people looking for a property to call home, but there’s no guarantee that you won’t run into someone who wants to try to cut into your profits to pad their own pockets.

Building the Right Team for Success in the Detroit Rental Market

Whether you’ve been investing in properties for years or you’re in the market for your first Detroit investment property, having the right team in your corner is crucial. Contact Upside Investments today to find out more about how our team of industry experts can help you maximize profits for your investment business.

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HousingTurnkey Investing

Estimating Home Renovation Costs

by Scott Dylan
written by Scott Dylan

Detroit offers a lucrative real estate market to investors today. It has scores of beautiful and historic homes that, after renovating and updating, can appeal to buyers and renters on the lookout for sturdy and comfortable houses in which to live.

When you have your eyes on houses in Detroit to buy, you may wonder what it will cost you to fix them up and bring them up to code. You can plan accordingly and protect your investments by estimating your home renovation costs and consulting with an experienced real estate investment company like Upside Investments.

Home Characteristics in Detroit

Detroit is currently home to around 233,000 houses. Out of all of them, around 194,000 are in good condition.

In fact, a large majority of the houses in Detroit that are still standing were built in the 20th century. Close to 40 percent of them were built prior to the Great Depression.

World War II brought a significant slowdown in the building of new homes in Detroit. After the war, new home construction ramped back up as soldiers came home from the warfront and looked for places in which to settle with their families. Ninety five percent of the homes still standing in Detroit today were built by 1956.

Still, the ravages of age and neglect have taken a toll on many of the houses available for investors to buy today. To bring them up to code, let alone make them appealing for buyers and renters, you may have to renovate them extensively.

Even so, renovating your properties in Detroit can be a worthy investment of your time and money, particularly if you aim to earn an income from them right away. By getting renovation estimates and knowing what costs come into play, you can protect your bottom line and make your properties welcoming to people looking to rent or buy them from you.

The Appeal of Brick Exteriors

As an investor in the Detroit real estate market, you may also find homes with brick exteriors to be well worth your time. Brick is highly durable. Homes made with this material are more resilient to damages and aging than other types of home exteriors.

Records show a majority of the homes in Detroit have brick exteriors. In fact, around 95 percent of the homes built in and around the Great Depression are made out of brick. Even more, these houses are between seven and 20 percent more likely to achieve a good condition rating from the local mapping parcel survey.

In total, there are just over 131,000 brick sided homes in Detroit. Out of that number, a little more than 118,000 of them are listed in good condition, which can translate into lower renovation costs for investors who buy them.

Another 10,000 brick sided homes in Detroit are listed in fair condition and may need more in-depth renovation than those homes that are in good condition. Around 2200 brick sided homes are in poor condition and may require the most extensive renovation after investors buy them. Close to 790 brick sided homes in Detroit are suggested for demolition.

Other types of siding found on the exteriors of houses in Detroit include asphalt, which builders used as a cheaper alternative to brick, and wood siding. Wood siding poses the potential of having asbestos in it. Getting rid of asbestos and bringing houses with wood siding back up to safety codes can pose a financial challenge to many investors.

Vinyl siding has also gained popularity since the turn of the 21st century. Still, compared to brick siding, vinyl does not hold up as well. Houses that have vinyl siding on them may suffer damages that cost investors more money to repair and take away from investors’ bottom lines.

Regardless of what kinds of siding the homes in Detroit that you buy, you may consider looking at the national averages for renovation costs when debating how much you might pay to bring your houses up to code. National averages often do not take into account factors like:

  • Local hourly labor rates
  • Material costs
  • Local permits
  • Sales tax

Still, studies show that the average cost for renovating a house in 2024 stood between $10,384 and $83,076.

What Renovation Costs Estimates Do Not Include

As an investor in the Detroit real estate market, it is vital that you understand what contractors may not include in your renovation costs estimates. You should take into account that some critical costs will exist outside of any estimates that you get and plan accordingly to cover them.

For example, your estimates typically will not include any permits that you need for your renovation projects. Depending on what projects you plan on giving the green light to, you may need to obtain a permit from the city or county. When contractors give you estimates for the work, you may assume the costs of permits are not included in these numbers.

Further, the city may require you to have the properties inspected before and after you renovate your homes. You can expect to pay for inspector fees separate from the other costs of renovating the houses. Your estimates typically will not include the costs for having your properties inspected before or after the work finishes.

Likewise, your estimates often will not include the costs of county, city or state sales taxes. It is vital that you know what these tax rates are and then figure them into the estimates that your contractors provide to you.

Finally, contractor fees can add to the estimates that you get for renovating the houses you buy in Detroit. Depending on the contractor, these fees can range between $5000 and $7000, if not more.

Investing in and renovating properties like brick sided homes in Detroit can be challenging for even the most experienced of investors. Upside Investments has the expertise to lend a much-needed helping hand. Learn more about renovation costs and investing in the Detroit housing market by contacting Upside Investments today.

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Property Management

Maintenance Matters: Keeping Your Detroit Rental Property in Top Condition

by Adam Luehrs
written by Adam Luehrs

Contrary to what you may have heard, real estate investing is not a completely passive means of generating income and building wealth. If you invest in the Detroit rental market, you should expect to do some work to make sure that you’re maximizing profits. Identifying and purchasing a good rental property is only part of the equation when getting into the world of Detroit real estate investing. Successful landlords are those who continue to manage and maintain their properties. While some maintenance tasks, such as lawn care and repairing broken windows are obvious, there are some other steps that you can take that will keep tenants happy and your property’s value as high as you need it to be.

Why Maintenance Matters

Before we delve into some simple maintenance tasks that you can perform to keep your Detroit rental property’s value up, consider some of the reasons that you need to make sure that you’re performing these maintenance tasks.

First of all, tenants have the right to a safe, functional home. As the landlord, you’re responsible for providing that. In the same way that basic maintenance tasks are required for the home that you live in, the properties that you rent need to be maintained. As a landlord, it’s your legal responsibility to ensure that those tasks are performed.

In addition to fulfilling your legal responsibilities, maintaining your Detroit rental property is an important part of protecting your investment. Keeping your property value high allows you to rent the property out for more, boosting your return on investment.

Finally, maintenance matters because your reputation as a landlord matters. It doesn’t take long for word to spread when a landlord doesn’t maintain their properties. Good renters, those who pay their rent on time and treat your property well, want to rent from good landlords. Maintaining your property shows potential tenants that they can trust you to keep their residences safe and comfortable. With these benefits in mind, let’s take a look at some maintenance tasks that you need to stay on top of.

Smoke Detectors

Most people don’t think about their smoke detectors until they experience a fire, but as a landlord, you need to ensure that the smoke detectors in your rental properties are in working order. If you have a multi-level rental property, make sure that you have smoke detectors on every level since smoke usually travels slowly. These detectors are not only vital in protecting your tenants, but they also protect your property.

Water Heaters

It won’t take long for you to get a call from a tenant when the water heater stops working. Hot water is a vital aspect of a tenant being able to safely enjoy the property, which is your legal responsibility as a landlord. Whether you have a modern, tankless water heater in place or a traditional model that relies on a large holding tank, scheduling regular water heater maintenance is a great way to make sure that your tenants have access to the hot water that they need for cooking, bathing, and more. Most tank-style water heaters are built to last for about 10 years while tankless water heaters last for up to 20 years. These lifespans are contingent on the water heater being properly maintained. Most manufacturers encourage owners to have their water heaters serviced every year.

Drain Cleaning

Drain clogs have the potential to create a number of problems in your Detroit rental property. Whether you’re dealing with a clogged kitchen sink, shower, or toilet, strong odors come out of clogged drains. In addition to the standing water that emits a sour odor, decaying food, human waste, and other materials lead to foul smells that ruin your tenant’s enjoyment of the property. Additionally, clogged drains are a leading cause of damaged pipes and water leaks. Once a year, schedule a professional drain cleaning to make sure that your rental property’s plumbing system is flowing freely.

Garbage Disposals

When they’re working properly, garbage disposals are a great feature to offer in a rental property. Unfortunately, they run into a lot of problems, largely because people tend to put items in them that they’re simply not built to process. If you have a garbage disposal in your Detroit rental property, make sure that you’re scheduling annual maintenance on it. Without regular maintenance, certain types of food will clog the disposal, resulting in disgusting odors and damaged components.

Maintaining Drywall

When tenants call your property home, they typically hang pictures and mount other items on the walls. While it’s a good idea to prohibit the mounting of heavy items like TVs, you probably don’t want to tell prospective tenants that they can’t hang pictures, artwork, and other lightweight items. However, when a tenant leaves your property, you’ll probably notice some holes in the drywall. Additionally, if you don’t put doorstops on the wall behind every doorknob, tenants may accidentally damage your drywall. While this doesn’t necessarily threaten the safety or structural integrity of your property, cosmetic damage does make the property look bad when showing it to potential tenants. When a tenant moves out, make sure that you’re repairing any holes or damage to the drywall.

Pest Control

No one wants to live in a home with pests and rodents. One of the longest-running debates around property management revolves around who is responsible for paying for pest control in a property. While you can certainly try to have the tenant handle pest control, you run the risk of them choosing the cheapest option. Instead, it’s a good idea for you to take the reins and contract a quality pest control specialist to make sure that your Detroit rental property doesn’t have bugs, rodents, and other pests.

Protect Your Detroit Real Estate Investment

Detroit rental properties are a great investment, but as a landlord, you need to be proactive in protecting your money. Work with your tenants to schedule regular inspections to make sure that everything is working properly in the home. It’s also a good idea to work with a reputable company that understands the Detroit market and the intricacies of owning rental properties. Contact Upside Investments today to find out how we can help you.

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MortageTurnkey Investing

How Non-QM Mortgage Loans Can Help Out-of-Country Real Estate Investors

by Scott Dylan
written by Scott Dylan

The American real estate market remains an appealing option for out-of-country investors. It offers lucrative opportunities for investors to grow their wealth and secure properties that can generate solid sources of income.

However, many foreign investors must utilize alternative finance options to buy American real estate. Non-qualified mortgages, or non-QM loans, can offer the ideal solution for financing that they need to invest in properties in the U.S. today.

What are Non-QM Loans?

Non-QM loans, also known as non-qualified mortgages, are designed for out-of-country real estate investors. Lenders design these loans to help investors who are located outside of the U.S. overcome challenges, such as credit criteria and not having Social Security numbers, that exclude them from qualifying for traditional real estate mortgages.

Further, non-QM loans satisfy the diverse needs that real estate investors outside of the country may have. Without these types of mortgages, some foreign investors may have no other way to buy into and grow wealth in the American real estate market.

Characteristics of Non-QM Loans

Non-QM loans have characteristics that set them apart in numerous ways from traditional real estate mortgages. To start, they have more flexible underwriting guidelines when compared to traditional mortgages.

Traditional real estate mortgages that are processed through programs like Fannie Mae, Freddie Mac and FHA typically come with stringent underwriting criteria. These criteria are often difficult for foreign real estate investors to satisfy.

With that, non-QM loans make accommodations for foreign investors who may lack American credit profiles or have non-traditional sources of income. They make it easier for these investors to qualify for financing in the American real estate market.

Further, no FICO requirements exist for non-QM loans. They allow for financing for properties for investors who have not yet or have no desire to establish credit histories in the U.S. Investors can provide references or use credit histories from their own countries when applying for these loans.

Moreover, non-QM loans allow for higher loan amounts. Foreign investors who have their eyes on pricier or larger properties may get the financing they need that is not available to them through traditional real estate loans when they apply for and get non-QM loans.

They can also use non-QM loans to finance various types of properties. These loans can provide investors with the opportunity to buy real estate like:

  • Vacation properties
  • Single-family rentals
  • Short-term rentals
  • Multi-unit properties

With non-QM loans, out-of-country investors can more easily diversify their real estate portfolios. They get access to a greater selection of properties that may otherwise would have been off-limits to them.

Real estate investors can also purchase points to lower the interest rates on their non-QM loans. When they utilize the discount points opportunities with this type of financing, they can save themselves thousands of dollars in interest during the life of their loans.

Finally, non-QM loans offer prepayment options for out-of-country investors. A prepayment option allows an investor from outside of the country to pay back the loan early. It can also save the loan holder a significant amount of money on interest costs.

The Benefits of Non-QM Loans

Non-QM loans offer a variety of benefits for out-of-country investors. Arguably, the foremost benefit focuses on allowing investors from other countries the opportunity to buy into the American real estate market. Foreign investors do not have to rely solely, if at all, on traditional mortgages.

Even more, non-QM loans offer competitive interest rates. Borrowers avoid the worry of lenders raising the loans’ interest rates simply because the loan holders live or work outside of the country. These competitive interest rates make non-QM loans more affordable and convenient for foreign investors to pay off in good time.

These loans also do not require that applicants have a Social Security number. Foreign investors can use an Individual Taxpayer Identification Number, or ITIN, or other sources of ID to apply for and secure non-QM loans.

Last, non-QM loans offer greater credit flexibility to qualify for them. Foreign investors who have not yet established or prefer not to establish credit profiles in the U.S. often cannot qualify for traditional mortgages. They typically face rejection of their applications for loans underwritten through programs like FHA or Fannie Mae because they have no established American credit reports.

However, non-QM loans allow applicants to use credit profiles from their home countries to qualify for financing. They can also use alternative means like credit references from other creditors.

Qualifying for and Finding Non-QM Loans

To qualify for non-QM loans, foreign investors need to prepare accordingly first. To start, they should compile the necessary paperwork that many lenders require. This documentation can include:

  • Government-issued identification
  • Bank statements
  • Foreign credit reports
  • Credit references
  • Appraisal reports for investment properties

They should also plan ahead for costs associated with investing in the American real estate market. These costs can include:

  • Closing costs
  • Property taxes
  • Insurance premiums
  • Property management fees

Likewise, out-of-country investors need to prove their liquidity, which includes liquid assets like their cash reserves. Most non-QM loan lenders want to know if applicants have enough liquid assets to cover several months’ worth of costs like mortgage payments, insurance premiums and taxes. Liquidity provides non-QM loan companies with a financial security net in the event of possible loan default or fluctuation in how much income an investment property generates.

Moreover, it is vital that foreign investors do not simply choose the first non-QM lender that they find online. In fact, they are encouraged to work closely with a real estate investment service that can help them navigate the non-QM process. This service can also help them find ideal investment properties and make sure all of the clients’ paperwork is in order before they submit their applications for non-QM loans.

Upside Investments assists all of our clients, including foreign investors, with these and a variety of other tasks associated with finding and applying for non-QM loans. The American real estate market is lucrative but at the same time complex and sometimes overwhelming. Let us at Upside Investments help you find the right investment properties and apply for financing like non-QM loans today.

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DISCLAIMER: UPSIDE INVESTMENTS CORP IS A LICENSED BROKER COMPANY IN THE STATE OF MICHIGAN AND NADER SHARIFF IS A LICENSED REAL ESTATE BROKER IN THE STATES OF MICHIGAN AND NEW YORK. PURCHASERS SHOULD MAKE NOTE OF THE ADVANTAGE A LICENSEE HOLDS IN THE MARKETPLACE AND UNDERSTAND A PROFIT IS MADE THROUGH THE RESALE OF PROPERTIES BOUGHT AND SOLD THROUGH THE COMPANY.