A new important award for one of OPISAS’ real estate investment locations

The renowned TIME revealed recently that Detroit has been selected in the third annual list of the World’s Greatest Places. The list highlights 50 outstanding locations worldwide. In doing so, the magazine honored Detroiters' many stories of resilience, along with a rich heritage of design and innovation.

This is yet another acknowledgement of the renaissance process that has taken place in this city in the last few years.

In fact, it was the wave of renewal and development that has pushed us to start offering high-yielding real estate investments in Detroit, located in carefully selected city areas on the basis of the best growth rates and prospects. Additionally, all the elements that contribute in making a real estate investment optimal, namely location, area development, residents’ profile, increased demand, yield, and prospects for capital gains, play a major role in our choice.

OPISAS has been monitoring this city for several years before directly and substantially investing in it.

As a result of the strong network, we have developed over the years, we are participating in major urban redevelopment projects of neighborhoods located just a few minutes away from the Downtown’s financial district. This specific investment model together with the economies of scale possible through full integration of all steps, allows us to offer our international clients real estate investments for rental income at prices per square meter sometimes even lower than the cost of construction.

In fact, our real estate investments fall within the range of $900 to $1,000 per walkable square meter (i.e., excluding basement, garden, porch, etc.) for single-family houses composed by 3 or more bedrooms, with front and back gardens, including the parking-space.

Comparing these data to the current average cost of building a new standard-level property in the same Detroit areas, amounting to $1,100 – $1,500 per square meter, the opportunities for future capital gains are more than evident.

Returning to TIME, the list was filled in by taking into consideration the nominations of countries, regions, and cities received from the international network of correspondents and contributors, with special attention to those locations offering new and exciting experiences. Moreover, TIME has devoted an important article to Detroit’s rapid recovery, in which writes “Nearly 10 years after Detroit filed for bankruptcy, travelers can now play a role in the city’s vibrant economic recovery by simply driving through. Detroit was recently selected as home of the USA’s first electric-vehicle charging road, solidifying its title once again as the Motor City—but for the modern age.”

The Governor of Michigan, Gretchen Whitmer, remarked:

“Already recognized as the number one emerging ecosystem for startups and selected as the home of the 2024 NFL Draft, Detroit continues to grow, attracting talent, events, and investments from across the country and around the world. In Michigan, we will continue getting things done on the kitchen-table issues that matter most so we can keep growing the state’s economy, ensure families have a great quality of life at a good cost of living, and build on our rich, diverse culture. The story of Detroit over the last century is one of resilience and strength, and the future looks bright.”."

“It’s gratifying that TIME has recognized what Detroiters always have known: that Detroit is a great city with an extraordinary history,” said Mayor Mike Duggan. “We still have work to do, but Detroit is in the midst of a real rebirth – one that many had thought was impossible just a few years ago. Thanks to the efforts of city residents and employees, and the support of our business and philanthropic community, the reinvestment that began in our downtown core has spread to neighborhoods across the city. Opportunity is more abundant and equitable today than at perhaps any time in our city’s history.  All of this adds up to more people seeing Detroit as a great place to live, work, visit and invest in.”

“Detroit is truly the textbook definition of a great American city, and not simply because it is the largest city in Michigan, said Wayne County Executive Warren Evans. “What powers Detroit is the same energy that fuels Wayne County; the inherent strength of our cultural and ethnic diversity, our history of confronting and overcoming near-crippling adversity, and our ferocious spirit. The Spirit of Detroit is a flame that can never be extinguished.”

Detroit is the most populous city in Michigan, the largest city on the U.S.-Canadian border, and the second largest metropolitan area in the Midwest after Chicago. The cost of living in Detroit, however, is still 18% less than Chicago.

The Detroit region is home to more than 300,000 businesses, including 11 Fortune 500 companies. The latest high-end retailers coming to the town and opening their offices, such as Whole Foods, Microsoft, Google, and Pinterest, represent a further evident confirmation of the city’s renaissance.

Forbes, in turn, ranked Detroit as one of the best places for business and careers in the U.S., with the city home to a variety of companies in emerging technologies such as nanotechnology and hydrogen fuel cell development.

Detroit turns out to be extremely attractive especially in terms of real estate investments for rental income. 44% of the households in Detroit are renter-occupied and rent prices have increased 25% over the past 3 years.

The average house price is than $100,00 in many Detroit neighborhoods, offering the opportunity to purchase investment property at an attractive price. Realtor.com ranks Detroit as a buyer’s market, meaning that the supply of homes for sale is greater than the demand, offering a potential window of opportunity for buying investment property in Detroit.

According to Wall Street Journal, real estate investors may find Detroit the perfect market for full equity acquisitions of very affordable rental housing. As the Journal has reported, mortgage rates are making it hard for local residents to buy a home. That may be one reason why almost half of the households in Detroit rent rather than own.

A relevant parameter to be considered when selecting the location where to make a real estate investment for rental income is housing affordability. It compares the amount of annual income needed to purchase a median-priced home in a given real estate market. Buy-and-hold real estate investors take into great consideration housing affordability to help forecast the current and future demand for rental real estate. Kiplinger published a housing affordability report for the top 100 metropolitan areas in the U.S. The report is based on a scale of 1 to 10, with 1 representing the most affordable markets and 10 the least affordable.

Detroit has an affordability index of 4 to 10, meaning that while housing in the market is very affordable, there are still a high percentage of people renting.

According to a recent study conducted by the Detroit Chamber of Commerce, the city experienced the second-highest growth for people between the ages of 24 and 35, the so-called “millennials”, over the previous decade among peer American cities. Statistically, this segment of population prefers renting.

As specified by Norada, even though prices in the Greater Metropolitan Area of Detroit have increased by 4.5% year over year, the median home price is still significantly lower than the national median price, proving investors with significant room of maneuver in terms of their profit margin.

For more information

For your U.S. real estate investments, particularly for Detroit, you can write to contact@opisas.com to schedule an appointment with an advisor who is an expert of the U.S. real estate market.