Celebrity boxing matches seem to be a pretty popular thing lately, and we have recently been pondering a showdown of our own: should real estate investors focus on the Detroit market or the Dayton market?
Over the last several months and even years, Detroit has emerged as a competing market when it comes to attracting real estate investors. There are a few similarities that we can see pretty clearly, but there are also a lot of differences. Dayton’s market has always been particularly attractive for a lot of reasons, so we don’t think that Detroit offers too much competition.
At ManCo Property Services, we’re always one step ahead of the latest trends, however, so we thought we’d take a closer look at whether investment dollars are better spent in Dayton or Detroit. Here’s what we discovered.
Detroit and Dayton: The Investment Similarities
Why would investors interested in the Dayton real estate market also be thinking about Detroit? Well, there are several ways in which the two cities and their real estate offerings are aligned.
- Similar Price Points
One of the most appealing aspects that both Detroit and Dayton have is the affordability of real estate. Both markets offer a relatively low entry cost compared to major urban centers, allowing investors to acquire properties at lower prices and potentially see greater ROI as the markets continue to grow and improve. Property prices are significantly lower than the national average, enabling investors to scoop up properties without breaking the bank. The cost of living in both Dayton and Detroit is also low, making them attractive cities to potential residents. This boosts rental demand.
- Similar Cash Flow Opportunities
Both Detroit and Dayton present investors with potentially attractive cash flow. As the local economies have grown, rental demand has increased, offering consistent cash flow benefits. Furthermore, both Detroit and Dayton have relatively lower property taxes compared to larger markets, which can enhance net returns and make long-term investment strategies more feasible.
- Diversity of Economies
Both cities have diversified their economies over recent years, reducing reliance on single industries and creating a more robust economic environment. Detroit’s economy is diversifying from its traditional automotive industry, with growth in tech, healthcare, and finance sectors. Dayton maintains a strong defense and aerospace presence, while also focusing on healthcare and manufacturing.
- Revitalized Urban Cores
Detroit and Dayton are experiencing notable urban revitalization efforts. After surviving economic downturns, these cities recovered into a stronger position than they were before with targeted investments in infrastructure and community development. This makes them ideal for investors willing to get in on the ground floor of potential growth.
There’s a supportive investment environment in both cities. Local governments in Detroit and Dayton are working to attract new businesses and investments, offering incentives and support for real estate development projects.
The rental markets in both Detroit and Dayton are strong and present excellent opportunities for investors to generate steady cash flow. There’s a high demand for rental properties due to a significant portion of the population being renters rather than homeowners. There’s also good ROI potential on rental properties, thanks to competitive rental rates combined with low property prices.
Comparing Detroit and Dayton: Which Market is Better for You?
While both Dayton and Detroit present compelling investment opportunities, Dayton may have a slight edge for certain investors due to several strategic advantages.
Firstly, Dayton boasts a lower cost of entry for investors, with property prices generally more affordable than in Detroit. This enables investors to acquire multiple properties, diversifying their portfolio with a smaller capital outlay.
Additionally, Dayton’s stable and growing economic base, driven by aerospace, healthcare, and education sectors, provides a dependable backdrop for sustained growth and rental demand. Unlike Detroit, which is still rebounding from economic setbacks, Dayton’s smaller population size and well-managed growth mean it’s less prone to dramatic market fluctuations, offering a steadier environment for long-term investments.
Furthermore, Dayton’s focus on innovation, as seen with institutions like the University of Dayton and Wright-Patterson Air Force Base, ensures a continuous influx of skilled professionals, enhancing demand for quality residential and commercial properties.
We’d also like to point out that the city’s commitment to community development and infrastructure improvements augments the appeal for investors seeking a vibrant and forward-looking city to invest in.
Getting Started: Investing in Dayton
With its affordability, opportunity for cash flow, and large pool of qualified tenants, investing in Dayton makes sense, even if you’re considering adjacent markets like Detroit. Here’s how to move forward with your plans in Dayton:
- Educate Yourself
Knowledge is key. Start by understanding where you are, and gather as much information as possible specific to Dayton.
- Set Clear Investment Goals
Define what you want out of your investment. Are you aiming for short-term profits, or are you focused on building long-term wealth? Your goals will shape your investment strategy.
- Analyze the Market
Deep-dive into the Dayton real estate market. Understand neighborhood trends, property values, and rent prices. This analysis will help identify high-potential areas and avoid overvalued properties with limited ROI.
- Secure Financing
Evaluate your financial situation and explore different funding options. Consult with multiple lenders to find competitive mortgage rates or consider leveraging saved capital. Remember—securing favorable financing is crucial to maximize your investment returns.
- Assemble a Local Team
Partner with local professionals like us who understand the Dayton market. Our expertise can guide you in choosing properties and navigating the local real estate landscape.
- Start Small and Scale
Starting with a smaller property can mitigate risk while settling into a market that may be new to you. Focus on single-family homes or duplexes before considering larger, more complex investments like multi-family units or commercial properties.
- Monitor and Adapt
Real estate is dynamic. Regularly assess your investments, stay informed of market trends, and be prepared to adjust your strategies. Whether the market is rising or stagnating, flexibility and adaptability are your allies.
We are here to help, whether you’re still deciding where to invest or you’re slowly growing a profitable portfolio of real estate. Contact us at ManCo Property Services. And remember: If it’s a property managed by ManCo, life just got better!