Detroit, Michigan was once a manufacturing goldmine, a city where industry and production combined with a rich culture all built around the automotive industry. Recent years have shown a downward trend into citywide chapter 9 bankruptcy, and the perception of Detroit has become one of a dangerous ghost town. The reality is, it’s a city waiting to make a comeback; a city of rich history and great potential, and it’s something many people are beginning to recognize. Here are 5 reasons why Detroit is a smart investment.
1. Detroit is a symbolic city for the U.S. As the economic recovery continues, the growth and development there makes it almost a poetic brand of sorts for businesses that can afford to put money there now and watch its progress back toward a major contributor.
2. From a monetary standpoint, now is a good time to buy property. The prices are low, and while competition is clearly building in response to attention, it’s still not the same as bidding for a building in a major metropolitan area such as New York City. And speaking of New York, we come to another argument in favor of Detroit. New York City was formerly the place that attracted creative types — artists, writers, and musicians who were struggling and broke. But they’re ultimately part of what made New York this very exclusive, expensive, and complex city with an amazing community.
3. There’s also the appeal of tax incentives to think about. Detroit real estate investments are sometimes eligible for the New Market Tax Credit (NMTC) which is meant to help draw small business and development efforts to Detroit. What it does is give tax credits of 39% of investments that are made into depressed socioeconomic areas. There are certain qualifiers to this, including that the investment must be at least $5 million and must remain in the area for at least a seven-year period.
4. Buy low, then do not sell. Of course you’ll want to sell eventually, but there is no rush. Detroit’s recovery is starting now. That means it has miles to climb, and many junctures along the way for you to cash in your investment. For those willing to buy and hold, the potential for returns is higher than anywhere else in the United States. Make no mistake, the city parks will be cleaned up, the fountains will be turned on, and major corporations will put their names on the city’s skyscrapers. In fact, when the Detroit Convention Center went looking for $299 million of investments to renovate its facilities, they received $922 million worth of bids within two hours. Renovations like that will multiply the value of our investments exponentially.
5. Finally, Detroit is investment friendly. To be sure, development plans will still have to go through standard city planning approval processes, but Detroit is welcoming investors with open arms. Since they made it through bankruptcy proceedings, they have taken serious steps to invite the kind of investments that we’ve already described. The culture in Detroit is one where developers and investors and the city government are working well together.