Generic filters
Filter by Categories

Investing in $500 homes in Detroit with Darin McLeskey

Podcast Featured Image 38

Darin McLeskey is an investor, developer, and Realtor in Detroit. We talk to Darin on this episode about investing in Detroit’s infamous “$500 house”, learn about the risks and rewards of investing in fringe areas of the city, and Darin tells us where the smart money is going now in Detroit real estate investing.

Daniel McLeskey Interview Highlights

012: Investing in the Detroit Real Estate Market

1:52 Who is Darin McLeskey?

4:27 How Darin Got Started in Real Estate

7:52 The Numbers of Detroit

10:38 Darin’s Preferred Investment

13:23 How Darin Finances His Investments

14:00 Mortgages vs Properties in Detroit

15:32 Living in Detroit

16:46 Stories from Detroit

20:27 The Typical Tenant & Rental in Detroit

25:27 The Future of Detroit Real Estate

30:52 How to Reach Darin McLeskey

Darin McLeskey Interview Transcript

Andrew la Fleur:
Now, for something completely different. Obviously, normally on this show, we talk about the Toronto condo market and what’s happening here in Toronto specifically, mostly downtown but occasionally, elsewhere, but today, we’re going to be actually talking about the Detroit real estate market.
Yes, the Detroit real estate market. You may have heard the stories of $500 homes, and the city has gone bankrupt, and millions of people have left Detroit over the past couple of decades. Detroit obviously has a lot of issues, a lot of problems, but with that, there’s always great opportunities.

It’s an area that I’ve always been very fascinated with. I’ve never really looked into Detroit very much to be honest, but I’ve just been fascinated by the city and by the stories that you hear of entire neighborhoods being wiped out, and millions of people leaving, but the same, you’ve got several billionaires investing in Detroit and reinvigorating the downtown, and much like what we talked about all of the time here, there is a broader movement happening not just here in Toronto but around the world, particularly with the millennial generation of people moving back into urban centers and taking advantage of life in the city, and people want to be closer to work, and closer to restaurants, and closer to the amenities of the city. That’s happening in Detroit as well.

Anyways, I wanted to get somebody on this show to just talk about Detroit and what’s happening there, and what people are investing in, and how people are making money from an investment perspective in the Detroit real estate market.
On today’s program, I got a young man by the name of Darin McLeskey. Darin, although he is young, he is very experienced in investing in real estate in Detroit, and he comes from a real estate family as well. He grew up, both his parents were realtors so he’s just born and bred in real estate. A very smart guy, really knows what he’s talking about and just very interesting to talk to him.

I saw him on BNN being interviewed a couple of weeks back and right away, I said, “I got to get this guy on the podcast and talk about Detroit.” We talked about what’s happening there. He’s got some amazing stories. We talked about the $500 homes and he’s bought lots. One story, he told me off the air, he bought a lot for a dollar, and he is recently selling that for $11,000. Pretty good ROI right there, right, but obviously, there are challenges and unique things that are going on Detroit as well.
I have no idea if I will invest in Detroit myself or not. It’s really not something that I’m actively looking at but

I just find this very interesting and I just thought that my audience, you guys listening, would find this interesting as well. Drop me a line any time, of course, with your feedback on the podcast. You can hit me on Twitter @AndrewLaFleur. You can send me an email You can always text me, call me, 416-371-2333. Of course, you can always find me at

Let’s get to the interview with Darin McLeskey. He is operating there in Detroit, and the show notes for this episode, you’ll want to check out with links to everything that we’re talking about in Detroit over at If you’d go to, you will bring up the show notes for this episode.
Great. Let’s get to the interview here with Darin McLeskey.

Andrew la Fleur:
All right. It’s my pleasure to welcome to this show Darin McLeskey. Darin is an investor. He’s also a developer and he’s also a realtor with the Developing Market Specialist at his brokerage firm which is called the Loft Warehouse. Darin, welcome to the show.

Darin McLeskey: Hi.

Andrew la Fleur: Darin, why don’t you start off just by telling us a little bit more about yourself, who you are, how you got started in real estate, and tell us more about your company, and what you do.
Darin McLeskey: Okay. I grew up in the suburbs of Detroit, a small town called Pinckney, Michigan. Very small, had a lot of subdivisions being built at the time. My parents at one point or another were both licensed agents with a couple of rental properties built four or five times over and so, I was into the real estate market just growing up with dinnertime conversation.

Then, I went to school for Environmental Engineering. Within that degree, I increasingly shifted towards real estate, brownfield redevelopments, all sorts of urban planning, studies, and things like that. I worked for two years as an Environmental Engineer, and always took the assignments that delved with development in urban areas.
Then, learned a heck of a lot regarding the tax, incremental financing, different things that you have in the state to encourage development in blighted areas. Then, went fulltime as a real estate agent just three months ago, and the entire time while I was in college, started buying property and achieved anywhere between $200 and $500 typically for vacant piece of land, maybe a couple of thousand dollars for these homes, and what I typically did was just stabilize the homes, secure them, put a security system, and a cellphone relay in these homes, stabilize them as best I could and get them cleaned up on the outside.

Once I graduated, I started renovating these homes for rentals, and have a couple of rentals right now that are cash-flowing and it’s really gotten hand-in-hand with why I got my real estate license because I’m realizing there’s such a great return on investment and such great opportunity that I need to share it with others, and obviously not able financially to take advantage of every deal I come across.

That’s, in a nutshell, where I’ve gone and what I’m trying to do mostly is creating a synergy while there is a specific intersection in Detroit of homes that can be bought and brought back or whether I could mix used commercial structure that requires additional funding, creating a synergy between multiple developments in an area, as well as going to create this effect that overly will really multiply rather than having a scatter shot of renovated homes, having pockets that are coming back in the vibrant twist, people that are paying rent, and keeping the place clean and everything is what I’m focused on currently.

Andrew la Fleur: Okay. I want to talk about what’s happening in Detroit and your take on the market, and what the opportunities are for investors, but maybe you could start by just giving us a picture in terms of numbers. A lot of investors listening to this show and a lot of them like to look at the numbers first and foremost. Can you give us some numbers on a typical investment that you have or that you’ve done or you worked with? How much does it cost? What’s the play? Are you going for cash flow or is this just like long term holds and hope that the values goes up? What do the numbers look like?

Darin McLeskey: It’s still hard to quantify this because things have changed so drastically in the last year even but I have an example of a home I bought at the end of 2013 for about seven grand. I put almost seven grand into the home while I was living there. I’ve got I would say $15,000 into the house total, and I’m getting over $1000 a month in rent. Here in Detroit, it’s not even about the ROI or the cap rate. It’s almost the simpler the number is, your breakeven. One, have you paid yourself back and in general, within a year or two, you can make back your entire investment.

That’s typical. Things have changed. That home is probably valued closer to $30,000 or $40,000 right now even though in only had $15,000 into it, but there are still properties that can be bought for anywhere between 10 and 20, maybe $30,000 that with just little work could be rented for between, I don’t know, $1000 and $2000. It really depends.

I would say if there’s a sweet spot, you can buy $1000 all day long in Detroit, but you’re going to be putting much, much more effort and money into fixing them up. There’s a sweet spot of a house somewhere between 15 and 25K, or you can get a home that may be is a previous foreclosure, had a big mortgage on it for 100 to 200K back in the day, and someone took new windows, and redid the electrical, and insulated it, and everything, and the value is low but the materials in the home, it’s worth it.

Then, on the other end, in terms of renting, if you just straightforward rent it out to a family, you’re not going to get as much if you rented it to multiple students or did something like an Air BNB, you’re going to get a higher ROI but it requires more management and more on-the-ground expertise as well.

Andrew la Fleur: What are you looking for right now? It sounds like you’ve experimented with a few different types of properties and a few different ways of doing it. What’s your preferred investment method right now?

Darin McLeskey: My preferred investment is to buy a home that has new windows, has a new roof, has updated electrical, and maybe some plumbing repairs but I typically bought distressed homes and that it’s a home that’s been abandoned or it’s a home that is about to get foreclosed on through lack of taxes, and I’ll approach the homeowner, and I’ll make an offer. Sometimes, these homes have water damage or have slight defects that need to be rectified but I’ll buy a home for anywhere 5 and 10 grand, or maybe a little more. Then, I’ll put about the same amount into renovating it, and just renting it out.
There’s a huge amount of people who are in downtown and midtown. They want to be closer to where their jobs are. It’s not the same as their parents’ generation of commuting into town from the suburbs and that’s your life. People want to be where the action is. There’s restaurants opening. There’s a light rail alignment that’s being installed on Woodward.

It’s just so many people want to be down here now that rents in midtown and downtown are through the roof, and there’s just an endless, nearly endless supply of people looking to move just half a mile outside of these realms, and they’re willing to reduce their rent by 25% to 50% for the same comparable product, but they’re living in an area where you may have bought a house for 10 or 15 grand, and they’re paying $1000 or $1500 a month. It’s still a good deal because it’s less than income.

Basically, buying a home, doing what aesthetic rehab work with knowing on the front end that it’s a solid home, and then renting out to this overflow from downtown and midtown. That’s my current, that’s my main objective right now because when we sell that, it’s not necessarily there. I may have a home that’s renovated and I have 35 or 40 into it but it’s really only worth 40 but I’ll be getting $1500 a month in rent. It doesn’t make sense on a value perspective but in terms of a cash flow perspective, it definitely does.

Andrew la Fleur: Interesting. How are you financing these types of rehab-type properties? Are you just doing it with cash or are there financing opportunities available for investors? Are you partnering with somebody? How does it typically work?

Darin McLeskey: Yeah, that’s a big hurdle in Detroit. Things don’t appraise and even if they could appraise, typically there’s issues that prevents them from getting a mortgage. Unless you’re in very isolated specific neighborhoods, you will not get a mortgage. The entire city of Detroit last year, there were about 400 mortgages made. There’s 300,000 properties.

Andrew la Fleur: Wow. Back it up. Back it up. Say that again. That’s an incredible stat. The city of Detroit, 300,000 properties did you say in Detroit?

Darin McLeskey: Yes.

Andrew la Fleur: There were 400 mortgages issues in 2014 in the entire city?

Darin McLeskey: Yes. It’s just banks don’t like it because it’s so unpredictable. It’s also very hard to give insurance in the city. Yeah, cash is the way to go. So far, for my own personal investment, I’ve cash flowed everything. I’ve, often times, done a lot of the work myself really low key, grassroots investing. Then, just recently, I’ve started partnering with a couple of family members who themselves were not sold on Detroit until I had a cash flowing property that they were just shocked. They’re absolutely shocked. Shocked enough to start partnering with me.

That happened in the last year and a half or so. Now, I’m starting to work with investors. Just from being on BNN, I’ve had just a huge amount of people contacting me but I am starting to work with investors. I’m considering creating like an investment group or a corporation to manage properties but as of right now, it’s just been myself and two family members that have been purchasing homes and properties with.

Andrew la Fleur: Do you live in Detroit yourself?

Darin McLeskey: Yeah, I live in a townhouse. I moved to five towns in the last year. Actually, I’m living in a townhouse that I bought for $2000 last summer and I’m putting, it will be about 7 grand total into the home, and I’ll be moving out into the next project. I’ve essentially been living in these homes that I’m working on. It’s not the best scenario for housemates, but it is fine by my standards.

Yeah, I’m living in Detroit right at the center of where I’m investing. It’s the best way. I bought the townhouse across the street, and I was helping this lady shovel her car out of the snow, and she told me she wanted to sell her house really badly. Being in the neighborhood helped in terms of just making friends and neighbors, in terms of safety, in terms of helping people sell their homes when they want to, and then also buying properties for investment. I wouldn’t have it any other way.

Andrew la Fleur: You must have some incredible stories and anecdotes to share of your experiences being in some of these rougher end and on the fringes neighborhoods. Obviously, like you said, you grew up in the suburbs, suburban kid, and now you’re making some money here in the city and in a city that’s undergoing unprecedented challenges but also opportunities. Do you have any interesting stories you wanted to share in terms of, I don’t know, any interesting characters, or events, or things that you’ve seen or crime that you’ve encountered or anything like that?

Darin McLeskey: Oh my, gosh. The story I told you about the home that I have put about 15K into, I got the bill from the county. It was for a county tax foreclosure. I got the bill in the mail. I found out after the fact that the previous owner was my neighbor. I was literally buying the property next door to someone who lost it to foreclosure.

Yeah, I made the mistake of moving some tools into the house without a security system, and I came home from work one day, just two days after buying it, and the front door was just beamed down like a battering ram was taken to it, and the electrical box on the back of the house was ripped off the wall.

They cut the electricity and battered in the front door, and took just a couple hundred dollars’ worth of tools but there’s stories like that and there’s just a protocol that I’ve developed on the way to do things properly just to protect and the safety. I lived there for a year and a half later and never had a problem. They parked multiple decent vehicles on the street, and never had a breakdown, or anything. My renters, loved it, they’ve never had any issues. Just various of crime but it’s generally isolated and there’s ways to avoid it.

There is another house where I bought it for $1800 and a neighbor was actually keeping his dog in the home acting as a dog house, and they let the dog do their business on the basement. Basically, I bought this house, and I had to perform cash for his deal because at the time, he was considered a squatter who had the rights to the property. I paid him $300 to vacate and sign a contract. Then, I was left with a big mess where I literally spent four days just shoveling crap out of the basement.

Andrew la Fleur: Literally.

Darin McLeskey: Literally.

Andrew la Fleur: Wow.

Darin McLeskey: There’s stories and there’s glamorous, cool side of Detroit but there is a lot of underlying issues. A lot of holdovers from the previous years of disinvestment and the downturn and everything else. There’s issues regarding that but then, there’s wonderful things that have happened too.

I adopted a dog that was a stray dog. There’s a lot of them in Detroit and didn’t realize she was pregnant at the time but she had 11 puppies, just about three months after I adopted her. Yeah, and I have two of her puppies now, and they’re just wonderful, wonderful dogs that I love to death. There are silver linings and everything here in Detroit.

Andrew la Fleur: Wow. What is your typical tenant like in these properties that you’re buying for cheap, you’re putting a little bit of money into to bring them up to standard, and you’re renting them out? It sounds like these are on the fringes of the good areas with a much, much more expensive areas the way you’re describing it where people want to go a little bit further out and get much cheaper rents and they’re still close to the action of the city. Who is your typical tenant or what’s your ideal tenant that you’re looking for? Describe them?

Darin McLeskey: A lot of them have jobs downtown or at midtown. For example, in the $15,000 home, it’s a gay couple. One is an artist and one is the manager of a restaurant that just opened up, a really hot and hip restaurant over in Corktown, and their friend who is a manager at a catering company downtown. I screened them, I looked at their income, I looked at their credit score, I looked at all of that. They put a month-and-a-half deposit down. They’re splitting the cost. It’s a huge home. It’s a townhouse but it’s almost …

Andrew la Fleur: Yeah, describe this home. 3000 square-foot townhouse.

Darin McLeskey: It’s a four-bedroom townhouse.

Andrew la Fleur: When was it built?

Darin McLeskey: 1912, and it’s a true brick home. The walls are really fantastic. It has these all new windows, a lot of updates, and all the floors have been refinished, oak floors, mahogany trim, beautiful fireplace, a walk-up basement. It’s just a great home that …

Andrew la Fleur: How many bathrooms?

Darin McLeskey: It’s just one bathroom.

Andrew la Fleur: One bathroom, four bedrooms, okay.

Darin McLeskey: Yeah.

Andrew la Fleur: You have a couple and you have another single person, and the three of them are living there.

Darin McLeskey: They’re living there together.

Andrew la Fleur: They are paying you. How much do they pay you in total?

Darin McLeskey: It’s $1000 a month.

Andrew la Fleur: A $1000 a month, okay.

Darin McLeskey: They split it equally. Basically, it’s very minimal compared to their previous locations. They’re paying between $400 and $1000 a month individually elsewhere and a much smaller space that wasn’t as well-maintained. For them, it made sense. For me, it obviously made sense. Everyone is happy at the end of the day.

Andrew la Fleur: How far of a walk is it to the action of the city, so to speak, the places where people want to be and where there’s a lot of things happening?

Darin McLeskey: It’s not a walk.

Andrew la Fleur: It’s not a walk.

Darin McLeskey: It’s probably three-quarters of a mile biking distance from some of the action. It’s probably a mile-and-a-half from the heart of all the action. It’s like a ring so to speak.

Andrew la Fleur: You paid virtually nothing for that house, it sounds like a beautiful century home, brick home like you said. If you wanted to get the same home right a mile away right in the middle of the action, how much is that costing you?

Darin McLeskey: There is a home right in midtown that’s similar. It’s more loft-like but similar square footage. It’s called the Springfield Lofts. It has a garage. Very similar layout and everything. It’s sold last summer for $370,000.

Andrew la Fleur: Wow.

Darin McLeskey: Yeah. That’s probably two miles away but you can walk is the thing. Then, you can walk a block or two away. The homes around it are a little better maintained and that home was valued at $117,000 three years ago. Now, it’s $370,000. That’s the kind of appreciation we’re seeing in downtown and midtown here in Detroit. You go up Woodward a little bit and it’s just an incredible value but the thing is that home is Westminster Street in Detroit. It’s one block off of Arden Park which is one of the top three premier subdivision. There’s mansions that are limestone and 8000 square feet just one street over.

It’s not on the fringe of midtown where it’s walkable and there’s new bars and restaurants but it’s on the fringe of a very well-to-do luxury neighborhood and that plays off on that a bit that’s why I bought the home.

Andrew la Fleur: Interesting. We hear two stories of Detroit. One is that the city is shrinking, people are still leaving the city, and obviously that’s never a good thing as an investor looking at buying into a market where people are living, and obviously Detroit still has major, major challenges financially but on the other side, we hear stories like you’re describing where you can purchase properties for virtually nothing and rent them out for decent rents, a $1000 a month, and if you start breaking down the ROI numbers, it’s insane what you can get from an ROI perspective. Challenges and opportunities, how do you see the market overall? Where do you see the market going in the next five years?

Darin McLeskey: It goes back to one other thing about these rings of development in Detroit. You have areas of blight and then as you get closer to some of the stable suburbs, you have nicer areas, and as you get closer to midtown, you have nicer areas. There are a lot of areas that are blighted and that are still going down hell. Not as that’s what they were a couple of years ago but they’re still going down hell.

It’s very true and there’s two stories. There’s areas that are seeing 100% per year appreciation for two or three years and then, there’s areas that are filled with $500 homes that are burnt out and there’s really no hope for those areas. If you look at a plan that a bunch of nonprofits worked on and the city has endorsed, it’s called Detroit’s Future City, you can look it up online. It spells out this framework that’s unparalleled for really any city but that’s only for Detroit. It’s a way forward in terms of what to do with these areas that are blighted.

Do they become large scale forests? Do they become urban agriculture, farmlands? Do we treat our runoff from our combined sewer? Do we separate that and have rivers, and ponds with these vast amount of areas that are being depopulated. Then, really focus on a hub [inaudible 00:27:56]. That’s where a transit-oriented concept where you have denser areas because before Detroit filled in, there were towns in Detroit. There were intersections that had little villages that were just engulfed by the expansion of the city.

Do we go back to where it was where you have Gratiot and Roseville, tiny little downtown and stable housing around it but then, around that, you have forests and whatnot. That’s really in the next five years, I don’t see that playing out, but in the next 20 to 30 years, I do. In the next five years, I just see continued growth of Woodward. I see tons of vacant lands right around the transit lines, seeing infill development.

I am hoping in the next five years, we’ll go a little more mainstream with financing and getting mortgages and development plans where it will spur development. If you look in an area like Corktown, homes are selling for $40,000 for years. You, all of a sudden, had people paying cash for 150 to 200K for these homes. Bank use those homes as comparable sales and started making mortgages. You had a jump literally in one summer from $40,000 to $200,000 for the same type of house in an area called Corktown.

In the next five years, you’re going to see other neighborhoods that see that jump where we go from this really, really, really low price investing to just this typical homes that are on par with their actual value. That’s what I see in the next five years.

Andrew la Fleur: Very interesting. Darin, anything else you want to add or anything else we haven’t talked about that you think is worth talking about with respect to Detroit and its real estate market?

Darin McLeskey: In Detroit, there’s a lot of deals that probably sound too good to be true and you need to know someone who is on the ground to vet those deals because there’s plenty of people who have bought things on the cheap and not realize really local-specific issues with it, whether it’s huge water bills that have yet to be put on the tax bill, whether it’s demolition whims or news with abatement that’s been occurring.
If you try to just do things, and there’s a lot of local people who are going to sell really crap to just make a quick buck but I think what you want to do is partner with someone who knows what they’re doing on the ground and knows Detroit well who can help guide you through the process because things are very unique. It’s a very unique time in the city, and you don’t just want to spend your money on things that don’t have value long term.

Andrew la Fleur: That’s great. Darin, if people want to get a hold of you directly, what’s the best way for people to find you online or otherwise?

Darin McLeskey: I’d say LinkedIn or Facebook. Just search for Darin McLeskey. That will be the best way to get a hold of me personally. You can also go, if you’re more interested in Detroit in general, go to

Andrew la Fleur: Great. We’ll sure to include links to your Facebook and LinkedIn profiles on the show notes for this episode as well over at for anybody who is listening. Darin, I want to thank you very much for your time today. I appreciate it.
Darin McLeskey: Okay. Thank you.

Andrew la Fleur: Great. All right. There you have it, my interview there with Darin McLeskey, investor, developer, realtor in Detroit, and I hope you enjoyed that. I hope you found that interesting and yeah, let me know what you think. Send me an email, hit me up on Twitter. Leave me a review, of course, on iTunes, greatly cover that if you want to support the show, if you like what you’ve been hearing, if you’ve listened to multiple shows here, and you’re a fan, please leave me a review, that would be great.

Great. Once again, for the show notes on today’s episode, just head on over to, and you can find links to everything that we talked about on today’s show. Including notes to get in touch with Darin McLeskey yourself if you’re interested in talking to him directly.

Thank you very much for listening and have a great week.

Thanks for listening to the True Condos Podcast. Remember, your positive reviews make a big difference to the show. To learn more about condo investing, become a True Condo subscriber by visiting

Last Updated on