I often talk with other real estate investors about the benefits of the Detroit bungalow. These little homes are so common in Detroit that I simply figured they were common in most places.
But that doesn’t seem to be the case.
And while there isn’t a ton of easily searchable history about the Detroit bungalow style home, most seem to have been built in the 1950’s much like these frame homes on Neff.
The big difference is the Detroit bungalow is usually a brick home. And while they can definitely have some slight variations, they generally look like this:
And the more I find myself discussing the Detroit style bungalow with other investors the more I’ve come to realize it makes a fantastic rental investment.
Let’s look at some reasons why.
The Detroit Bungalow Is Small
Bungalows in Detroit are generally between 900 and 1,100 square feet.
To me, as someone who’s been investing in Detroit since 2019, this seems very normal and reasonable.
But I’ve found it tends to be an initial turnoff for many new Detroit investors.
It just seems TOO small, and they have a hard time conceptualizing living with a family in a home of this size.
That’s understandable. Today, the average American home size is over 2,500 square feet.
But back in the 1950’s, when these homes were built, the average size of a single family house was under 1,000 square feet.
As investors, small homes are great.
Why?
Because with less square footage, it’s much more cost effective to update.
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When it comes to changing out flooring, painting the whole house, or putting on a new roof these houses are an absolute dream!
The smaller size of these homes means spending less on these sorts of updates and it’s quicker to get in-and-out during a tenant turnover as well.
And if you’ve ever done a tenant turnover you know time is money!
Overall, the Detroit bungalow is simply efficient. This efficiency means they are solid and steady producers.
Just check out the performance of my first Detroit bungalow I purchased in 2019.
That’s simply not the case!
But still, out of state real estate investors worry that these homes are too small to attract tenants.
There Is High Demand For Detroit Bungalow Rentals
In fact, it’s quite the opposite.
There is a ton of rental demand for Detroit bungalows for several reasons. One of the reasons is the sheer prevalence of these homes in Detroit.
In an area that simply doesn’t have a lot of larger housing stock, people simply become accustomed to more modest living.
I don’t think that’s a bad thing!
In fact, where I live on California’s Central Coast many of the homes are 1,000 – 1,200 square feet. Our home seems to be an outlier at just over 1,700 square feet.
While our home is three beds and two baths, we’re not using one of the bathrooms right now as we’re remodeling.
It’s incredible how quickly you become accustomed to sharing a smaller space even with two kids.
But the Detroit bungalow has something my house doesn’t, making it even more spacious and appealing.
Detroit Bungalows Have Basements
Almost every home you see in Detroit will have a basement. The Detroit bungalow is no exception.
This provides an immediate ~900 square feet of extra space. This can be used as storage, a gym or recreational room, or simply an area for kids to hang out.
As someone who grew up in Michigan I can tell you that once kids get to middle and high school age the basement becomes their domain.
It’s the perfect area for a couch, some chairs, and a TV.
That way, parents can have their own space in the main home while the teens take over the basement. It’s a huge benefit we simply don’t have out here in California!
And it’s not something investors consider when shying away from the smaller footprint of these bungalows.
Small Houses But Adequate Yards
Many times my Detroit rentals will appeal to folks looking to move out of a downtown apartment. The small Detroit bungalow is still usually more spacious than what they’re living in downtown.
But they also have another big benefit: outdoor space!
If you read the very short article I linked to earlier you may have caught these last couple sentences:
“Though the properties weren’t very wide, they did have one benefit, he says. ‘The lots were narrow but deep, so the backyards could actually have gardens.’”
I’d argue this individual is underselling the yard space that you see with a typical Detroit bungalow.
And while all of these benefits are appealing for renters, they are also very attractive to first time homeowners.
The Detroit Bungalow Makes A Great Starter Home
As a real estate investor you should always be thinking about future appreciation and resale value.
Although it’s small, I only see increasing tailwinds for the Detroit bungalow as a desirable first-time home purchase.
Why?
As we stated above, the average American home seems to only be getting increasingly larger. Builders simply don’t build “starter homes” anymore because it’s not as profitable.
In an environment that seems to only be getting worse in terms of home affordability, the modest starter home will become even more popular.
And while some buyers may desire more than one bathroom, there are a couple options for added bathrooms in your typical bungalow.
A homeowner may look to add a full bathroom in the upstairs bungalow section or add a half bath in the basement!
One of my bungalows in Detroit has a full bathroom upstairs, creating an ensuite for the primary bedroom. And a couple of my bungalows have a half bath in the basement.
So neither of these options are at all uncommon!
Speaking of updating…
Detroit Bungalows Are Easy To Update
We’ve already talked about the smaller size of these bungalows as attractive from an efficiency perspective when it comes to things like painting, flooring, or roofing.
But a smaller footprint also means kitchens and bathrooms tend to be smaller as well.
Again, that’s a win in the cost effectiveness category.
But when it comes to plumbing and electrical, the Detroit bungalow is also EXTREMELY easy to update.
The basement is key here, as is having all of your plumbing needs (bathroom and kitchen) on the first floor.
Today, if I had to rip out all the plumbing in one of my Detroit bungalows and completely replace it I might be looking at a cost of around $3,000.
Yep, $3,000… that’s not a typo.
It’s an incredibly easy job because it’s so frictionless to access everything from the basement.
Then it’s just about replacing it with PEX plumbing, an incredibly easy to work with material that’s often used in new construction.
It’s basically adult legos:
Electrical is similar with easy access from the basement where the electrical panel is generally housed.
It’s hard to argue with the efficiency and ease of working on the typical Detroit style bungalow!
I Wish I Had An Army Of Detroit Bungalows
Like most new investors, I figured larger homes would be more desirable, valuable, and command higher rents.
I think that can be true to an extent, but if I had to do it all over again I very well may have simply focused on building an army of Detroit bungalows.
While I love the Colonials, Tudors, and other styles of homes you see throughout Detroit (and I own those too), it’s tough to beat the Detroit bungalow pound-for-pound.
These homes offer more space than initially expected, are in high-demand, and are extremely cost effective from an investor’s perspective.
That’s kind of the perfect trifecta!
What’s your experience with these modest masterpieces? Do you own any? Do you own larger rentals that have been comparatively harder to maintain?
I’d love to hear about it in the comments!