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IcHARD AND eAMELA MAcK are making a big bet on the future of
Detroit: They've just purchased a huge house in a city that's been hol-
lowed out by the Great Recession and the near death of the American
auto industry. One in 10 homes here stands vacant, accordingto Data
Driven Detroit, and unemplo;rment in the metro area is at a staggering
15%, reports the Bureau of Labor Statistics. Some would say it's crazy tobuy
properby in this city right now, but a good value investment always looks like a bad
idea to most people. That's what makes it a value.
For the past year MONEY and its sister Time Inc. magazines have chronicled
how Detroiters like the Macks are coping with what's happened in and around their
hometown. The stories are different, but what's universal is that while Detroit may
have become a synon)nn for economic decline, those who live and work in the area
don't have the option of standing by idly. On the following pages you'll meet people
from the Motor City and its environs who found that to move forward, they had
to take calculated risks-switching careers, starting a business, even moving away.
You may have encountered simila4 if less daunting challenges in the recession and
so-called recovery, or you may well indeed down the line. The smart, realistic strate-
gies laid out here can help you get going when your personal economy gets tough. -)
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I ior or that they won't fall further. So when does a "deep value" > Be prepared for care and feeding. As a real estate investo4
ere investment make sense? Take the counsel of famed investor be ready to put in sweat equity. That means fielding calls at
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ne]-s. Benjamin Graham and be sure there's a margin of safety, 2 a.m. complaining about a burst pipe, or paylng a property
nies. or a comfortable gap between the price you're paying and manager to handle such issues for you' And because a bad
.ome. what you conservatively think it's worth. Which leads to... tenant could cost you thousands in rent, damage, and legal
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eigh- > Think income, not capital gains. Most of us think of real es- fees, you'll need to do due diligence upfront-including back-
it the l tate as a capital-appreciation investment-meaning that the ground checks, credit checks, even a Facebook check, advises
r-e in, return comes from a rise in the properby's value. But income Shuki Haiminis, president of real estate brokerage Lofts.com.
cndo, ,z- from rent can cushion the margin of safety, and many advis-
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nent. ers think it's more profitable to view real estate as an income
investment anfvay, since values aren't expected to balloon The Big Decision
.Yery .>\
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any'bime soon. At current prices, in a nice Detroit neighbor-
3;
-r= hood, you can get more in rent than your carrying costs, says
She Switched Careers
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'lo realtor Christine Winans of Prudential IIVWIB in Birming- > Barbara Stachowski, community organizer
n'est- ,.o
ham, Mich. That improves the cushion for the Macks, even
their -O if they plan to live in the house. (They can always rent it out Barbara Stachowski, who worked on land development
guar- :L
ifthey move again.) A real estate agent can help you figure projects for an engineering firm, was making photocopies
rnd- -/r out whether the prospects are as good in your area. at work one day in 2006 when her supervisor asked, "Hey,
you got a second?" By the time they got to the conference it is more cost-efficient to takea few courses that would
room, Stachowski knew what was coming: With business sharpen specific skills you know you need for the transi-
having slowed down, she was being laid off. tion-or go for a highly focused degree, as Stachowski did.
"It was scary but exhilarating" recalls Stachowski, now >Play up your transferable skills. You may not need to acquire
53. She'd been contemplating a career change for years, and more training ifyou can convince hiring managers that you're
this was her chance. In 2OO7 she entered a master's pro- a shoo-in. That comes down to your sell. "You have to posi-
gram in social justice at Detroit's Marygrove College. And tion yourself relative to v,'hat you want to do in the future,
today she has ajob she loves: a contract position directing not what you've done in the past," says Ibarra. So if you're a
a crime-prevention and community-revitalization program marketing specialist trrying to get a job as a project manager,
in Hamtramck, a small city that's surrounded by Detroit. talk about howyouVe completed projects on a tight deadline
It hasn't been easy. She's taken a 25o/o pay cut and is rather than sharing details about campaigns you've led.
paying for her own health insurance, all while shouldering
$25,000 in student debt. "But reinventing yourselftakes
time," she acknowledges. And already people are starting The Big Decision
to recognize that she's good at what she does. "Just today
I got two calls for possible consulting jobs," she says. He's Cutting His Losses
> Mark Munteanu, engineer
Howto Make ltWork
> Give yourself time. Stachowski is right about how hard it is Trained as an engineer, Mark Munteanu moved to the De-
to change professions; it rarely takes less than three years, troit area from his native Romania in 1996, exactly as his
says Herminia Ibarra, a professor at the Insead international brother, Gabriel, also an engineer, had done a year earlier.
graduate business school. That's because you need to figure The U.S. was Mark's "dreamland." And he made a good
out what you're looking for-a trial-and-error process for living working for the Motor City's automotive firms-until
most people-and then gain relevant experience and make November 2008, when he was laid off from his job at a
connections. So ifyou're thinking you could use a backstop seating manufacturer.
career; start moving on it, whether by moonlighting or taking Soon after, he attended a job fair held by a military-vehicle
a night course, beforethe layoffcomes. manufacturer. "They had 100 positions open, and there were
> Focus your retraining. Going back to school can be a good 8,000 people there," says Munteanu. "It was utterly a night-
tool for jump-starting a career change, but you'll need mare." The experience got him thinking beyond Detroit.
to do a cost-benefit analysis. In your forties and up, you Searching online, he found a contract job with airplane brothr
don't have as much career left to earn back your tuition manufacturer Airbus in Mobile. "When I saw this chance, happl'
expenses. Besides, a general degree, like an MBA, probably I said, 'I have to take it.' I don't know when I'm going to Munte
won't buy you much-most of the benefit comes not from get it again." At first, he was flying back and forth between
what you learn but from the implication that you've met a his family in Michigan and the job in Alabama. But soon Howtr
certain standard, says New York City career coach Stanley the position became permanent, and Munteanu's wife and s Reme
Back. Since a long r6sum6 can serve the same purpose, two sons joined him down South. It was tough to leave his logical
with a
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Stachowski and Batchelor, like lots of people in Detroit and arounC the country, both had to confront a loss of jncome. Financiai Lewis,
planners suggest thesc ways of clealing r;ith long-lastlng and signif icant pay reductions, whether from alayoff or a salary cut.
Profesr
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re brothe4 who remains employed in Detroit. And he's not want to deal with logistical hassles, says Lewis. Thus, Lewis
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happy that his Michigan house remains unsold. But, says suggests not including your address or the location ofpast
to Munteanu, "I took it like a new challenge in my life.,' jobs on your r6sum6. Or tap into your network to help get
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special consideration of your application; Munteanu had an
In Howto Make ltWork Airbus engineer he'd met at a conference put in agoodword.
rd > Remember, you've done this before. Major change is psycho_ > Don't get stumped by
"sunk costs." Aversion to loss doesn't
is logically difficult any'time. Ironically, when you,re dealing just make you cling to the familiar, it also messes up your
with a job loss, you may have the strongest urge to stay put internal calculators. Most of us are more susceptible to the
in your current location or career field. ,,It,s twice as hard sunk-cost fallacy-the notion that past investments commit
to let go ofthe rest ofyour support structure," says David us to future ones. That's why a blackjack player says to him-
Lewis, an executive at the staffing firm Express Employment self, "I won't get up from the table until I win back the g200
Professionals. His advice: Recall another time when you've I'm down," why it's so hard to dump a losing stock, and why
made a big move to remind yourself that you're capable of the prospect of selling your house at a loss might prevent
adjusting. That kind of thinkinghelpedMunteanu makethe you from taking a better job in another city. While Munteanu
transition: "I moved from Romania to Detroit. Shouldn't I was able to avoid getting bogged down in the sunk costs of
have the courage to leave Detroit for a better life?" he asks. his unsellable home-"I don't see my future being tied to a
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> Blend in with the locals. Even
l when you,re willing to move house," he says-few people can be so unemotional in assess-
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on from a citywhere your opportunities have faded, you face ing their own situations. So pretend you're giving advice to
a big practical baryiers. Out-of-town candidates typically don't a friend, instead: Would you suggest he throw good money
o get past the first round ofscreening as hiring managers don't
a after bad, or move on to better prospects? r
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M0NEY November 2O10