Why is your market the best?

28 Replies

If someone was going to move from California and learn a market in which to execute the BRRR method, why is your market the best?

Man I hope someone suggests Detroit...

@Joe Kling  May I ask why you would bash Detroit so quickly?  Here come the Boo Birds..

Ask yourself first leaving Cali, what type weather in the winter are you willing to want to deal with lol. That may help you narrow down your market.. Seriously

If your leaving Cali, for buy, rehab,rent, refinance, repeat, there are a ton of investors here in the Midwest doing this and do not have a shortage of properties. Not saying particularly Detroit, Cleveland, Cincy, Columbus, Indy, is better than one or the other etc.. Any of these markets you will do very well if you put yourself in contact with the right people, build the right team, and be boots on the ground. 

Originally posted by @Joe Kling :

If someone was going to move from California and learn a market in which to execute the BRRR method, why is your market the best?

Man I hope someone suggests Detroit...

Skip Detroit! We've got that covered.

http://www.biggerpockets.com/forums/311/topics/198698-detroit-and-michigan--1-defender-answers-questions?page=1

Glad I left Orange County California to invest here.  But hoping everyone else goes somewhere else.

Perfect question. Me and my buddy are both from California and have a year left in the military and we're just talking about where we should move. Im from Orange County as well and do not want to move back.
Originally posted by @Mike Carino :

@Joe Kling May I ask why you would bash Detroit so quickly?  Here come the Boo Birds..

Ask yourself first leaving Cali, what type weather in the winter are you willing to want to deal with lol. That may help you narrow down your market.. Seriously

If your leaving Cali, for buy, rehab,rent, refinance, repeat, there are a ton of investors here in the Midwest doing this and do not have a shortage of properties. Not saying particularly Detroit, Cleveland, Cincy, Columbus, Indy, is better than one or the other etc.. Any of these markets you will do very well if you put yourself in contact with the right people, build the right team, and be boots on the ground. 

 Hey Mike

I was just joking about Detroit. I'm not opposed to that or any other market. That's the purpose of the question. 

In all reality I was thinking about staying in California during the winter and building the portfolio in spring, summer and fall. 

In your opinion none of the markets has an inherent advantage over the others? 

This post has been removed.

Originally posted by @Joe Kling :
Originally posted by @Mike Carino:

@Joe Kling May I ask why you would bash Detroit so quickly?  Here come the Boo Birds..

Ask yourself first leaving Cali, what type weather in the winter are you willing to want to deal with lol. That may help you narrow down your market.. Seriously

If your leaving Cali, for buy, rehab,rent, refinance, repeat, there are a ton of investors here in the Midwest doing this and do not have a shortage of properties. Not saying particularly Detroit, Cleveland, Cincy, Columbus, Indy, is better than one or the other etc.. Any of these markets you will do very well if you put yourself in contact with the right people, build the right team, and be boots on the ground. 

 Hey Mike

I was just joking about Detroit. I'm not opposed to that or any other market. That's the purpose of the question. 

In all reality I was thinking about staying in California during the winter and building the portfolio in spring, summer and fall. 

In your opinion none of the markets has an inherent advantage over the others? 

@Jo Joe I can only speak for Detroit and Detroit Metro areas based on my day to day experience here and the investments I hold personally and through my partnership. This city has very high rent rates for the price you pay on a home, most of that has been set based on the high amounts given from section 8. It is not uncommon for investors in inner Detroit to get $850/month section 8, for homes that they are all in 25-30k even lower. This pretty much sets the baseline as far as monthly rent goes.

I have seen these same tenants take their same section 8 vouchers, move out the suburbs for better schools, better neighborhoods, in which pushes the rent rate higher for the better good of the neighborhood.  Seems to be a trend as you go more north and west (it has it exceptional pockets) out of the city the higher the rent rates go.. If your here with boots on the ground you will be able to pick those houses at a deep discount that will be best bang for your buck.

 It is very common to get in homes in decent suburbs under 50k and rent for $850-950 without any problems finding good tenants. 100k homes will reach you into the $1200-1400/month that will get you even better tenants. Let's not forget, at the same time you can and will get these houses at a very deep discount, rehab, rent, and refi. IF you are here and work with the right people.

I myself, don't know many places around that give you those returns in great neighborhoods, and has ample supply of homes for all investors to enjoy. This to me would fit your lifestyle of developing enough cash flow  that you can enjoy cali on those winter months . A personal goal of mine is to build a portfolio and a strong team here, so that I can live back out on the west coast in Seattle/Tacoma  close to family, and raise my kids.

There will be pros and cons in all the markets.

Money is made in R.E. a cross all 50 states.

I assume your looking for a cheaper market as you do not want to invest in California.

Most of the Midwestern rust belt markets are very similar.

It's really about you and the connections you are able to make.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

@Mike Carino

  who finances homes in Detroit once your past your 4 or 10 mortgage slots.

and how does it go with appraisals... when you have so much wholesale activity.. where an investor buys a home for and in rehabbed etc  40k  and then says its worth 80k... I would have to think lenders understand there are two values there one the real value and that's the 40k and the other a paper value the 80k since NO one would pay 80k for the home.

Are there portfolio lenders in Detroit allowing people to ramp up and own 20 to 50 homes or more.. will B2R or Colony lend in these areas ?

Originally posted by @Jay Hinrichs :

@Mike Carino

  who finances homes in Detroit once your past your 4 or 10 mortgage slots.

and how does it go with appraisals... when you have so much wholesale activity.. where an investor buys a home for and in rehabbed etc  40k  and then says its worth 80k... I would have to think lenders understand there are two values there one the real value and that's the 40k and the other a paper value the 80k since NO one would pay 80k for the home.

Are there portfolio lenders in Detroit allowing people to ramp up and own 20 to 50 homes or more.. will B2R or Colony lend in these areas ?

 Thanks Jay.  That's actually the question I have. In other markets I know I can refinance out my original investment. Is that possible in Detroit? 

Originally posted by @James Wise :

There will be pros and cons in all the markets.

Money is made in R.E. a cross all 50 states.

I assume your looking for a cheaper market as you do not want to invest in California.

Most of the Midwestern rust belt markets are very similar.

It's really about you and the connections you are able to make.

Hey James. Hopefully you don't mind a hypothetical. Let's say I wanted to invest in multiple markets and I chose to invest in the Cleveland area from afar. I know you offer PM services, but that's not going to cover the original rehab. How might someone utilize your services to implement a BRRR strategy in Cleveland?

@Joe Kling

  what do you do when you get to 10 mortgages?  that's the question In my mind if your going to do this you need to go large 5 to 10 homes like these you will find over time may or may not be worth doing... Vis a vi risk reward scenario.. compared to buying on the west coast..

It's a term @Brandon Turner  first used (I think). I know @Joe Villeneuve (among many, many others) is using it successfully.  It stands for Buy, Rehab, Rent, Refi.  It allows you to recycle your seed money by purchasing a property below market, getting it rent ready, renting it at a price which allows the property to cash flow even with a higher mortgage and then refinancing at the now higher valuation to get your seed money out and available for the next project.   

Perhaps we need to talk privately, but I think this is a strong enough strategy that many people might benefit from reading about it.  

Originally posted by @Jay Hinrichs :

@Joe Kling

  what do you do when you get to 10 mortgages?  that's the question In my mind if your going to do this you need to go large 5 to 10 homes like these you will find over time may or may not be worth doing... Vis a vi risk reward scenario.. compared to buying on the west coast..

 Partners.

@Joe Villeneuve

  talking about bringing in Credit partners ?  there are no portfolio lenders that will loan on Detroit rentals?  Small commercial banks... Credit Unions... I suspect for locals that live there they can get this.. someone who does not reside there probably not.

Originally posted by @Joe Villeneuve :
Originally posted by @Jay Hinrichs:

@Joe Kling

  what do you do when you get to 10 mortgages?  that's the question In my mind if your going to do this you need to go large 5 to 10 homes like these you will find over time may or may not be worth doing... Vis a vi risk reward scenario.. compared to buying on the west coast..

 Partners.

 Joe would you consider a blanket loan?  Maybe something from B2R which would allow you to roll three or four loans in to one, which would allow you to perform your strategy two or three more times again?

@Joe Kling

  you should just Ping B2R I find them really responsive IE they answer there phone :) based on the states or markets they lend in will give you a good indication of where they have researched markets and are comfortable lending. 

Originally posted by @Jay Hinrichs :

@Joe Kling

  you should just Ping B2R I find them really responsive IE they answer there phone :) based on the states or markets they lend in will give you a good indication of where they have researched markets and are comfortable lending. 

 I will do that Jay.  That might help me narrow the focus down to 2-3 markets that I know could be viable.

Originally posted by @Jay Hinrichs :

@Joe Villeneuve

  talking about bringing in Credit partners ?  there are no portfolio lenders that will loan on Detroit rentals?  Small commercial banks... Credit Unions... I suspect for locals that live there they can get this.. someone who does not reside there probably not.

 I have a local Port Lender.

Originally posted by @Joe Kling :
Originally posted by @Joe Villeneuve:
Originally posted by @Jay Hinrichs:

@Joe Kling

  what do you do when you get to 10 mortgages?  that's the question In my mind if your going to do this you need to go large 5 to 10 homes like these you will find over time may or may not be worth doing... Vis a vi risk reward scenario.. compared to buying on the west coast..

 Partners.

 Joe would you consider a blanket loan?  Maybe something from B2R which would allow you to roll three or four loans in to one, which would allow you to perform your strategy two or three more times again?

 That is a different (and very good) application of a different strategy I use (teach) that I refer to as using a "cash like substance"...(Non-lienable debt).  It can take many forms, and the one you described is just one of them.

Originally posted by @Joe Kling :

If someone was going to move from California and learn a market in which to execute the BRRR method, why is your market the best?

Man I hope someone suggests Detroit...

 Kind of Detroit.  The immediate suburbs of Detroit is fantastic.  Keep in mind that Michigan isn't in Detroit...and I only say that because many outside of this area don't get that.

Originally posted by @Joe Villeneuve :
Originally posted by @Jay Hinrichs:

@Joe Villeneuve

  talking about bringing in Credit partners ?  there are no portfolio lenders that will loan on Detroit rentals?  Small commercial banks... Credit Unions... I suspect for locals that live there they can get this.. someone who does not reside there probably not.

 I have a local Port Lender.

 @Joe Villeneuve, you beat me to my response.Local small lenders is what is happening here. Rather its portfolio/blanket loans, or investors seeking out 10 sfr loans.

@joe kling

If 10 is not enough cash flowing for you here. Partner after 10 like my fellow neighbor @Joe Villeneuve preaches it on this topic.

http://www.biggerpockets.com/forums/50/topics/2066...

Jay, you seem to know this area very well from previous posts I have read in the past. You may be surprised what people are paying for in homes to the west in Livonia/ Westland and down Southgate/ Wyandotte to set the market values. Are you still active in Southeast Michigan?

Originally posted by @Joe Kling :

It's a term @Brandon Turner  first used (I think). I know @Joe Villeneuve (among many, many others) is using it successfully.  It stands for Buy, Rehab, Rent, Refi.  It allows you to recycle your seed money by purchasing a property below market, getting it rent ready, renting it at a price which allows the property to cash flow even with a higher mortgage and then refinancing at the now higher valuation to get your seed money out and available for the next project.   

Perhaps we need to talk privately, but I think this is a strong enough strategy that many people might benefit from reading about it.  

Got it.

That is a strategy I am familiar with.

In a perfect world I assume your doing it this way in the hope that your property is going to appraise high enough that you end up with zero cash tied up in it.

While we have had many clients do cash out refinances on properties, I don't see you buying anything out of state were you are able to buy low enough then have it appraise high enough to end up with zero cash in the property.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633
Originally posted by @Jay Hinrichs :

@Mike Carino

  who finances homes in Detroit once your past your 4 or 10 mortgage slots.

and how does it go with appraisals... when you have so much wholesale activity.. where an investor buys a home for and in rehabbed etc  40k  and then says its worth 80k... I would have to think lenders understand there are two values there one the real value and that's the 40k and the other a paper value the 80k since NO one would pay 80k for the home.

Are there portfolio lenders in Detroit allowing people to ramp up and own 20 to 50 homes or more.. will B2R or Colony lend in these areas ?

 Once you get up into those numbers, I'd suggest looking at traditional commercial financing.  There's a TON of lenders who will be happy to lend to do, especially large national banks.  

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