I bought two properties in the city of Detroit and I have had them for a little over 3 months now

33 Replies

I bought two property's in the city of Detroit and I have had them for a little over 3 months now and I was wanted to know the best way to sale or get money to fix and rent out then get a loan I'm stuck need to find some away to get going 

Probably should have had a plan first. Maybe you can get a short term loan to rehab them. Either way money doesn't grow on trees so you will either have to borrow it or work for it or sell something. I don't know but it's up to you to figure it out. Best to have a plan before leaping though.

I have to agree with Scott. It's tough to spend hard-earned money without a plan in place on what to do with the assets you acquire. 

With that said, what I would do if I were in your situation (which I would not be) would be to advertise on here on Bigger Pockets if there is a contractor or two who can go in them and help you estimate the amount of work the homes would require to be fixed up. Once they are fixed up, or even if they do not get fixed up, start calling local realtors to put them on the MLS, or advertise them here on Bigger Pockets to sell them without a realtor, or advertise them for sale on Craigslist.. Or if you plan on renting them out, advertise them on Craigslist.

Just my 2 cents..........

@Kathy Argento

  I suspect these were very inexpensive  at least I would think so...

rehabbing on your own in much of Detroit will be a challenge of epic proportions.

@Maurice Boston

  put them on Craigs list and sell them. if you don't want to fix em up... loans will be pretty difficult if your not residing there.

You bought houses, now what? Man whatever you do do something quick. Offer then to a church group if they help you fix them up and sell them if you can do a split on the earnings if there will be any. Get someone interested , anyone willing to put in a little money or work to go in with you but hurry do not do nothing. You have property taxes to deal with and you should have some insurance. Can't answer if any insurance company will insure you but think fast on your feet. Offer the house to a potential buyer if only they will help you put up the money to fix them and make it worth their while. or simply sell them some way and learn to never do that again. offer then as a free project to someone who would otherwise be a cash buyer then let them pay you at the back end of a sale. 

Man you stepped in it !!

Originally posted by @Rod Desinord :

This cant be a serious question lol. I am not answering until i atleast see a profile pic.

I'm with you Rod.  This is most likely a gag account of some type.  If they really want some help with their turds, they'll put a pic up and let us know about how all this came about.

Originally posted by @Maurice Boston:

I bought two property's in the city of Detroit and I have had them for a little over 3 months now and I was wanted to know the best way to sale or get money to fix and rent out then get a loan I'm stuck need to find some away to get going 

 Get fire insurance and let the city take care of it lol. Am I right guys?

Maurice do I even want to know where these properties are? Put it on craigslist and let someone bail you out

lol I had a plan to rehab them  And then rent them but have not being able to rehab both property's I'm currently living in one the other is just sitting I got on here because  I was trying to get advice from people that  have more experience in this maybe. Was just trying to see what other people did.. Rehab rent and get a loan or just rehab and sale

@Maurice Boston, congratulations on taking a big leap.  If I was in your position, here's what I would do.

Continue to live in the one house.  Assuming the second property is habitable in the least, I would get one of my good (and broke) friends to move in.  Because of your (lack of) financial situation, this sounds like it's going to be a long term project taking months or even more than a year.  It's best to have the property occupied.  Tell your friend to pay you $100/month for rent and pay his own utilities -- the two of you should sign a lease.  Make it clear to him that at some undetermined point in the future, he will have to move out or begin paying market rate rent.  Once both are occupied, get the cheapest insurance you can.

Then, spend as much as you can and work as hard as you can to get the house you're living in rehabbed as fast as possible. Once that first house is in great condition, approach a bank about getting a HELOC on that first house. After you get the loan, move into the second house and rent out the first house. Then use the money from the HELOC on the first property to renovate the second property.

Good luck.  You can make this work if you're dedicated enough.

Originally posted by @Randy E. :

@Maurice Boston, congratulations on taking a big leap.  If I was in your position, here's what I would do.

Continue to live in the one house.  Assuming the second property is habitable in the least, I would get one of my good (and broke) friends to move in.  Because of your (lack of) financial situation, this sounds like it's going to be a long term project taking months or even more than a year.  It's best to have the property occupied.  Tell your friend to pay you $100/month for rent and pay his own utilities -- the two of you should sign a lease.  Make it clear to him that at some undetermined point in the future, he will have to move out or begin paying market rate rent.  Once both are occupied, get the cheapest insurance you can.

Then, spend as much as you can and work as hard as you can to get the house you're living in rehabbed as fast as possible. Once that first house is in great condition, approach a bank about getting a HELOC on that first house. After you get the loan, move into the second house and rent out the first house. Then use the money from the HELOC on the first property to renovate the second property.

Good luck.  You can make this work if you're dedicated enough.

 @Randy E. makes some very good points. As you know - the Detroit housing market is very unique and presents lots of challenges and risks.  

Depending on the houses and areas - your rehab costs are liable to be much greater than you would expect.  From my property dealings in Detroit, you will probably need (at the very least): windows, electrical, HVAC, and plumbing.  Search for good contractors that are NON-UNION that will work inside the city.  It will save you a lot of money.  I usually use Wallside Windows for replacement windows (double hung, low E glass, argon filled) at an average of $350/window installed.  If you are in the Boston Edison District or a few others you may have a few restrictions to keep things looking in the period. Use PEX instead of copper or galvanized for the plumbing (no scrap value and a better product). 

Having a good friend stay at the property paying a little rent is a good idea.  You definitely need to sit down and work out a plan for the rehabs and exit strategy.  Do you want to do a full rehab going down to the "bones" and add proper insulation, get rid of old knob & tube wiring, etc? or just basic rehab?  Rent it out or sell it?  

Good luck!  It's a risky market but can provide a nice reward if you cover all your bases.

I'm not seeing any replies from the poster either so I'll assume something might be off there. Nonetheless, I'll post a response based on the initial question. Maye it'll help someone else.

The question here appears to be how do you rehab a house if you have little to no money. Obviously, the real answer here is never buy a house that needs rehab unless you have the money to rehab it. Especially in detroit where I don't see too many banks wanting to lend on houses in disrepair. 

But, for argument's sake, lets say you unimaginably fall into that category. Here would be two suggestions for possibly getting that rehab done with some creative means.

1) Offer a renter super low rent and have them take on the repairs.  Something is better than nothing. If the house is sitting vacant, you're getting 0 income coming in. Offer to charge half what you'd normally charge for rent provided the tenant make some of the repairs themselves.

2) Offer a contractor a deal that if they do the rehab for you, you'll pay the materials. But with a condition that their pay will come out of the rent once the house is rented. And they can tack on additional $500 to the bill for the delayed payments.

This likely won't work for all contractors. But someone that is doing it as a side business may very well be willing to do something like that. 

So lets say the rehab is going to come to 6k in labor. And lets say the rent would be $650/mo once you get the house rehabbed.  Bottom line is you're not getting any money coming in today and that house is just going to sit there anyway.

Go ahead and promise the contractor the rent payments until they get paid 6,500 and at least you'll be getting the house rehabbed. And once that contractor is paid off, then you'll be able to pocket the rent for yourself.

In addition to that, once its rehabbed and rented, you may be able to get the financing you need on the house so you can pay him off in full much sooner.

Those would be a couple of options I would consider if I had a house that I couldn't rent because it needed rehab and couldn't rehab because I didn't have enough money to do it.

Where are these properties?

How bad are they?

Talmer Bank has some money you can get if your household income is 25K-65K I think.

Otherwise, if its just cosmetic it stuff, lots of Credit Unions in SE Michigan do signature loans for 5-20K for home improvements.  All you need is an invoice, or rehab plan.  Of course you need to be a CU Member, have a direct deposit, and decent credit(660+). We have used that for short-term money, for 3-6 months to get us through a few projects if we had multiple renovations going on two different occasions. Interest Rates are 5-9% typically for 4-6 years.  But its you are generating income you can pay them off pretty quickly.

Of course, you could source some of that cheap Detroit Labor on Mack and Bewick, you might have to make sure they don't walk off with the foundation to your house, but hey your options are limited.

I know someone who can help you sell them if you are interested in that route.. She is a good wholesaler out of Detroit..