I've been a member here for a while and actually live down the street from the man, the myth, the legend, Mr Brandon Turner himself in the wonderful albeit very strange town of Aberdeen, WA. My wife and I moved here from Seattle on New Year's Eve last year. We bought a HUD foreclosure what was in really good shape: 2,000 sf plus finished basement, 3/2.5 with a bonus room for $80,000. We are doing all the requisite cosmetic fixes and hope to sell next year for a good profit, through the market is soft so we may need to rent for a year and see if it starts to improve. Anyway, I've been scouring the MLS for months looking at possible rental properties (mainly 2-4 unit and some SFR) in the area and nothing has worked out thus far. My wife is from West Michigan, and so about a month ago we decided to re-focus our search in the Kalamazoo, Grand Rapids, Battle Creek area. Just yesterday we went under contract on a 6 unit in Kalamazoo. The units are 2/1 and rent for between 550-600 month and is fully occupied. We are both filled with excitement and fear as we havent seen the property (but have a good friend who is going to go to the inspection next week and check it out. He is an investor so we trust his thoughts, as well as what the inspection report reveals....hopefully not much). To be honest, I hope I never even see the property, just provide a good, safe living situation for the tenants and collect some solid cash flow each month.
All that being said, anyone have any tips for out of state investors? Anyone else invest in Kalamazoo?
Kalamazoo is a great city to invest in. There's a constant flow of students at one of the most expensive small colleges around! Very good choice. If you're interested in looking for something in Ann Arbor (the most expensive college town around with rents starting at 1500 and heading upwards to 3200) then contact me. I'm a Realtor in the know at Keller Williams.
I live in the Kzoo area and I'm relatively new to REI as after 2 years of looking and researching, we bought our first rental earlier this year and we're hoping to find a 2nd property before the end of summer. Though I admittedly don't have the REI experience, I do know the Kzoo area pretty well so let me know if I can be of any help to you and your wife. I'm mostly focused on SFR's but long term I would like to grow into smaller multi-family units. Good luck!
Congrats on the property under contract @Ryan Kuja ! I'm excited to see how this plays out for you!
And we should probably hang out sometime again soon :) You guys wanna come over for a BBQ sometime?
Nice job. I hope everything comes back wonderfully!
For the time being, I am investing in areas that I can reasonably drive to, so I don't have a ton of advice there. However, West Michigan can be a good market if you know your areas and sub-areas. We discussed this property a bit, and I think it's in a good area.
I'm from here, and my 'tip of the day' for West Michigan is to know a few people in each field. Know more than one handyman, more than one inspector, more than one appraiser, etcetera. I've found that people can get very busy during their 'high times,' and it has been very helpful to have a lot of contacts around the area.
Other than that, welcome to Kalamazoo investing!
Hey @Ryan Kuja ,
Congratulations. I'm actually pretty much in the same boat as you in Kalamazoo, purchasing a new multi unit for the first time in this market. I'm based out of Evergreen, Colorado. The market here is pretty pricey. I'm someone who does a TON of research and have found out a few things based on conversations with locals. If interested, just shoot me a message.
what are the numbers?
Re-reading my previous post, I meant to include one of the tips to see if it was the type of info you were looking for and would want to learn more about. But I was multi-tasking during a boring client call at my W-2 job and hence my vague post. Sorry about that.
In Recap and expand a bit...
I'm in a similar situation as you with investing in Kalamazoo. I've learned a lot by reaching out to some BP members and done my own due diligence. The Kalamazoo market offers a lot more interesting cash flow opportunities compared to my current market in Colorado. There can be some spotty areas, so good to hear you have a friend in Kalamazoo. I've got the same situation where I leverage a buddy from this area as my boots on the ground.
One thing to think about are the terms of your rental leases. Most property managers align their leases on the same timing. This is driven by the local universities. A large majority of the turnover happens around the same time. Which is ironically now during the July/August time frame. Yes there are those out there that have leases that are not on this schedule. But after talking to numerous property managers and local investors, this was a point that was brought up again and again and something to consider.
Beyond this there are city certification requirements if you are in the City of Kalamazoo boundary and other historical building regulations if you purchase a historic home. More than happy to share more info if this is the type of stuff you are looking for.
@Brandon Turner : Yes! BBQ sounds legit :)
@Michael Glunk - Great tips! Thanks for the reply. I'll send you a message and we can connect further. I appreciate it!
@Josh Bloomquist : I'll reach out to you and we talk more. Thanks!
@George P. - According to BP calculator, it should cash flow $1000/month using 10% for capex and 10% for maintenance. Owner pays w/s/g and tenants pay gas/electric.
Does this mean I'm not invited to the BBQ? Im also an uber fun ex-tennis pro who has played in the Kzoo tennis stadium and have a few fun stories to tell. I'm popular with the wives, children, men, and can cook a mean chicken piccata while juggling.
How's that for a party resume?
Upadate: So it ends up the 6 unit at 142-146 Hutchinson Rd in Kalamazoo fell through--and I made a $936 mistake, one I'll never ever make again! I didnt have anyone walk through the place before having the inspection done ($936). I figured since it was fully occupied, photos looked decent, and the realtor we were working with said it looked good and was in a great neighborhood that I could skip that step and just go to the inspection. Bad idea. The inspector spent about 7 hours going through it with a fine toothed comb and did a stellar job, thankfully. The report revealed it needed a roof as well as the structure below the asphalt shingles, there was mold in lots of different places, issues with plumbing and electrical, and more. Overall it would have cost $40-50 K to fix all of it. Truly a case of a slumlord letting the place go to hell, all the while his tenants live in sub standard housing while he sits back and collects their money. Not good, not good at all. Anyway, I lost almost a grand in cash, one mistake Ill definitely learn from!
Sorry it didn't work out, as you obviously had a lot emotionally invested in it up to this point. However, a $1k loss is about as cheap as mistakes come in the real estate world, and is a lot cheaper lesson than any guru class you're likely to find. Don't get discouraged, just keep on reading on the BP forums, network with other investors locally and in your target market, and keep on looking!
@Ryan Kuja ... Ugh. Sorry to hear it. It's a real shame when people try to pass of junk deals to others.
If you need a property walk-through next time, let me know and I'll do it if I can. Other than that, the next one is surely right around the corner. (:
A $1k mistake is much better than a $100k mistake! You just paid $1k for an education - pretty cheap if you ask me . . .
@Ryan Kuja - I have always liked this quote: "failure defeats losers & failure inspires winners"
Keep on keeping on & learn from those mistakes!
Well said @Robin Secord !
I can second @Brandon Krieg 's offer. I live right in Kalamazoo and would be happy to help out. I'm not sure if I could have noticed all those problems though. Could you? You might not have done a walk-through at the beginning, but good thing you got an inspector to do their job. Relatively inexpensive insurance against a nightmare situation.
I'm new to this, but I think you played it the right way. It's very possible (maybe even likely) the mold would have been missed in a friendly "walk-through". That's why we pay inspectors! $1000 probably stings, but it could have been much worse! It made me think I'm okay sticking with SFR as a newbie for a little while longer...$200-$300 inspections!;)
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