$128,000 profit without flipping....

Buying & Selling Real Estate
7yFollow

$128,000 profit without flipping....

Marisa R.
Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes

Hi All

Just wanted to share another little sweet deal, this is a buy and hold, access equity, rinse and repeat.

Advantages are that I get to continue growing my capital as this neighbourhood is hot. Problem is trying to find another at this price.... just keep searching I guess.

This property was purchased in July 2017 for $72,000 in July 2018 I had a bank valuation of $200,000. 

Today, I expect it to be worth over $200,000. As we know bank valuations can be a tad conservative. 

So why flip this one when I can enjoy ongoing growth, I access equity, continue holding a solid property, with a solid tenant and solid rent.

I know many will poo poo Detroit market, but as you can see there are deals to be had if you know how to find them.

Here are the numbers

Rent- $1250 (100% Section 8 voucher)

Bank Valued - 200K (2018 July)

Rehab - $10,500

Purchase - $72,000 (mid 2017)

Address: 17385 Warrington - University District

https://www.estately.com/listings/info/17385-warri...

10Reply
84 views

Most Popular Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y

yes banks has a value.. but landlords in that or many markets will pay no more than the 1% rule especially with a section 8 tenant. so value  is probably realistically 120k ish.. unless you can find owner occs that will live in a renter dominated street which is rare.

Podcast Guest on Show #222
JLH Capital Partners51 Review
WebsiteView Page
14Reply
See this reply in the discussion

83 Replies

Jump to latestLatest
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @Marisa R.:

    I apologize if this is a naive question... but why would banks over value a property? This is more risk surely.

    I have always experienced the opposite where banks generally under value a property

     What kind of "appraisal" did you get? Was it a bpo, a drive-by, or an actual visit by an appraiser?

    0Reply
  • Christian Hutchinson
    Investor · Detroit, MI · Member since 2014 · 360 posts · 354 votes
    7y
    Originally posted by @Danny N.:

    Meh I think alot of real estate professionals are not understanding what is going on with interest rates. Im a trader for a living, interest rates are up 20%+ in a short time frame. The reality is these nominal cap rates we've seen in real estate for the last 6-8 years are gone. Mortgages are 5% now and Us treasuries yield over 3%, anyone who doesn't understand what those are and how treasuries affect all assets has no business discussing home valuations.

    An appraisal means nothing, I had to get an appraisal to insure my exotic car a few months I, I wanted a $140k valuation, which is what I paid, they gave me $200k, how/what/why I don't know and I don't care. The entire appraisal industry in all assets is a joke.

     My buddy who works for a hedge-fund told me that 10 Year Note drives lending. But that was talking about shorter term loans for business or capital equipment.  4-10 years with 25/30 Year Amortization. Also, he stated, I learned in college, and I have heard on TV on CNBC/Fox Business/Bloomberg, that when cost of borrowing rises the value of the asset decreases, but numerous other things kick in inflation and the sort.
    But he basically said the value of the asset and cost of borrow is an inverse relationship when controlling for inflation, and scarcity (demand).

    0Reply
  • Branden Robinson
    Member since 2018 · 10 posts · 1 vote
    7y
    @Marisa Rowe wow that’s a pretty solid deal and the numbers are working in your favor definitely hold that. Detroit real estate is up and coming so your in good company. Super sweet deal, how did you go about finding this ?
    1Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y

    @Branden Robinson

    Thanks Branden, where are you buying

    0Reply
  • Jeremy Verdusco
    Investor · Huntington Woods, MI · Member since 2013 · 7 posts · 14 votes
    7y

    There's no way this is worth $200k. I own a duplex on the same block, and I think that's generously worth $100k. This property is on the low-rent southwest corner of the University District. There's probably nothing on that block worth more than $120k (though I would love it to be true). Not sure which bank valued it for you, but they're pretty optimistic. Heck, we looked at a duplex right next door to this property (or maybe a couple doors down) that was listed last fall for $90k. 

    There's a world of difference between the first two blocks of Warrington north of 6 Mile, and the rest of the University District. The "comp" on the same street you point out is almost a mile north and those are some pretty big homes (i.e., not comparable to 1,300 sf). But, even with $82k into it, you're likely making decent cash flow in the area, even with management.

    If you do have a bank that's valuing it at $200k, run, don't walk, to refi as quickly as possible before they realize they have bad comps.

    2Reply
  • Marisa R.
    OP
    Developer · Atlanta and Detroit · Member since 2018 · 601 posts · 821 votes
    7y
    Originally posted by @Branden Robinson:
    @Marisa Rowe wow that’s a pretty solid deal and the numbers are working in your favor definitely hold that. Detroit real estate is up and coming so your in good company. Super sweet deal, how did you go about finding this ?

     Yes my thoughts exactly..... its currently a hold, in a rising market the trend is your friend

    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    @Marisa R. , did you end up tapping into this equity?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free