Detroit, MI · Member since 2018 · 38 posts · 14 votes
Hi! I’m completely new to real estate and my goal is to start investing, particularly in multi-unit properties. I’m in the metro detroit area, and it’s been challenging to find multi units on platforms like Zillow, trulia, etc.
Anyway, I just found a newly listed duplex in the area (both units are rented!) and have an appointment to speak with the realtor this afternoon.
What are some key questions to ask?? And things to look out for? Please advise :-)
There are still a ton of off-market properties available in the Detroit area. What realtor are you speaking to? The listing agent? If so, that's a bad move. Search for a Detroit-area investor-friendly agent in here and then confirm with Zillow reviews that they also invest and take care of their clients. If you are inquiring on a duplex, you want to know if the utilities and everything is separated for the units, the rent roll, the securities being held, how long the leases are for, how long the tenants have been there, if any of the units will be provided vacant at closing, what the owner pay is for utlities, gas, water, sewer, etc.
There are still a ton of off-market properties available in the Detroit area. What realtor are you speaking to? The listing agent? If so, that's a bad move. Search for a Detroit-area investor-friendly agent in here and then confirm with Zillow reviews that they also invest and take care of their clients. If you are inquiring on a duplex, you want to know if the utilities and everything is separated for the units, the rent roll, the securities being held, how long the leases are for, how long the tenants have been there, if any of the units will be provided vacant at closing, what the owner pay is for utlities, gas, water, sewer, etc.
Jonathon, thanks for all of these questions to ask! Regarding the role of the person that I’ll be chatting with, I’m not sure. I pressed the ‘Contact Agent’ button on Zillow. But I’ll definitely be keeping that in mind regarding WHO I should be talking to.
If you're just going with whatever agent responds to you, you're likely to buy something that's not a very good deal!
Ask yourself, other than selling you a property to get their commission, what else is an agent like this providing you?
Logically, find a good Realtor, an unbiased Inspector and an even better PMC.
They are all critical to finding a solid rental property with good returns and keeping it that way. They should also be a good "check & balance" for each other.
We've worked with Realtors that were trying to sell investors crappy properties we didn't want the headaches of managing. If everyone has a team mentality, open & frank discussions about properties should be possible and lead to an investor acquiring a good investment. We do have Realtors we work well with and refer investors to, but an investor shouldn't necessarily accept such a referral blindly. While we like to think we're one of the "good guys" you can trust, we've taken over rentals that a slimy Realtor and PMC screwed an investor with. So, be sure to do your due diligence on both!
Inspectors are the last, but not least of your "Tripod Team" of support. Try to find one via your own search. Having your Realtor or PMC refer you to one may be easier, but how much can you trust them to honestly assess a potential purchase and not be pressured by the Realtor that found the deal? You want an inspector to tell you everything wrong with a potential purchase, so you don't get ugly & expensive surprises.
An example of what can happen when your "Tripod Team" doesn't exist or work together: we had an existing client go out on their own and buy another rental. They looked online and bought it through the listing agent, representing only the seller. The client found their own inspector, but didn't get us involved until after they bought the property. After going through the property, we sent our client a $20k RentReady bid with supporting video, to be able to get the rent amount the client wanted. The client was shocked and furious! Without going through all the tribulations, the problem was that the house hadn't been update in at least 40 years. The Realtor that sold it to them was legally required to only look out for the seller's interests, so didn't tell them. The Inspector did their job, which was to only point out structural problems and such with the property. Our client failed to involve us, as their PMC, to get our feedback on what the property would rent for as-is, and what it would take to RentReady it to get market rent. Hope this example shows why your Tripod Team needs to work together on your behalf!
Anyways, once you vett out your main tripod team, they should be able to refer you to lenders, attorneys, insurance agents and even tax professionals. All these team members have less of an impact on your success, so going with a referral has a lot lower risk associated with them. You should still screen them though, for their knowledge, performance and how they will mesh with you and your team.
DM us if you'd like to discuss investing in the Detroit market:)
Wow, thanks for breaking it down for me! I won’t lie, I didn’t realize that the process is this involved in order to be done correctly. I definitely would like to learn more and do it the right way. I will be reaching out!
Thanks David for your suggestions! I’m definitely picking up from everyone to take a step back and do some thorough research before diving in. Makes sense!!
in addition to the other suggestions, when you find a realtor make sure they give you rent comps, too. buying a 'deal' that won't support the rent is not a fun lesson to learn...
Let them ask you questions and if you are learning things you aren’t learning then thats your pick. Let them talk more and if you are learning instead of hearing a sales pitch you will know.
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