Hello to all.. first post but longtime reader. I'm in the middle of a renovation and would like some advice. House was listed three months but I haven't received any "solid" offers. Long story short, the property was renovated but only the interior and no appliances or furnace were installed. I wasn't comfortable listing unless property was turn key but followed the agents advice to list "as is". The few offers I got were 5-10k below the already lower than I wanted asking price. Property was market researched at 70k but agent listed for 49k. I would like to finish renovation (install furnace, water heater, and appliances) but I'm not sure if I'm sinking too much money into the property for flip or if I should hold on, complete the property, and find tenants. I have 37k invested so far and would like a decent return. Any opinions are welcome. It's multi-family (2:1 upstairs and 2:1 downstairs with an unfinished basement) located at 17204 Strasburg Street Detroit, MI 48205. Thanks in advance.
It sounds like you and your agent are not a good fit.
My properties are the in NW Detroit so I am not completely familiar with this neighborhood. After a quick glance, I would find a good property manager (I know they are hard to find in Detroit) and get a realistic view of what the rents will be.
I would think that you will cash flow good even if you were to get a mortgage to go purchase another property.
If your long term plan is stay with flipping, then you defiantly need to finish the property and then maybe look at a different way of marketing the property.
You don't want to install appliances or furnace until you have a buyer as someone will break in and steal them!
Looked at the listing pics and the one bathroom looks incomplete or hacked.
Also, this is a terrible listing message:
"Great investment, must see, 1 upper and 1 lower unit duplex, fully updated just buy and rent out, all data approx, buyer and buyer agent to verify, buyer and buyer agent to obey with CDC and State Of Michigan when entering the property. sold as is"
Doesn't mention bed/baths, the work you had done and it states "as-is" which means "looking for lowball offers".
Either get a better agent or find a PMC (us!) to rent it out and then relist to sell as turnkey rental.
What did you use for market research? Have your realtor pull the comps. I'm a little familiar with the area and what you've been offered about in line with the neighborhood. For your listing price someone would expect something that they would be able to move right into.
I think you could finish it and rent out both units for at least $600.
Best of luck,
Totally objective opinion without knowing the Detroit market, but why don't you finish teh rehab, tenant it, then refinance most of your money out (BRRRR)? If you can wrap up the rest of your rehab within 12-15k you could almost get all of your money out.
@Drew Sygit I totally agree with your assessment. I'm new to real estate but consider myself "handy" when it comes to small homes projects. I was offered this property by a friend that was getting out of market after having tenant problems in several of his properties (failed to pay rent or damaged property). He marketed the property to me as an "investor flip" or simply minimal renovation and it would be sold to an investor. When he pulled out of the market I lost most of my contacts and then the distance, I'm in Florida, made it more difficult. I let his "crew" renovate interior but that one bathroom and some other small things made me not want to work with his "guy" anymore. Like cars, I don't like trying to sell things that aren't finished. It gives the buyer too much bargaining power and leaves potential profit on the table. The real estate agent said not to finish property as "investors don't care about the small things" but I think these small things are bigger deterants than he assumed. I trusted him as he is physically involved in the market, even though he didn't seem to share my concerns. I would like to find a decent contractor or property manager to oversee the house to completion. I have traveled to detroit multiple times to install things like dusk-to-dawn lights and gates after the basement glass blocks were kicked in (nothing was taken but there isn't really anything to take). I just feel vulnerable at this stage. I'd like to finish what I started as I feel there is potential in the market. Thanks for you help.
@Darvin Johnson the first realtor (before he passed it to his buddy apparently) completed a market research analysis based on local comps. I thought 70k was high but figured that was for a turn key property. The second realtor, my current agent, said it's not worth finishing considering I'm marketing towards investors. I probably should have stuck to my gut feeling and continued renovation through winter. Thanks for your reply.
@Michael S. I honestly wanted to flip and move into the south/southwest Florida market as its pretty hot right now. The idea of collecting maybe $1,200 in rent but opening myself up to all the headaches associated with landlording just doesn't seem enticing. Plus, I really like the idea of being near my properties so this renovation process has been heart-wrenching.
@Korey Barberio I'll have my realtor send me the comps and I can DM you think link if you'd like. If what you're realtor brought up was close to 70k they might have cast a VERY wide net. A lot of neighborhoods are up and coming but without boots on the ground knowledge it can be tricky to navigate.
I think you're options would be sell as is and try to break even or finish, get a tenant and use BRRR to move into another property while collecting a little rent. You could definitely hire a property manager to handle everything and even have them market it to an investor as turn key but knowing that area you'd still probably end up breaking even.
@Korey Barberio I'm local to Detroit and know that area very well and its not a good area to invest in. Even if it was fully renovated I wouldnt pay 70k for as a owner occupied home. The area crime rate is sky-high and don't put any appliances or mechanicals until you close. The will disappear. Maybe offer a land-contract with a decent DP but the area isnt great at all. If you need more help PM me .
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