Macomb, MI · Member since 2015 · 141 posts · 45 votes
Wow what an experience and learning curve! Major thanks to personal friend and fellow BP'r @Christian Hutchinson for all the advice and help.
My wife and I have been wanting to get into real-estate for some time and finally put our plan in motion about 6 months ago. As of of Nov 1. our first lease is signed. Feels great.
Thanks to everyone here for their help and advice.
Fort Worth, TX · Member since 2015 · 121 posts · 28 votes
10y
Congratulations on signing your first tenant! I'm currently doing research on whether I should do the same with my primary residence but first we have to buy another house to move into!
Macomb, MI · Member since 2015 · 141 posts · 45 votes
10y
If any other newbies like me have any questions feel free to ask. We definitely made some mistakes. I haven't dealt with the general public in this type of setting EVER so that was a real treat at times let me tell you!
Fort Worth, TX · Member since 2015 · 121 posts · 28 votes
10y
Congratulations on signing your first tenant! I'm currently doing research on whether I should do the same with my primary residence but first we have to buy another house to move into!
Investor · Lodi, NJ · Member since 2013 · 487 posts · 179 votes
10y
Andrew, congrats! Exciting right!
I started as well in the same manner about 2 years ago. Keep moving forward, learning, and don't be afraid to make mistakes. All part of the learning process!
What would you say was the most challenging thing you and your wife have had to overcome, and what are some of the steps you took to do so?
Looking back, do those same problems seem as daunting as they had in the first time?
I would say learning how not to let people waste our time is number one. People lie and lie and lie. We wasted a lot of time with bogus leads/people etc. With 3 kids, wife full time job, that was killer. I was also very aggressive with the signing date after a potential tenant passed our checks and scorecard.
I won't ever have a lease signing on a Monday again, that was disastrous. I realize now that not everyone has almost 4K just laying around for a security deposit + 1st months rent + app fee's etc. That's a lot of money and I should have allotted more time for my #1 pick to get the funds. I didn't even think about the fact that they are going to have to give their current landlord 30 days notice, plus get that security deposit back to use on my rental etc...
All in all it was an awesome learning experience and I'll take these tools with me to the next property we acquire.
Flipper · Mercer Island, WA · Member since 2014 · 30 posts · 18 votes
10y
Congrats! We had our first tenant lease signed back in July. (Well, we had a rental years ago, but it was run by a property manager, so we just collected the checks.) I agree - it felt great!
And yes, many people will say they have a huge deposit available, but I think many are blowing smoke. We had tenants picked out, ready to go sign the lease, and they backed out because the funds were "not available" even though they swore up and down that they were. But it all worked out in the end with the 2nd person on our waiting list.
Investor · Brighton, MI · Member since 2014 · 85 posts · 20 votes
10y
Andrew Halbert how do your numbers look from a cashflow standpoint? Did you purchase this home with the intent of converting it into a rental shortly after? I've been considering the same thing but I'm concerned that I would only cashflow around $100 a month after all expenses
Andrew Halbert how do your numbers look from a cashflow standpoint? Did you purchase this home with the intent of converting it into a rental shortly after? I've been considering the same thing but I'm concerned that I would only cashflow around $100 a month after all expenses
When we bought the house it was at the height of the economic crisis (especially in detroit) and we paid hardly anything. It was never our intention to turn this into a rental when we bought the house almost 8 years ago. We did a LOT of modest renovations etc. Currently it appraised at 160K. I did not pay anywhere close to that, so there is equity to work with.
Our cash flow is ok. I am pleased with the potential ROI for just this unit for now. It's a good safe starting point for us. We know the neighborhood, we know the house through and through. I thought about selling and taking the money and purchasing one or two units in a lower value area, but decided against it due to the fact that my knowledge of this house and this area is worth something. I also have a full time job, 3 kids and new house to look after, so we needed to play this smart.
Andrew Halbert how do your numbers look from a cashflow standpoint? Did you purchase this home with the intent of converting it into a rental shortly after? I've been considering the same thing but I'm concerned that I would only cashflow around $100 a month after all expenses
Each person's/investors situation is different. For us at this stage of our life this made the most sense. It might not yield an awesome cash flow, but it was a safer and more logical choice for my family. If I was 25 again, no kids sure I would have gone all in very aggressively. The way I look at it is hey, I'm at least starting this journey so I don't have to work a 9-5 forever. 90% of the battle for us was simply getting going and taking the risk.
Investor · Brighton, MI · Member since 2014 · 85 posts · 20 votes
10y
@Andrew Halbert the key is taking action. Since you know the area and the house inside and out that option makes the most sense. I'm trying to determine if renting out my primary would be my best option as I could purchase my next home with an FHA loan to keep my overall capital investment as low as possible. I'd like to purchase a multi family property but there aren't too many in my area
First off, congratulations!! We are in a similar situation...we bought our primary residence for almost 50% of the current value. Why did you decide that renting the house out would be a better move than selling and buying another home (or two)? I would love to rent our house out (great location, schools, etc), but I don't want to pay capital gains tax! :-/
@Andrew Halbert the key is taking action. Since you know the area and the house inside and out that option makes the most sense. I'm trying to determine if renting out my primary would be my best option as I could purchase my next home with an FHA loan to keep my overall capital investment as low as possible. I'd like to purchase a multi family property but there aren't too many in my area
FHA allows you do up to four units in a multi-family. So, in theory you make your current home a rental, then your get duplex-quadplex via FHA. So with one transaction you would get four units(extreme for a newbie, but if you have a close friend or family member walking you through, you can manage). FYI, you must live in the FHA home for one year to avoid mortgage fraud, etc.
So depending on your living situation, you being a Westsider in Brighton, search Waterford, but the more premiums will be in Novi, Northville, Plymouth(most inventory). Most likely you will find a 2-3 unit deal, you live in one side and rent out the extras. Also, Ypsilanti, and if you have deep pockets, Ann Arbor/Chelsea.
Again, depending on family living situation/desire, you could find 3-unit deal, with a converted attic and rent out 2 units in a side by side/up and down. If you have a significant other or children that probably won't work.
First off, congratulations!! We are in a similar situation...we bought our primary residence for almost 50% of the current value. Why did you decide that renting the house out would be a better move than selling and buying another home (or two)? I would love to rent our house out (great location, schools, etc), but I don't want to pay capital gains tax! :-/
Like I mentioned earlier, the knowledge of the area and the home are worth a lot. Being a newbie, and already having my hands full outside of investing, it made the most sense with the least amount of risk at this time.
It's a different experience that's for sure. Emotionally detaching from the house where we became a "family" is not that easy.
Sorry Andrew, I should have been more specific. Do you want to buy and hold, fix and flip, wholesale, buy commercial, buy single family homes, buy apartments, etc. Real estate is so vast and encompasses many different strategies and techniques. I think to be successful in life is to focus on one strategy, or nice as some call it, embrace it and learn as much as possible and then attack it. Most unsuccessful people in life just jump from one idea to the next because it didn't work out. It takes time, experience and mistakes to learn a skill in life.
Sorry Andrew, I should have been more specific. Do you want to buy and hold, fix and flip, wholesale, buy commercial, buy single family homes, buy apartments, etc. Real estate is so vast and encompasses many different strategies and techniques. I think to be successful in life is to focus on one strategy, or nice as some call it, embrace it and learn as much as possible and then attack it. Most unsuccessful people in life just jump from one idea to the next because it didn't work out. It takes time, experience and mistakes to learn a skill in life.
May I ask what rent runs up there? I'll be moving in Dec to the area of Brighton, Michigan and Trulia has rent estimates around 500 - 700/bed depending on East or West of Grand River Ave. All the apartment complexes I've looked up are damn near $1k.
Investor · Brighton, MI · Member since 2014 · 85 posts · 20 votes
10y
@Account Closed I've lived in Brighton for 24 years. $1000 is much more accurate for a decent place. You won't find anything in Brighton for $500-700. Feel free to message me if you have any questions about the area