OH NO! NOT DETROIT!

OH NO! NOT DETROIT!

Real Estate Broker · Troy, MI · Member since 2012 · 42 posts · 12 votes

Hello BiggerPockets community! I'd like to take a moment to thank everyone in advance for all the care and considerable knowledge that's been put into this site. It's an incredibly powerful resource that I've lurked for quite awhile. I've loved so much of the content and conversation I've read here.


After a recent road trip (white water rafting in West Virginia), during which I had a BP podcast marathon, I decided that when I got home, I would engage with the community more. It's my first time really taking part in a community. I've read forums of all types for decades, but I've never really got involved with one before.

My name is Tommy Desmond, I'm a real estate investor and agent in southeast Michigan (THE DREADED DETROIT!). Actually not Detroit proper though, my primary areas of activity are in south Oakland county (immediately north of Detroit) and west Macomb County. I'm an agent at the Keller Williams in downtown Royal Oak, where I serve on the Agent Leadership Council (ALC) and as the chairman of the Technology Committee. I work mainly in Royal Oak, Birmingham, Bloomfield Hills, Troy, Rochester Hills, as well as Ferndale, Berkley, Clawson, Madison Heights, Sterling Heights, Pleasant Ridge, Huntington Woods, Shelby, Utica, and Warren. I've been with KW since 2009.

In my capacity as an agent, I'm more of a listing agent than a buyers agent. As an investor, I'm already a rehabber and I plan to buy and hold multi-family in the (near) future (haven't found the right deal yet).

I'm active with a few local REIAs, and I attend sheriff sales (Oakland county's) on a fairly consistent basis.

I'm married to the love my life, Katie, I have three great kids, and a boxer named Charlie.

My wife is an active part of my real estate investments. She's great at construction and design, and as of Oct 21st of this year, we're both getting our Michigan builder's licenses.

I've owned quite a few businesses over the past couple decades. Over the years, I also owned a print shop, a screen print shop, several e-commerce sites, and a video production company. I've got a solid web development background, writing PHP since its inception. I was one of the developers for early database-driven iterations of the MLS in our area, back when they were still faxing new listings to each brokerage for daily inclusion into stacks of 3-ring binders (though I doubt any of that code is still powering our MLS today).

I came to real estate thinking that it would be a lifetime business. My previous companies, never really seemed like permanent business models for me. They felt more like companies I was cutting my teeth on, and learning the basics of building and running a company, managing people and processes. Some of my early businesses had pretty decent success, others I smashed into the ground. Sometimes I lived with a hefty bank account, and other times I was counting the change rattling around in my cup holders to buy lunch.

Through it all, I've always been persistent, and I've never lost the belief that entrepreneurship is the only way to live my life with passion and the potential for freedom for my family… a philosophy I've seen over and over again here at BP, which I think is great.

I'm looking to network with other investors for idea, network, and resource sharing. Rehab wise, I'm buying around the $50-100k mark, with the goal ARV of between $135-200k respectively. Buy and Hold wise, I'm still looking and learning, and building my leverage to acquire my first multi-family. My current 5-year goal (for Holds) is to add 20 units/properties to my portfolio that cash-flow at around $500/month each. I'd love to find some mentorship relative to that. I'm also interested in meeting international investors who are interested in the Detroit area.

I'm pretty good with HUD deals, and have gotten quite a few good deals there, so if you have any questions about them, that's an area I might be able to provide some value.

I look forward to meeting many of you, and hopefully working with a few of you.
More than anything I wish everyone the good fortunes they seek.

… But for the record, no, I can't help you get a $400 house in Detroit.

Onward!

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Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
13y

I really don't think the Detroit area is much different than any of the major metros in Ohio (Cin, Col, Cle, Day), or Indianapolis or Kansas City. The $25-40k house (all-in) that rents for $750-900 is attainable in all these metros. It's essentially impossible to get bank financing on these properties, so it's strictly cash purchases or private money financing. This absence of institutional financing has kept prices depressed, so a mixed blessing for investors. It's always a challenge to get quality property management for these inexpensive houses. All the PM's prefer nicer areas with larger fees and less tenant issues. Owners need to stay on top of things carefully, and they require active management. Be cautious and very prepared before purchasing homes like these from out of the area.

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  • Real Estate Broker · Troy, MI · Member since 2012 · 42 posts · 12 votes
    13y

    I'm honestly not the person to answer that question, I've never had to evict anyone, so I don't have any first hand knowledge. I'm originally from New Jersey, so I've heard Michigan is incredibly landlord friendly, but that's relative to NJ and NY, so I don't know what the rest of the country's perspective is.

    Anyone else have any input?

  • Grand Rapids, MI · Member since 2013 · 99 posts · 30 votes
    13y

    Hello from GR @Tommy Desmond

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y

    @Patricia Franciulli , You can find great cheap rentals in South Oakland and South Macomb County. No war zones either. I average $25K per rental project I have done in the past 2 years.

    As for eviction, it's not bad. I had to do it one time with a tenant on my first rental property back in 2010. I went to the court. Filed the papers which I think was maybe $50... They had me serve the initial notice myself. Luckily the tenant left within the 30 days on the notice. Hopefully in the future this ALWAYS happens. Ha ha ha..

    Unfortunately the house wasn't so fortunate :-(

    @Tommy Desmond , yes I knew about the $500 houses. Just confirming that's what you meant. Also I agree completely about using an agent to "Find" the houses as most don't care because the comission is too small. I know this for a fact. I just posted about this in another forum you and I answered.

    But I did find an agent I am very very happy with. He is an investor himself and has been for many many years. We are on the same page. He no longer markets for retail leads though. Soley works with a small group of investors, me included. I'm the 'Baby' of the group.. ha ha ha.... Still haven't met his partners though. It seems to be a tight group to break into.

  • Las Vegas, NV · Member since 2012 · 251 posts · 9 votes
    13y

    @Aron How much did you rent that house for?

  • Real Estate Broker · Troy, MI · Member since 2012 · 42 posts · 12 votes
    13y

    @Aaron Yates It sounds like you found a real investor agent. I know a couple people who work like that, and yes, they are the kind of agent you want to find. They are fairly rare. Usually agents with lower license numbers who are still active are this kind of agent. If they've been around for a long time, and they don't have any visible marketing of their name, but are still doing business, they're an investor agent. Good find Aaron.

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y

    @Tommy Desmond . Yes, it is a blessing. He can actually walk a house for me and know if it fits my criteria. My purchase in June was exactly that. He walked it. Told me his view on it, I bought it. Didn't see the property personally until 3 days prior to closing.

    I was working in Maryland at the time. He looked at about 10 properties for me. I couldn't believe it. He was all over it. And yes, he has been investing for years. He is an agent, an investor and also used to build a handful of houses a year before the crash.

    He took a hard fall and lost everything. Started over 3 years ago and has a goal. He needs 6 more properties (free-and-clear like I buy) to hit his goal and he's done and is retiring to just managing his portfolio.

  • Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    13y

    Tommy,

    I agree the unions have put a lot of businesses out of business or drove them to other countries.

    Joe Gore

  • tel aviv, mercaz · Member since 2012 · 38 posts · 1 vote
    13y

    Hey Aaron

    when you say yout 25k all in. what is the avarage rent for these type of investment?

  • Real Estate Broker · Troy, MI · Member since 2012 · 42 posts · 12 votes
    13y

    Detroit is actually relatively meth-free. The primary drug industry in the city is crack cocaine, and apparently those "businesses" work to keep meth out of the city as it's a competitor for them. The west side of Michigan produces almost all of the meth in the state.

    I know this is a weird topic to put my 2 cents on, but my sister-in-law is a forensic scientist for Michigan State Police and she deals very specifically with this issue, so it's something I accidentally know more than I want to know about. lol

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y

    @Daniel Gura , make sure you use the @ symbol and the persons name so they get notified. I only stumbled upon your question because of another keyword that popped up from @Tommy Desmond

    .

    To answer your question, I get $750 for all but one which I get $850 because it has the most amenities. 2 1/2 car garage, basement. All have 3 beds and 1 bath and are minimum 930sq.ft.

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y

    @Patricia Franciulli , see post above this one.

  • Las Vegas, NV · Member since 2012 · 251 posts · 9 votes
    13y

    how much did you buy those houses for?

  • Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    13y

    @ Aaron--You are buying $50k houses (3BR/1BA) in the suburbs and renting for $750 nowadays? Or was that an average in the past 2 years?

  • Investor · West Bloomfield, MI · Member since 2009 · 358 posts · 306 votes
    13y

    @Shari Posey, @Aaron Yates may not see your message since it didn't hyperlink, but he should see mine now.

    He knows his suburb best, but in general in the suburban Detroit rental markets I'd say a $750 rental would cost around $25K - $40K today depending on its attributes. $50K sounds way overpriced for $750/month. $50K can get you more like $950 - $1050/month all day long in decent rental suburbs. This is the Third Coast, not the East or West Coast.

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y

    Thanks @Tom A.

    @Shari Posey , the houses I own will sell to a homeowner in the current market for between $40,000 and $50,000. But would be most likely cash sales because most banks won't lend that little. I know this because i have spoken with literally dozens of lenders this year trying to get funding.

    Its not the house, it's the neighborhoods that only allows the $750 a month. 4 of my properties are around 1000 sq.ft, 3 bedroom, 1 bath. One has a basement no garage, one has a garage no basement. One is $850 but has a full basement and 2 1/2 car garage. I don't go for peak market. I go for quicker occupancy (but not so cheap that I get trash tenants) and to be one step ahead of the competition with the quality of work I do to my properties.

    Point being, it varies on the property and neighborhood. I'm told I should be renting for a minimum of $800 from some management companies but not how I see it. I get a property rented within a month normally where as I see empty properties for months on end from local management companies running them.

    Also, the were not $40-$50K when I initially bought them. One I have owned for over 2 years. It's just now a $46K house.

    @Patricia Franciulli I have paid as little as $7000 and as high as $20,500 for a property. Obviously the lower properties needed full rehab.

    there are so many new investors affraid of these distressed houses that they sit on the market until a big company grabs them or someone little like me finds it and isn't affraid.

    One last thing, I wouldn't call my market areas suburbs. They are very highly populated areas on the North border of Detroit.

  • Las Vegas, NV · Member since 2012 · 251 posts · 9 votes
    13y

    Nice.. I hope we can keep in touch as I am starting this new thing of investing out of my area.

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y

    @Shari Posey , @Patricia Franciulli the other thing about the rental rate is that I manage my own properties. The rates the management company advertises properties at is before their commission of 10%. So say I used them to get the higher rates as one company tried talking me into last night, I'm still at the same cash flow. Actually less if I can only get another $50 a month.

    So that's alot at play and many variables to look at. Everyone's situation is different. I fund all my own deals and need all the cash flow I can get. So until my funding options change, I am not willing to give up money to a management company or until I acquire too many properties to handle myself.

    Hope this helps. Michigan is a different character as I have stated in many posts here on BP. Most don't believe it since they are not here to see it.

  • Las Vegas, NV · Member since 2012 · 251 posts · 9 votes
    13y

    I agree with you... 100%

  • Las Vegas, NV · Member since 2012 · 251 posts · 9 votes
    13y

    @ Aron Yates How do you find your deals? On the MLS? Trustee?

  • Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    13y

    I really don't think the Detroit area is much different than any of the major metros in Ohio (Cin, Col, Cle, Day), or Indianapolis or Kansas City. The $25-40k house (all-in) that rents for $750-900 is attainable in all these metros. It's essentially impossible to get bank financing on these properties, so it's strictly cash purchases or private money financing. This absence of institutional financing has kept prices depressed, so a mixed blessing for investors. It's always a challenge to get quality property management for these inexpensive houses. All the PM's prefer nicer areas with larger fees and less tenant issues. Owners need to stay on top of things carefully, and they require active management. Be cautious and very prepared before purchasing homes like these from out of the area.

  • Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes
    13y
    Originally posted by Patricia Franciulli:
    @ Aron Yates How do you find your deals? On the MLS? Trustee?

    The MLS. I am trying to start a mail campaign but havent quite pulled the trigger. I keep battling with the fact Im going to have to deal with calls from people who will just want a value or to yell at me or whatever it myay. I have very little free time and dont want it wasted with calls like this.

  • Los Angeles, CA · Member since 2013 · 42 posts · 7 votes
    13y

    FYI – My partner has been in the real estate market there over 20 plus years and we do very well. An idea of what we have had is -> rehabbed; rent rolling properties in the 19-25k range. Last bulk deal was (17 rent rolling 2-4's, 3-3's, the rest 2-'s - in the 650-850 rent range – price 440k appraised at 672k.). Apartments too – an idea of one now is (10 - 2/1 –the entire block – price 199k, all rented 66k per year) These are in good areas no war zones, and all off market. We can get rehab properties all day long there too. It can be a very good market for anyone if you know what you’re doing.

  • Southfield, MI · Member since 2013 · 4 posts · 0 votes
    12y

    Hello Tommy,

    Love your forum, I have been wanting to talk with you and see if you can mentor me through my beginning venture, I am excited about getting into what I love and have been addicted to since I made my first deal years ago just dabbling while in the military. Currently I have a property that a one time owner (co-worker) wants to sell and offered to give me my first deal. I am going to treat it as a wholesale to get moving and not miss this deal. Let's talk maybe you can offer a few pointers.

  • Involved In Real Estate · Rochester Hills, MI · Member since 2010 · 812 posts · 178 votes
    12y
    Originally posted by @David Beard:
    I really don't think the Detroit area is much different than any of the major metros in Ohio (Cin, Col, Cle, Day), or Indianapolis or Kansas City. The $25-40k house (all-in) that rents for $750-900 is attainable in all these metros. It's essentially impossible to get bank financing on these properties, so it's strictly cash purchases or private money financing. This absence of institutional financing has kept prices depressed, so a mixed blessing for investors. It's always a challenge to get quality property management for these inexpensive houses. All the PM's prefer nicer areas with larger fees and less tenant issues. Owners need to stay on top of things carefully, and they require active management. Be cautious and very prepared before purchasing homes like these from out of the area.

    I've lived in both Cincinnati & Detroit. They are nothing alike.

  • Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    12y

    @Joe Delia

    "The $25-40k house (all-in) that rents for $750-900 is attainable in all these metros".

    This was the point of my post. Surely you don't disagree with that.

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