New to Real Estate | Duplex House Hack – Okemos/East Lansing/Meridian Township@MI

[Soumik Das]

Hey everyone! I’m just starting my real estate journey and currently working with an agent I found through this BiggerPockets community. I’m exploring duplexes for house hacking in the Michigan (Okemos/East Lansing/Meridian Township) area and still learning a ton from videos and online resources.

Right now, I’m focused on building my team and learning how to do proper due diligence - and I’d love some insights from experienced investors here. Specifically:

1. 1. Analyzing neighborhoods – Best websites or methods to check crime rates and rental potential?

2. 2. Property background tools – How to verify ownership history, past records, and legal details?

3. 3. How do you find reliable inspectors in your area? Any local recommendations?

4. 4. Any good contractors you’d recommend for duplex or multifamily work?

I’m an immigrant and not FHA-eligible, also just started my professional career so very little capital to start with, I’m currently exploring pre-approvals from a few lenders and learning about other financing options.

I’m really interested in connecting with like-minded investors who have experience in multifamily investing in Okemos/East Lansing/Meridian Township. It would be great to connect, learn, and exchange ideas with others on a similar path.

Thanks in advance — every bit of advice or connection helps! 🙏

[Drew Sygit]

@Soumik Das welcome to the BP community!

Guessing your an engineer-type given your analysis driven approach.

It's really ovekill!

1) Crime rates are nice to know, but if you just drive the area, you'll know more than any statistics can tell you.
- Rental potential: not sure what you mean? There are several sites that will tell you potential rental amounts. If you search you can also find Rental Days On Market (DOM), which is also important to set your expectations and reserves.

2) What does any of this have to do with buying a property to rent out?

3) Michigan has no licensing for property inspectors, so it's a crapshoot. Get a few names from local real estate agents and get sample reports to evaluate who to hire.

4) A HUGE crapshoot! Big companies charge too much to justify hiring them to work on rental properties. The guys you want to use don't advertise, so they are hard to find. This also makes it hard to check their references - and the actual good ones are too busy to answer a bunch of questions. 

Here's some of our standard copy & paste advice you might find useful:

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How much do you know about Property Classes?

Recommend you spend some time learning about them, so you don’t mistakenly buy a property that will NEVER meet your expectations!

Why is Property Class so important for investors to understand and apply in their investing strategies?

Because the Property Class dictates the Class of the tenant pool that the property will attract.

The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.

Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.

The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.

Why is that important?

Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?

Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.

We use the following to rank Property Classes, in order of importance:

• Property Tenant Pool: closely linked to location, but not always.
• Property Location: closely linked to tenant pool, but not always.
• Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”

Key metrics for each Property Class:

Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.

Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.

Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.

Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.

Where did we get our FICO credit score information from?

Check out this chart:

FICO Score	Pct of Population	Default Probability
800 or more	13.00%	1.00%
750-799	27.00%	1.00%
700-749	18.00%	4.40%
650-699	15.00%	8.90%
600-649	12.00%	15.80%
550-599	8.00%	22.50%
500-549	5.00%	28.40%
Less than 499	2.00%	41.00%

Source: Fair Isaac Company

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.

We can also share numerous examples of properties & portfolios we’ve assisted investors with!

DM us if you’d like to discuss this logical approach in greater detail!

Horror Stories:

https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain

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https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs

https://www.biggerpockets.com/forums/963/topics/1195280-experience-of-oos-investing-in-cleveland-after-15-years