Investor from West Michigan

11 Replies

Real Estate Background
Owner of a small real estate investment company called FNG Properties, LLC. We started buying single family homes and then duplexes. We got into the industry right before the big crash. So we got lucky and picked up some property when prices were very low. Wish we would have picked up more! This time has been good to learn what it is to be a good landlord. Service calls, leases, evictions, property maintenance and the guest service side of how to keep good tenants were all areas we learned. Our strategy has been what we call the "Trick or Treat Philosophy". We buy houses only in neighborhoods we would feel safe to take our kids Trick or Treating.

Short Term Goal
Learn more!  Single family homes made sense to us when we started but have since learned that multi-family units and commercial have much better returns.  They just never seemed feasible to purchase before due to the costs.  However since stumbling onto BP I am learning that it is possible to get into bigger deals.  I just need to learn how.  Short term specific goal is to get to double our units (or rental income) by next year.  

Long Term Goal

I want to change the world.  Which means building this company into something that is much bigger than supplying my family with a good sustainable income.  

"Trick or Treat Philosophy" great idea! Best wishes for your goals, I work with plenty investors If you need any comps or advice on the market let me know.

Tim. Yes our company FNG Properties owns and manages our own properties in Grand Rapids. Our company address is in Hart MI (80 miles north).  We liked the Grand Rapids market the best in West Michigan. 

Hey Jeff, I am in the southeast part of Michigan, suburbs of Detroit.  I also have several multi units.  Connect with me and I can share with you some programs I have in place with my tenants that maximize my profits and provides me great tenants.

Lance

@Tim VandenToorn with SFH we have operated mostly on cash flow more than CAP. But need to look at that too. We look for properties that income is double mortgage rate as rule of thumb to start the process if we want to buy. We know the market in out areas of comp rents and housing prices so that helps to spot a good deal. With multi-units I am curious the strategies one goes through to spot a good deal. For ie what CAP they look for???

Jeff, 

I calculate every expected expense along with actual tax information prior to submitting an offer. My offers are 100% based on CAP rate. I know some investors say I should take into consideration appreciation, however I don't count this in my equation prior to making an offer. I would be happy provide you with the APOD (the spread sheet we use to calculate CAP) if you contact my by email. I use the same formula for multi-family properties as I do single families. It has been my experience that it is harder to find a multi-family property at the same CAP as a single family home if you compare them side by side. This is if you are using cash and not leveraging. This is a whole different discussion and I understand that value is created by increasing rent price on a multi-family property which raises the value (on paper) of a larger commercial property. In the single family arena most investors (that I deal with) are buying the property on face value. I don't make promises of what the property may be worth next year, or what we may be able to increase rent to next year, all of which would artificially increase the value.

All this to say I try to keep my offers conservative to meet my investors goals. 

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