#19 rental was purchased today

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#19 rental was purchased today

George P.
Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes

a few days late since i am super busy with the current rehabs, but closed on #19 on thursday night. 

worked on it for awhile with the listing agent and the brokerage. they apparently have a great relationship with the feds and kept trying a few times to get the best price. about a month+ ago, it was listed at 72k, i believe. then a few days later it dropped to 64.9k. i offered 52, but they didn't take. they said they had another offer. then i offered 55 and stuck to it 3 times in a row. they said best they'd do at this time was 55.5, so i took it.

it's in Garden City, but on the border with Westland. it's on a cross road (one that goes between 2 major roads, so that will push some people away. 

numbers look like this:

purchase - 55.5k
rehab - who knows, after 18, i still can't estimate properly, but i am hoping $20k at most
taxes - $2,500
rent - average rent is $1,000

the problem is that i am out of money right now and can't touch it until i am done with the latest 2 rehabs. i might do a little here and there like demo and cleaning up the yard of trees and such, but no major installs until we are done with the latest 2.

my goal was 20 a year ago. i am close, so i just need a new goal.

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Jay C.
Seattle, WA · Member since 2014 · 308 posts · 170 votes
11y

Devils advocate here. Why buy just to log numbers? Given the fact you don't even have the cash to finish the project. Some free advice don't get ahead of yourself. Its this exact scenario that destroyed the levered REI investor a few short years ago. How we forget the lessons of that time.

Its quality and not quantity. If its not making you cash then pass or slow the heck down. This is not a race. Just my 2 cents....actually gave you 3 cents worth.

Good Luck !!

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  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    11y
    Originally posted by @Jay C.:

    @george 

    @George P.

    You wrote.."

    to me its a race since the prices are going up and i want as many as i can get RIGHT now."

    Oh George ...I dont know where to begin. To begin the same was said in 2007 and 2008. Then the banks and markets rolled over and took everything with it. Energy prices went in the toilet and on and on. REI investors who were leveraged were crushed. You just posted what appears to be you are levered to the gills on these properties with loans on near everything ? Now today........we have a stock market at historic all time highs..most are calling for a correction. Real Estate has booming prices once again............like remember when.....yes 2007.Energy prices have already collapsed. Interest rates are about to be raised. George we have all the makings for this to collapse once again and it will take with it the levered investor who speculated on flips and even buy and hold. When you have too much leverage sometime the smallest thing can domino the whole portfolio.

    Be very careful. Sites like BP are great but they dose out just as much bad advice as good. Never in investing of any kind was it a good thing to go wild after more more more. It a path to being busted. 

    Again...best of luck to you.

     I would agree if we were talking about $500,000 houses in Seattle. I disagree though when we are talking about a $50,000 in Michigan. There is a huge difference. 

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  • Tracie Davis
    Wickliffe, OH · Member since 2015 · 48 posts · 18 votes
    11y

    Congrats! Here is to making number 20 happen.

    1Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    Originally posted by @Tracie Davis:

    Congrats! Here is to making number 20 happen.

     thank u..  I am closing on number 20 at the end of the month.  but no thread until I close. 

    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    before

    this house was purchased 4 months ago, but i think we worked on it just 2 months since we were busy with the last one. i am glad to move on. it was a drag. lots of issues with electrical contractors on this one.

    1Reply
  • Cory Adams
    Investor · Tampa Florida · Member since 2013 · 68 posts · 30 votes
    11y

    Do you have pics of the outside of the home? What kind of wood flooring is that and how does it hold up to multiple move ins? 

    Great job! 

    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    Originally posted by @Cory Adams:

    Do you have pics of the outside of the home? What kind of wood flooring is that and how does it hold up to multiple move ins? 

    Great job! 

     i do, but i dont like to show them because of the address.

    the hardwood holds up pretty well. my guy can just screen it and apply another coat of poly and it's good to go. i charge the tenant for messing/scratching it up.

    0Reply
  • Account Closed
    Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
    11y

    Looks awesome, nice work as usual!  Are you not putting appliances in this one or just haven't got them yet?

    0Reply
  • Vincent Crane
    Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    11y

    Dude those after pictures are amazing, you did a fantastic job. What do you plan on renting it for, and will it hit the 1%, or 2% rule?

    1Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    Originally posted by @Account Closed:

    Looks awesome, nice work as usual!  Are you not putting appliances in this one or just haven't got them yet?

     i dont buy appliances. i know our pics suffer because of it.  i buy them if they need them and we charge extra

    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    Originally posted by @Vincent Crane:

    Dude those after pictures are amazing, you did a fantastic job. What do you plan on renting it for, and will it hit the 1%, or 2% rule?

     we got it for 55.5k. i put around 18k or so. renting for $1,150.

    0Reply
  • Vincent Crane
    Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    11y

    Dude those numbers are incredible... Are you going to get it re-appraised and do a cash out refi to buy more units? Or let the money sit and just pay it off with the incoming cashflow.

    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    Originally posted by @Vincent Crane:

    Dude those numbers are incredible... Are you going to get it re-appraised and do a cash out refi to buy more units? Or let the money sit and just pay it off with the incoming cashflow.

     the numbers are OK.  nothing special.  but no cash our refi...  I don't need the extra cash anymore 

    0Reply
  • Vincent Crane
    Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    11y

    @George P. People on this site are chomping at the bit to find a 2% rule property anywhere in the country, as long as it's not in a war zone. Those really are great numbers. In atlanta we're lucky to get 1% most of the time.

    0Reply
  • Sam B.
    Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    11y

    @George P.  Beautiful!  You have a good thing going, keep it up.

    1Reply
  • Adrian Watkins
    Tucson, AZ · Member since 2015 · 70 posts · 24 votes
    11y

    Looks so much better!  Awesome job!

    0Reply
  • Simon Gill
    Investor · Los Angeles, CA · Member since 2015 · 56 posts · 7 votes
    11y

    @George P.

    1. Congrats on 19! The upgrades looks soo much better.  Are houses still going for $50k in that area?
    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y
    Originally posted by @Simon Gill:

    @George P.

    1. Congrats on 19! The upgrades looks soo much better.  Are houses still going for $50k in that area?

     no,  the normal homeowner type of  house,  unupdated,  is going for around 110k asking. 

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    11y

    @George P. nice job, I dont share the concerns that Anthony and Jay have raised. Probably that's because I am doing the almost exact same thing. Same type of houses, same strategy. As long as I end up with a property that is structurally better and younger (capex) than most comps and I stay below 75% LTV with good cashflow I think it's a solid deal.

    I always try to have one house for rent, one house in refi, one house in rehab and one under contract - it's a tricky balance and almost never works perfectley, because they are moving at different speeds through the pipeline. Keeping the pipeline stuffed on the front end I have recently started sending out yellow letters as I am not finding as many forclosures as I used to. I agree with you that I am almost never on budget, mostly over, but I try to bring the mouse in a condition where all components have at least 10-20 years of life left (which means replacing a lot of course).

    One thing that you do and I think I will change is to not finish the basements. It provides a lot of value for a family in a 1200 sft ranch to have a finished rec room downstairs, but I know that I can't really justify that financially. Best case I can ad some good will for lower vacany rates. Whats your take on finished basements? 

    0Reply
  • Joshua Woolls
    Investor · Grosse Pointe Park, MI · Member since 2015 · 164 posts · 64 votes
    11y
    Originally posted by @Marcus Auerbach:

    @George P. nice job, I dont share the concerns that Anthony and Jay have raised. Probably that's because I am doing the almost exact same thing. Same type of houses, same strategy. As long as I end up with a property that is structurally better and younger (capex) than most comps and I stay below 75% LTV with good cashflow I think it's a solid deal.

    I always try to have one house for rent, one house in refi, one house in rehab and one under contract - it's a tricky balance and almost never works perfectley, because they are moving at different speeds through the pipeline. Keeping the pipeline stuffed on the front end I have recently started sending out yellow letters as I am not finding as many forclosures as I used to. I agree with you that I am almost never on budget, mostly over, but I try to bring the mouse in a condition where all components have at least 10-20 years of life left (which means replacing a lot of course).

    One thing that you do and I think I will change is to not finish the basements. It provides a lot of value for a family in a 1200 sft ranch to have a finished rec room downstairs, but I know that I can't really justify that financially. Best case I can ad some good will for lower vacany rates. Whats your take on finished basements? 

     I am on the same page with you and George in this market. I am not a huge fan of leveraging to the gills, but these houses here are still undervalued. Not all of the county is in the same spot. The rents are so solid(and will not decrease dramatically even with an economic correction) that even should the market turn, they will still supply solid cashflow. Also, I know this area well and George should have nailed it on the ARV. This home is 100-110k all day.

    I consider myself to be a pretty cautious investor. I don't believe in taking risks that are unnecessary. An frankly, I am very glad that George wasn't renting that house out in it's original condition. It disgusts me when people put homes like that on the market(at least in my area) as it does nothing but bring in lower quality tenants. Eventually destroying the neighborhood. As I see it, landlords can be an asset to the neighborhood, or they can suck the life out of it.

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    11y

    Well said, I could not agree more, there is a social responsibility that comes with holding properties. In return for growing our business we owe it to the people in neighborhoods that we invest in. Properties rented in distressed condition are an eyesore and the owner is not only milking his property but is also milking the neighborhood. There is nothing sustainable about it and there is no value created for the society, in fact it's a parasitic behaviour. I disrespect people who don't take their social responsibilities serious and I am not holding back when I have a chance to tell them.  

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    11y

    Well said @Joshua Woolls

    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y

    after about 28 showings and a month on the market, the tenants are moving in in 3 days. it took 5 months from purchase date to move in, but i think it sat 2 months before it was touched. rent is $1,210, but i have to get appliances.

    glad it's over and we are moving on to the next one.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    10y
    Originally posted by @George P.:

    after about 28 showings and a month on the market, the tenants are moving in in 3 days. it took 5 months from purchase date to move in, but i think it sat 2 months before it was touched. rent is $1,210, but i have to get appliances.

    glad it's over and we are moving on to the next one.

     28 showings!  Just goes to show newbies that you can't be in a rush to get "someone" in the house. You have to hold out for the best tenant. Someone that's not going to cause headaches.

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  • Jeffrey Townsend
    Rental Property Investor · Kalamazoo, MI · Member since 2014 · 51 posts · 7 votes
    10y

    Congrats on number 19!! @George P.  Motivation for me

    0Reply
  • George P.
    OP
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y
    Originally posted by @Jeffrey Townsend:

    Congrats on number 19!! @George P.  Motivation for me

     thank u.  I actually have to start a thread regarding number 23. that will be later tonight. 

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