Duplex metro Detroit

19 Replies

Please advise , on duplex Asking price 90k 2 units currently rent for 775= 1550 Tenants pay all utilities Annual taxes 2000 Homeowners insurance is 150 a mouth This Duplex is in metro Detroit This is my first home, and I would owner occupy. Would do you all think

Hi tereal, first thing I would say would be to remember it's not 1550 because you said you would occupy. So that might change the deal depending on how much mortgage, interest is. Also, I would also be leery of properties in Detroit but if you think you know the area well enough and you feel safe no complaints here. Remember no one else is there analyzing and seeing what you see so I would pull the trigger only when you feel comfortable. How much does it cash flow a month????

The big question: is it in Detroit Proper or Detroit Metro. That will determine if 90k is a value or overpriced. 

2nd: what work is needed or will be needed soon? How old is furnace, what is roof condition, does basement leak, etc, etc? I can go on, but try to rule out the big ticket items and/or negotiate price down if they need replacing now or soon in future. 

3rd: if you'll be the OO, your rental income will be cut in half.

4th: check around for lower insurance rates. $150/month seems high. For stuff like this, I always get quotes from multiple vendors. 

Hi Tereal,

It doesn't look like a bad start to me--

Where in Metro Detroit?  @Benjamin Allen - "Detroit" and "Metro Detroit" are very different animals, but both have good and bad areas to invest in.  In Metro Detroit, there are good and bad areas within the same zip code...

Is it currently occupied and renting for $775 per side?  Or do you have comparables that say it will rent for that?  What condition are the units in?  How about the building itself?

The insurance does seem a little high, but then I haven't looked at OO policies (seems like they would be cheaper since you are living there). $150/month is about 2x what I am going to be paying on my duplex, but it could be very dependent on the area as well.

Kelly

Originally posted by @Tereal Wilsonn :
Please advise , on duplex

Asking price 90k

2 units currently rent for 775= 1550

Tenants pay all utilities

Annual taxes 2000

Homeowners insurance is 150 a mouth

This Duplex is in metro Detroit

This is my first home, and I would owner occupy. Would do you all think

Tereal you left out what the mortgage payment is.  That could vary depending on what kind of program your buying with.  Detroit's varied I guess.  You need to find the find the average rents in that area looks like you have.  Also the number of vacancies as far as rentals.   That should be in the appraisal which I would go over carefully or get an agent to tell you now.  If its a dup there should be a lot of comps in that general area.  The ability to rent in that area could affect the loan plus you want to know what the score is. If no loan you didn't say weather you were getting a loan or not so. 

@Tereal Wilsonn what city in metro Detroit? Could be a good deal. The cost of insurance you should be able to get lower if you are living there. 

I'll get more of this information, and I'll post it later tonight 

Good rule of thumb is the tenant rent should cover the mortgage.  So at 90K 5% down with a 4.5% rate you are looking at $760/month for your mortgage/tax/insurance.

Not bad.  Numbers look good, now its about the property itself. Age of the roof, furnace, electrical...

I would run cable and internet to their unit and charge them $75 a month extra so they subsidize your cable, but thats me.

Please be advised, that I welcome any and all guidance as this is my first property , thank you in advance

Ok, so I decided to take more action after procrastinating , so I found a duplex in oak park mi, deal almost meet the 2% rule so I looked closer ,

As of right now the deal is tied up at 85k which I though was fair , but it's contingent on the appraisal and inspection .

Currently the property has 2 tenants paying 775 for each unit = 1550 one of the tenants will vacat once I take over the property , va allows 60 days once I take ownership to move in so the mortgage brake down is below

For a 30 year fixed with 4.5% rate you’re looking at the following monthly:

Principal and Interest: $430.68 Insurance: $85 Winter: $3.58 Summer: $161.75 Total: $681.01

Benjamin Allen So at 775 - 681.01= 94 positive cash flow and the live for free , then I'll move in a year do the same thing

Matt Castle the roof is 4 years according to the sellers discloser agreement and the other big ticket items will be part of the inspection right ? If anyone has any recommendations for Oo homeowners insurance please point me in the right direction

Kelly N. Yes both sides are currently rented , the structer seems sound, but inspection inspection inspection and I'm looking for another insurance this quote came from usaa with a deductible of 2k

Someone please tell me if this look right for closing cost on a va loan

Processing Fee: $650 Real Estate compliance Fee: $495 Admin Fee: $870 Appraisal fee: $550 Credit: $50 Re inspection Fee: $150 – this is a just in case appraiser needs to go back out. Pre-paid interest: $209.60 First Year of insurance: $1020 Escrow deposit: $750.99 Closing Fee: $550 Title Insurance: $334 Courier Fee: $50 Recording Fee: $90 Prorated taxes: $1562.22 Closing cost Total: $6672.21

Any all feed back is welcome

Hey Tereal,

I'm even newer to the game than you and I hope to be in your situation in a few months! I'm looking for a duplex to OO myself, but so far the prices don't come anywhere near what homes in Detroit seem to be going for... They're about double! One that I just viewed today was listed at $179,000 and was a real eyesore! I'd be lucky to get $750/side! The hunt is on though. Best of luck to you and I'll follow you along for the ride.

@christian Hutchinson @matt castle @Kelly N. Please be advised, that I welcome any and all guidance as this is my first property , thank you in advance Ok, so I decided to take more action after procrastinating , so I found a duplex in oak park mi, deal almost meet the 2% rule so I looked closer , As of right now the deal is tied up at 85k which I though was fair , but it's contingent on the appraisal and inspection . Currently the property has 2 tenants paying 775 for each unit = 1550 one of the tenants will vacat once I take over the property , va allows 60 days once I take ownership to move in so the mortgage brake down is below For a 30 year fixed with 4.5% rate you’re looking at the following monthly: Principal and Interest: $430.68 Insurance: $85 Winter: $3.58 Summer: $161.75 Total: $681.01 Benjamin Allen So at 775 - 681.01= 94 positive cash flow and the live for free , then I'll move in a year do the same thing Matt Castle the roof is 4 years according to the sellers discloser agreement and the other big ticket items will be part of the inspection right ? If anyone has any recommendations for Oo homeowners insurance please point me in the right direction Kelly N. Yes both sides are currently rented , the structer seems sound, but inspection inspection inspection and I'm looking for another insurance this quote came from usaa with a deductible of 2k Someone please tell me if this look right for closing cost on a va loan Processing Fee: $650 Real Estate compliance Fee: $495 Admin Fee: $870 Appraisal fee: $550 Credit: $50 Re inspection Fee: $150 – this is a just in case appraiser needs to go back out. Pre-paid interest: $209.60 First Year of insurance: $1020 Escrow deposit: $750.99 Closing Fee: $550 Title Insurance: $334 Courier Fee: $50 Recording Fee: $90 Prorated taxes: $1562.22 Closing cost Total: $6672.21 Any all feed back is welcome

VA Appraisals/Inspections are VERY tough. Prob the toughest of the of the 3 big ones Conventional, FHA, VA.

The numbers look good...Don't get too far ahead of yourself in terms of moving on in a year.  All income nowadays need to be aged two years before it will pass underwiting(That way Fannie and Freddie will insure them).  So you will get dinged for the mortgage payment, but they won't count the rental income for two years(or at least two tax returns).  So you have a $600 hole in your budget.  I don't know what your income is like but keep that in mind.

Maybe take the money you are living "free" from and get you one of those homes through the Detroit Auction or Wayne County Tax Auction next year.  Then in 2017 all rental incomes will be aged and then you can move on and up.

They say the inspectors in Michigan are the same guys that do va and fha are the same inspection , so how is it the toughest
Jared Resendes are you getting a va loan Benjamin Allen Kelly N. Jon W. George Allen Matt Castle Please give review this an provide feedback please
Jared Resendes are you getting a va loan Benjamin Allen Kelly N. Jon W. Aaron Yates
Originally posted by @Tereal Wilsonn :

Matt Castle the roof is 4 years according to the sellers discloser agreement and the other big ticket items will be part of the inspection right ? If anyone has any recommendations for Oo homeowners insurance please point me in the right direction

Kelly N. Yes both sides are currently rented , the structer seems sound, but inspection inspection inspection and I'm looking for another insurance this quote came from usaa with a deductible of 2k

Any all feed back is welcome

You will need to verify with your inspector that the big ticket items will actually be inspected. Some inspectors will look at a furnace, for example, and just look for visual damage, turn the thermostat to make sure it's heating, etc., but that's about it. Many will have a clause in the inspection report saying something like "buyer should seek furnace company for blah blah" to cover their backside. 

Other inspectors will merely use a pair of binoculars to visually inspect the roof from ground level vs pulling out a ladder and doing it the old fashioned way. 

So bottom line... check with multiple inspectors and verify they will do the important stuff. Your agent should know a few, but it's kinda up to you to get value out of what you're paying for. 

If anyone knows an inspector in Royal Oak, MI, that does this, please list them to assist Mr. Wilson. 

I think I see some junk fees in the closing.  Also the title insurance is high.  Kind of advanced stuff lol.  However don't balk the atty will want it to close.  Not that big of a deal. Numbers look good.  After a year get inspections network around get an experienced investor to go with you if possible.  It's good to have friends.  You need to do a market analysis on the neighborhood of course.  Your going to get that in an appraisal.  Crunch those numbers carefully learn yourself use the web.  Also I didn't see any mortgage insurance

Go Blue

I had to switch financiers, they qutoed me 4.5% intrest so i found a different lender this offering 3.8, in Oak Park Michigan 

Detroit is a great area for cash deals and be on the look out for new polices for Vet owner occupant. If you are disabled and service related you might be in for a tax break. They are trying to pass a law now in Michigan to have service related vets own property without ever paying property taxes. 

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