All Forum Posts by: Account Closed

@Paul Miller One of my best deals was a pee house!  This was not a bank owned house, but a private seller who took it back on a land contract default. They didn't want to deal with the house so we got a great price.  The pee smell scared away all of the other buyers so I was able to pick it up very cheap.  We were able to locate the problem area, a closet the cat was using as the litter box.  Torn everything out to the joists, bleach, Kilz paint, then new subflooring and flooring (we used Kilz on the entire subfloor throughout the building to make sure we got rid of it).  

I would offer a very low price (just to throw out a number I would say $10K).  Obviously the bank knows there is a problem if you are not even allowed to enter the house without a mask.  I was fortunate with my deal because we were able to locate a specific spot where the issue was.  If there is not only one closet that is the problem area, you will likely have to remove all of the flooring and subflooring, and that's a tough pill to swallow if you have nice hardwood.  But if the urine is soaked into the wood it will always smell - and it is a health hazard.  This will be an expensive fix, but if you get the price low enough it can be a great deal in the end.  

@Jean-francois Ndomb I personally don't like carpet, although I do have units with carpet.  For the past couple of years when flooring needs to be replaced I have been using Allure vinyl plank flooring - you can get it at Home Depot.  There are different styles to choose from and its under $2 a sq ft out the door.  This is a rubber backed "floating" floor so it is not glued down.  It is easy to install so you can do it yourself to save money.  This flooring looks nice and will last a lot longer than carpet.  

Splitting utilities can be difficult.  For heat you would have to have 4 separate furnaces with ducting installed.  For water you would have to have 4 water heaters and make sure all of the water lines were ran properly - all of that would be very expensive.  Electric should not be too difficult to split though.  When I started I preferred utilities to be split too.  At this point, I honestly don't mind having all utilities included.  I just charge more rent.  In Michigan, we estimate that including all utilities runs $100-$150 per unit per month (obviously this varies based on the size of the units) so I will rent a $500 a month apartment for $650 with utilities included.  You can do your own utility analysis on your property to see what your average is per unit.  

I have also found that a lot of tenants like having utilities included in rent, so they only have to worry about paying one bill (especially in Michigan - tell prospective tenants that they won't have a heat bill and they'll get excited about your building). 

@Gerry Sosa  The tenants should pay their own utilities - unless it is a multi-unit building and the utilities are not split.  In that case I would include utilities in the rent, and charge more.  

College towns can create nice cashflow, but they are typically heavily regulated.  I would contact the local city compliance office.  It's likely that the rental property will need to be licensed as a rental and inspected by the city.  They will also be able to tell you how many unrelated people can occupy the property.  

Another consideration is insurance.  I would call around for insurance pricing before purchasing.  There will likely be a higher premium to insure college student housing.  Hope this helps.

@Byran Parson sounds like you have already taken action and have a plan in place, congrats!  I would say it would be better to buy two per year than one, as long as the properties are cash flowing and you can handle the upkeep and management.  The easiest answer to your question on banks and lending is to ask.  Schedule meetings with commercial loan officers, let them know what you are doing and what your goals are.  Prepare your financials prior to your meeting and bring them with you.  Technically 1-4 units are residential but some lenders will let you bundle them together into one commercial loan.  I've found that your local credit union is easier to work with than some banks.  Credit Unions will likely hold the loan in house rather than sell it off so they can be flexible with lending decisions (as long as it is a good risk for them).  

@Joe Villeneuve is right.  People think Michigan is Detroit.  It's not, and there are plenty of investment opportunities.  [Sidebar I do think that Detroit will make a comeback and you can make an impact there if you are diligent]

@Joe Semifero @Joshua KappThere are 30K houses, not as many as a few years ago, but there are still a lot of good deals.  I find them around Lansing.  This issue is finding the ones that are in a good area and getting them quick.  You're not the only one looking for a deal so when a good one comes up its usually gone pretty quick.  There's a lot of junk out there too that is cheap and not worth investing in due to amount of rehab needed or bad neighborhood.  I'll walk through 10-20 houses before finding one that's worth buying, and that's after weeding through them online.  

We picked up this one a couple of years ago.  Its in a decent area and easily rents for $650-$700.  We are in to this with purchase and fix up for $25K total.

Joshua Kapp check out meetup.com. There are REI clubs listed on there. I know there is one in Lansing and I think they meet monthly. I've been traveling a lot lately so I have not been to any of these meet ups but that would be a good place to start

@Thea Linkfield I would suggest jumping into investing.  Find an investment property in your area buy it.  You can read all the books and listen to all the podcasts but will learn more by doing.  

If you still want to get a job in the real estate business you can try property management.  I personally think that property management is a difficult job in which you don't get much of a reward.  But it is a good way to learn about the business, see what types of properties perform well, attract the best tenants, what neighborhoods get the most rent, etc.  I would not discount getting into sales.  Selling is important.  Even as an investor I am always "selling".  Selling an empty unit to a prospective tenant - or - selling my business plan to an investor.

You could try meeting up with an established investor.  Maybe work for this person as you are learning about the business.  

@Ethan Painter  Check out meetup.com - there is an investor group on there.   Also there is Rental Property Owners Association of Mid Michigan.  I have not been to any meetings recently due to travel schedule so I'm not sure how good the info is but its a place to start.

Hi @David Coleman-Roush

We just started the same process - looking to get a few properties on one commercial loan.  We went in with a list of our properties, what's currently owed on them, the estimated market value, etc.  They will likely want to see copies of all leases, income statement for the properties, and your personal financial statement.  Best to have all of this ready when you sit down with the lender.  Probably wouldn't hurt to give the lender a call and ask what paperwork they'll require.  

From my experience, the effort to purchase a 10 unit is the same as it is when purchasing a 4 unit. The biggest reason I would recommend to start small is because you will make mistakes. It's part of the learning process. Mistakes on larger properties can be a lot more costly than mistakes on a smaller property.