All Forum Posts by: Eric Wilkinson

@Elvija Haxhaj. What type of lease do the tenant’s have? Unless it is a month to month lease, you will not be able to raise the rent or have the homes vacated to do renovations until the lease comes to an end.

You should contact your local assessor for specifics, but I think that the homestead exemption would change to 0%.  The taxable value of the property would stay the same and not reset since you are not changing ownership.  Your taxes would go up since you might be paying about 16 mils more in taxes since it is nonexempt, but the value the mils are multiplied against should not change.  Check out the treaurer’s page for an estimate.  https://treas-secure.state.mi....

Age of the home will affect your maintenance costs.  For example, houses built in the 40’s-60’s in the area will likely have to have their original sewer line replaced if it has not been done so already.  

Ann Arbor’s city council has also been tossing around different efficiency standards for homes.  Older homes are likely to have little or no insulation, so that could be an issue for you if new ordinances are passed.  You can google the topic and find some recent articles.  

I agree with @Joshua B. that a 1945 vintage house is not necessarily an issue for A2.  If you were looking for something newer, then you would likely need to look in the surrounding towns.

@Daniel T Stockman

For my rental properties I have been trying to follow the bank account method outlined in the book Profit First.

I have a business checking account at a local bank for all my expenses along with a credit card I use only for these expenses. I use the Stessa app to track expenses and have those accounts tied to it.

In Ally, I have 3 accounts that I have connected to my operational checking. One is for security deposits as mentioned. Another is for maintenance and CAPEX and vacancy. Every month I send a % of rent to that account. This builds and maintains my reserves. The last account is my profit account. Every month I send a % of rent as my cash flow profit. It goes into this separate account to protect this profit.

I use Ally to earn more interest but to provide distance from my operational checking. This is a technique recommended in the book I mentioned.

@Marco Bombardi. Check out Beal Properties.

As others have said, it is a matter of how bad the windows are. I have had to replace windows in 3 of the last 4 rentals I have bought. The existing ones simply were not safe in that they did not lock or were painted shut. Our most recent purchase had the windows nailed shut.

The city I invest in does rental inspections every other year and this is a specific area they look at. It is simply something that has to be done.

There are areas surrounding Ann Arbor that are more affordable and where there may be better deals available.   Ypsilanti might be a better fit.  Properties can be purchased for much less, but the rents are decent.  It also has the potential to benefit from growth from Ann Arbor spilling over.  

@Thomas Enright

I will have to try that the next time (hopefully there never is next time).

I reviewed this all with the title company and their lawyer and they would not insure more than the purchase, but perhaps I did not ask it the right way.

@Thomas Enright. It is an off market deal where the seller has owned the property for 30 years. There were 2 liens from personal loans from his mother. The mother passed away years ago so there was no way for her to sign a lien release.

We had to get a mortgage release from his 5 surviving siblings. Since nothing is easy, he is apparently the black sheep of the family and was not on speaking terms. We had to track the siblings down and get a release signed from all of them. The release is all signed so we are just now waiting to get it to the title company.

I could have done a quiet title action. That would have taken as much or more time. The house is in roughly shape so I was worried about the money that I put into was going to be at risk since title insurance was only going to cover the acquisition price. A quiet title action would have also made it difficult for me to flip it if I chose to go that route. Currently planning to BRRRR it.

@Eric Li

I had a property get listed to rent the same week the governor issued stay at home orders. I was fortunate because we were contacted by an insurance company looking to place a couple whose house had caught fire and needed a place to stay while repairs were taking place.

This arrangement worked great as the insurance company is paying a third more than market rates and sends the check a week early each month.

I was not aware of this possibility before , but there are services that apparently cater to insurance companies and placing their clients. You can get on their list when you have an opening.