All Forum Posts by: Christian Hutchinson

do it, make it into 3 units.

live in one keep, one for a rental, and the other for air bnb

you will come out way a head.

@Lisa Haney

Good luck getting a mortgage in Detroit.  So many issues with appraisals, the property itself, then actually being able to make money.

Detroit is a cash game. I have had homes appraise over the what I had it contract for and have banks refuse to do the loan, because they see 5 houses 3 streets over sell for $1 or $500.

I would make the current tenant pay a full months rent.

I would use the that money to house them at a short-term housing situation (air bnb) for the new tenant.

Offer the new tenant a free month when they are able to move in.

Tell the old tenant to pay up.

Amazon HQ2 will bring in $5B in investment and 50K workers.  Avg wage pays $100K.

It doesn't matter where the building lands, the whole MSA will go up in RE Values.

Avg household is 3.3 people. So that means 150K people will job magically pop up in whatever MSA in the course of 5 years. Those people will need places to eat, get gas, buy cars, buy clothes, etc. ANYONE with an established business or in REI will see improvements. Even if you are renting mid-cost small ranch homes in working class neighborhoods, the rents will rise, because frankly, those workers in service type jobs will have more work to perform.

There will be more teachers, firefighters, etc also.

Me personally, IF my area makes it into the "playoffs" (word is Amazon will go to 3-5 finalists) I will begin getting houses under contract at all price points. I know the general area they would setup shop, so I would purchase some low-end housing, some-midgrade housing, and probably one higher end place. For a goal of maybe 5 properties with 8 units in total. Basically 2 duplexes, 2 ranches/bungalows, and 1 colonial/bi-level/tri-level because I want to rent to people making $80K a year and to people making $40K a year.

I target some places for cashflow ( MF in the City of Detroit), family homes for appreciation (middle class suburbs tied to the local economy), and "starter" homes in exclusive areas for keeping pace with inflation (always a built-in market for renters or people who are just trying to sneak in, but not the ideal house people look for when buying in these areas).

Cash-flow only gets you a few hundred dollars every month. But appreciation gets you double digit increases in value/wealth.  But appreciation can't feed your family. You only get that money once you transact on the property (sell, refi, or take out equity via heloc, or loc which cost money).

I rather have 2 properties paying me $1000 with 1-2% appreciation, then have a 3rd property paying me $200, but getting 8%-12% increases per year in value. Because those cash-flowing properties help me get more cash-flowing properties or high appreciating properties.

We have good 9 to 5 jobs, so cash-flowing properties help us save money faster.

Investing out of state in Detroit, CLE, Cincy, KC, etc without being from there, having a family member there, or having a very good contact (like a friend who stood-up in your wedding type contact) is a recipe for disaster. You can get better ROI going to your local strip club. If you do decide to come into the MW market, avoid the Turn Key Providers, and bump up from $10K to $30K...If you get comfortable and know the market drop down, take the riskier stuff.

I think you better just come on out and say where this stuff is at in Detroit.  Lots of Detroit investors on this site.  Someone might be able to save you.

Just from I have initially heard it sounds like you may have been taken by every person involved in this process. Sad to say there is lots of opportunities in Detroit, but that breeds bad actors waiting to make a few bucks off someone.

This was a recent story in the newspaper: http://www.detroitnews.com/story/news/special-repo...

Guys like this are just the tip of the iceberg.  They made money gaming the system, and preying on the poor and destitute.

Because of the City's decades of dysfunction instead of just operating like a normal landlord, it has given rise to a whole group of investors and professionals in engaging in tactics that would make Mr. Potter blush.

Well there are different level of repairs for different levels of houses.

For instance...

I have 2 ranches and a triplex.  I let anyone hack away at those. They are my try out homes.  Someone says they are a "handy-man", plumber, painter, etc its there tryout. Even if they mess up costs are low, and not too much can go wrong. Also, not much can break in those homes.

My other properties, I only use people who have "worked" their way up to this level, or reputable local companies.

Painting a 1000 sq ft house, standard rental, shouldn't cost more than $1200 in labor, basically $150/room. Every 4-5 years I'll pay to have a really good painter do the house so it locals super nice.

@Tony Gazetti

You are talking about this like someone who has been studying Real Estate and listening to podcast for a year.

Here is some easy, free advice.

Take your money and instead of grabbing a property for $140K in places you feel "comfortable" with go get 2 places like a normal investor in Roseville, Oak Park, Madison Heights, Hazel Park, or Redford. Something with 3 beds, preferably brick, basement is a bonus, garage is even better.

Its extremely difficult to make money on SFH in the $140K range. TOP end of the rental market in Michigan is $2200/mo when you consider that someone needs $6600/mo in income to afford this (79200/yr) . Thats in places like northern Farmington, Bloomfield, Rochester, Troy, Birmingham, Canton. Your market once you get above $1600 ($4800/mo and $58K/yr) thins out greatly, and only flies in a few markets in Metro Detroit. This here is a breakdown of median incomes, city, county for every city considered in "range" meaning they can afford $900 to $2200/mo in rent, and have more than 1500 households. After seeing this chart overlay your numbers and start understanding "who" will actually rent your places, and where they will be given the pricepoint.

Classing neighborhoods don't help you make an investment decision because it completely negates how people actually choose housing. Meaning someone will pay $1800/mo to be in a 3 townhouse in Troy, MI with Troy Schools but will completely live with $1600/mo place 3 bedroom home in Auburn Hills, MI with Avondale Schools. Thats how people shop.

As you see the pool of people who can AFFORD that is greatly lower, and not even including if you as an investor can make any money on the deal. Divide these cities incomes by 12 then 3.  That will tell you where to buy, what purchase, and who your target is. One thing, I learned early on being a landlord, is people don't make as much money as you think they do.

@Tony Gazetti

You are talking about this like someone who has been studying Real Estate and listening to podcast for a year.

Here is some easy, free advice.

Take your money and instead of grabbing a property for $140K in places you feel "comfortable" with go get 2 places like a normal investor in Roseville, Oak Park, Madison Heights, Hazel Park, or Redford. Something with 3 beds, preferably brick, basement is a bonus, garage is even better.

Its extremely difficult to make money on SFH in the $140K range. TOP end of the rental market in Michigan is $2200/mo when you consider that someone needs $6600/mo in income to afford this (79200/yr) . Thats in places like northern Farmington, Bloomfield, Rochester, Troy, Birmingham, Canton. Your market once you get above $1600 ($4800/mo and $58K/yr) thins out greatly, and only flies in a few markets in Metro Detroit. This here is a breakdown of median incomes, city, county for every city considered in "range" meaning they can afford $900 to $2200/mo in rent, and have more than 1500 households. After seeing this chart overlay your numbers and start understanding "who" will actually rent your places, and where they will be given the pricepoint.

Classing neighborhoods don't help you make an investment decision because it completely negates how people actually choose housing. Meaning someone will pay $1800/mo to be in a 3 townhouse in Troy, MI with Troy Schools but will completely live with $1600/mo place 3 bedroom home in Auburn Hills, MI with Avondale Schools. Thats how people shop.

As you see the pool of people who can AFFORD that is greatly lower, and not even including if you as an investor can make any money on the deal. Divide these cities incomes by 12 then 3.  That will tell you where to buy, what purchase, and who your target is. One thing, I learned early on being a landlord, is people don't make as much money as you think they do.