All Forum Posts by: Christian Hutchinson

 Despite what people say Detroit is not a scene out of Mad Max.  I like to target properties just outside the "desireable" areas.

Reason, property is relatively cheap, rent drop-off isn't that great. Crime difference not significant.

Then you here the classic $5000 or $10000 Detroit house.  I would gather its in a bad part of town, that crime is fairly rampant.  The only tenants you will attract will be on some sort of housing voucher, or marginally attached to the workforce.

My model is target homes at 30-60K put some slight improvements in, target a cross-section of tenants.  

I guess the question is the 3 C's...

Capital

Credit

Crime Tolerance

Are you living there too, or investing from a far?

 What's illegal and dishonest is that the zip code my car is registered in is 48236 has both a Detroit Side and a Grosse Pointe Farms side.  If my car was registered at an address less than a 1/4 mile north of mine falling into Detroit, my vehicle insurance would be $700/mo, though NOTHING else at all would change about my insurance profile.  That's the very definition of redlining.

Next I TRULY question the amount of auto-theft or vandalism Detroit is known for because of I have lived in Detroit 7 years with my car parked on the street(no driveways) and not a single time has my car been vandalized or attempted to be stolen.  I had my windows broken out at homes in Rochester Hills, Madison Heights, I have had my tires stolen in Sterling Heights.  BTW I drive way nicer vehicles now then I did then with a 2003 Kia Sephia,1999 Saturn, or a 1993 Buick Regal.  Strangely my Escalade can sit on the street in front of my house in Detroit with no issue, but its the most stolen vehicle on the road.  Or strangely enough people can go to a Lions, Tigers game and their cars get stolen/broken into, but my cars do not? My vehicle is parked at or near these locations 24/7.

Insurance companies charge it because they know they can get it. Its that plain and simple.
Property crime rates are failing rapidly in Downtown and Midtown Detroit and Insurance companies have claimed for years they went on a zipcode by zipcode basis, and not once in the last 10 years have they adjusted the rates down for these areas....hmmm.

 No one registers their car in the Detroit.  You register and insure your car in the suburbs.  Also, I pay 150/mo for two cars a 2012 Buick and a 2008 Malibu for full coverage.  I have paid as high as $200 maybe 3 years ago.  At one point last year I had 4 cars registered with my 2013 Yukon and 2013 Escalade for $190/mo.

I have tenants in my Detroit properties who keep their cars registered in other States or at their parents.

I would simply register your vehicle outside Detroit, same with insurance.  Change your driver's license to mate your registration/insurance of course.  DPD will never question it, and the suburban police won't scrutinize you, if you get pulled over.

I have a a friend thats a mortgage broker.  He owns/runs about 5 branches.  He always complains about red tape and the Govt.

He did agree with something in DF though that basically the Govt tracks your loan originations, and there is a 3-5 year tracking.  That if you have too many loans default, he gets in big trouble criminally.

He said he writes less loans, and there is a ton of extra paperwork.  But he also said there is something to be said, that you are having customers enter into a contract for something as essential as a place to live and they are unable to adhere for less than 10-15% of the term of the loan.  He said in a one year contract, that would mean someone would be in default basically in 30 days.

Jefferson-Chalmers??

I know it makes sense, but this is where being born, raised here, and knowing these streets.  I see houses over there, I see the neighborhoods, I couldn't do it.

I see how that area could turn around, but I rather wait, and pay 40-60K a house that needs a little work, when the neighborhood is starting to hum.

I can't be "first on the beach" over there.

Someone other people can do proof on concept,  If I ventured that way I learn more towards Morningside.

Any landlord should know that a 1099 employee should be like deduct 40%-60%. These people never dealt with a hairdresser, or nail-tech?

I'm not financially free, I don't see us ever leaving our jobs, because you need W-2 income to do bigger deals.

That said, I'm not overworking myself, I'm not angling for the corner office, and I'm not worried about losing my job, because I'll find another one, and I could take a 50% paycut and it not alter my life, I couldn't buy more real estate every year(maybe just lowly value stuff).

I'm a Detroit person.  If you are going to spend $40-$50K avoid the Section 8 crowd and go after market rate tenants.  The TK business isn't great long-term.

Here is a thread this was discussed.

There are plenty of purchases you can make in spillover development areas.  You could attract market rate tenants at essentially the same amount, with upside of rent coming in less than 3 years.  THEN your property will get appreciation.

These TK operations are really just trying to make a quick buck.  They don't care about the properties, or neighborhoods they are in.

 I talked Private Lender last week, that did 70K min, but the purchase was 110K with 35% down, numbers couldn't work. But what your saying makes sense.