All Forum Posts by: Christian Hutchinson

We have a property like this we bought a property in a city we want to live in with our kids.  So we bought it and basically rent it at cost. The plan was for Day 1 to move into when our kids start school.

If thats the case thats the ONLY way to justify this deal.  You also on the flipside need rigorous screening of the tenant, you don't want this place turning over 3 times in 5 years.  It will get beat up. From investment purposes this is not a good deal.

So I guess your next question you have to ask yourself is this where you want to live, no questions asked.  Meaning if your income goes up 35% in the next 5 years, and your GF's income goes up 35% you still want to live in this home/neighborhood.

 Someone will lend with 50% D to I? On $40K down? I want to meet this lender! I ran into recently That by putting down so much it was falling below the loan min's the places I shopped.

40K is 20% down for a 200K house.  Maybe its a short term with a high rate, because on a deal under 150K there isn't enough meat to make it worth it for many private lenders.

Just based on what you said...IDK what your options will be.

Have you even been working 2 years? Most lenders private or traditional need 2 years of income. Next private lenders would want a LLC or S-Corp for them to lend to.

That fact you have 42K liquid is a nice amount to work with, but you might need to look into Warren, Detroit, Eastpointe, Harper Woods, or Hazel Park south of 9 Mile. So you can do a cash purchase.

If you can get closer to $50K your could get into HP, or MH on a fixer upper. Get something at 45K then use credit to get the work done, and sell. Honestly, that might be cheaper and easier, but HML fees are $$$

 I get Section 8 is a reality in some markets.  I take issue with it in Detroit particularly because I view it as the Owner is "taking easy money".  What I have run into, and I'm nowhere the scale of someone like yourself is lots of Detroit Real Estate is addicted to Govt Money.  Which, creates a whole layer of issues.  You seen my posts regarding things I will do with my properties.  I will spend $1-$3K on a property that won't increase its property value on an appraisal.  If its upgrading plumbing/lighting fixtures versus installing proper exterior lighting or fencing, I'll spend it on later versus former. 

Plumbing fixtures can be improved once money rolls in, but a building lacking exterior lighting and physical security will sit, or attract lower quality tenants.

I can't tell you how many people I run into want to get property and plug it into a group home, Section 8, or some sort of Govt Alphabet Program.  Everyone is in it to make money, I respect that but I can't bring problems into a property.

I have a buddy who brought two properties at auction and is working on them.  He wants to put women who are in the Foster Care System who are under 18 who have children in the properties.  Because he talked to some agency that will give him $1200/bed/mo for these females and he bought homes that  have 3-5 bedrooms.  The havoc he is going to release on this neighborhood means nothing to him because he lives in Clinton Twp.  I feel its dirty money, and frankly I think its bad business. I doubt his neighbors at this property will appreciate what is coming their way in the near future.

I'm a local Metro Detroit Investor.  I never have dealt with TK Companies, because I am local.  I see lots of bad actors. I would personally never go through one.'

My biggest issue is they will "guarantee" income by putting someone in a property that is Section 8. Basically having no regard for the other neighbors/properties.  The thing is they could probably get a "market-rate" tenant for +/- $50 in either direction. When you consider their total investment they are still doing good returns.  But by introducing these types of tenants into a neighborhood, they essentially start devaluing the properties surrounding them.

Not all Section 8's are bad but I took over a Triplex last spring that was Section 8.  Deferred maintenance, hadn't been updated in 3 decades possibly, just tons of problems. I spent the money to improve and update the property, and I was able to charge $25-$50 more than the Section people.

Is that bad investment/economics? Not long-term.  Because of what I did, 2 other properties sold on the street and the owners improved their properties, the next door owner who sat on his building 18 months did work and started improving his property.  Why? Because the "type" of tenant pool changed instantly.  Meaning if everyone improves their property in 3-5 years we can increase rents by 200-400/mo and enjoy increased property values.

But If I decided just to "Section 8" for guaranteed money the property would continue to deteriorate and the neighborhood would also.

Newburgh is dangerous I spent 3 weeks in Poughkeepsie,NY and would fly into and drive around Newburgh...it seemed fine. shows looks can be deceiving.

Several people I worked with said they used to or had a spouse that commuted to the NYC.

I worked a lot in Danbury, CT that seemes like a solid area. Nice mall, I know the locals said it was overpriced, many said its better to just move closer to NYC.

Thats a broad question. Budget matters, city vs suburbs. All questions you must answer.

Where in Macomb County?

We have a 4b/2ba in SH and we have a lease coming due in July...We are trying to decide to cash out or hold.  We are doing 1600/mo in rent. Since it has Utica Schools we project it will sell for 155K.

We are leaning towards holding, because replacing it with a comparable property would mean aligning in a lower grade neighborhood, and going to a nicer area probably would mean less cash flow.

Your doing something thats lots of people just are not programmed or comfortable to do.

A large portion of the population the apply for a job, are told what they paid, are told when to show up, told what to do, and how.

RE Investing is VAST; lots of places to find your niche. Your are essentially becoming your own business.  You become the beginning and end of the operation, you might make money one month, and lose it the next. You really control your own destiny.  Thats not just RE Investing, thats ANYTIME you decide you want to start your own business.  Self-determination is a liberating, exciting, and scary situation.

Some people just don't want that, and thats fine, life is full of choices.  I still keep a 9 to 5, because I'm not ready or desire to live off RE Investments yet.  I don't think I ever will, I like having both income streams.. You decided you want to try this.  As crazy as this sounds you can exit faster and with less harm than leaving the military(lol).

I think there are only 3 people in the WORLD who became Billionaires working for someone else(versus owning/selling/starting a company or being born with a Billion) up until 2010ish.  Eric Schmidt was the most notable one because he struck gold multiple times in getting into different Tech Companies as a Sr. Manager/Executive as they were moving to the forefront of their industry, thus enjoyed huge stock gains.  SO I'm not saying your going to become a Billionaire but you'll get there faster/and much more likely owning the company than working for it.

Your taking a risk, you might fail.  But its not the end of the world.  You can try again, or walk away.  

Well...You have heat, if you are going to turn on the water.  This is a small cost that you can write-off anyway.  Most tenants check the water before they move in anyway.

Its a $150 for the water, and $100-150 for DTE to turn on the heat, so its 250 in total. 

I would wait until mid-january so the renters will be available right now, unless you have a backlog of people looking your just throwing away money...If you could wait until Feb it might be even better.

In my exp, unless you have a rental near a college, Renters are not looking until after MLK Day, UNLESS we get some really nice weather the first half of January.