All Forum Posts by: Christian Hutchinson

I want to know what insurance company is insuring a property in Detroit for $720/yr? I would expect $1800/yr and thats on the cheap side.

Thats cheaper than many suburbs for similar sized homes, unless you literally are only insuring your cash into the project and that still seems low.

The property taxes also seem VERY low(esp non-Homestead). I would expect closer to $1700 or $1800.

 No PM is going to care about your money like you do.

If your investment goes sideways in Detroit you are out of $25K-$100K. Thats a high incentive to be diligent.  For a PM if a property goes sideways it cost them $75-$150/mo so in a year they lose $1000 in a year on a bad property.  No one will care about your money like you do, especially in this market.

What he is saying as a professional investor is very true.  People over and over attempt to overlay the typical PM Game on the Detroit Market is fails every time.

If you want to do Detroit it has to be personal.  It can't be numbers on a spreadsheet. It means going by properties a couple times a month when occupied and daily when empty.  It means the neighbors have your number, it means when you have rehab happening, your contractor has a "sitter" for the house.

I make my Detroit properties work because I am by them non-stop, I have cameras (the wires are inside of steel casing so they are more difficult to cut) I can monitor the premises from my phone or laptop.

Detroit is not a buy it and forget it town.  I forget about the places I own in the suburbs except for when I get a water bill I have to pay.

I personally wouldn't invest here I'm 7.2 bias...I shy away from SFH in Detroit, I prefer 2-4 units.

That said, this is a solid model for Detroit, good purchase price, reasonable amount of cash to rent for a home and fair for housing amount in terms of rent. Decent enough neighborhood with nice amount of commercial activity. ARV feels high by about $7-10K, but that wouldn't stop me on a deal in Detroit anyway.

I would worry about tenant placement this late in the year, or even going into Jan and Feb.  Its Sept 5, 2 weeks to close 5 weeks of rehab if you get going right away. November 1 move-in?

I think its not a bad deal, feels like the calendar is a little off. If there was a way to drum of leads now do it.  Also, it feels like based on Zillow there are lots of unfilled rentals in the area. Some of the ads are garbage, so actually post ads with photos, just dont put appliances in until you have someone moved in, schedule delivery on the same day they move in.

https://www.zillow.com/homes/for_rent/Detroit-MI-48227/79082_rid/42.413191,-83.177534,42.380548,-83.232465_rect/13_zm/

I would furnish the house. Then start calling around to HR Departments of large companies and try to angle for a relocation deal. Companies are always scrambling for housing, in nice school districts at reasonable costs.

I had a $1800/mo place that I was going to turn into a corporate for $3000 furnished. But luckily the house sold.

Either of those zip codes could work.  I guess my question is how cheap are you getting in? I know some people don't get this, but I rather spend $55K on a property than $25K.

$25K you have an investor or a owner just trying to get some money and run.  At $55K the property might be in an okay area and the current owner lacks funds to complete the work.

Its all inter-connected.  I work for a large company and we have a Consulting company as essentially a partner.  For years our company used the consulting company to source foreign talent in India.  This Consulting house has a large scale practice off-shore.   The people in India, who spoke English well, and could fit the company culture basically would prove themselves in 6-12 months on  H1-B1 or a J-1 Visa contract.  Some of the people coming over from India said they took a job at this Consulting firm 3-4 years prior to their arrival because they knew if they performed well they get a shot coming to the USA (or Canada). These people come hungry too work like crazy, they have to make minimum $72K due to regulations.  They make a name for themselves then get a full-time position, and a H1-B1.  Then they work 3-5 years, get the coveted Green Card. That money they send back to their home Country gets pooled and who knows what else, then comes back into the USA as a real estate purchase. Thats when floodgates open for a family/extended family/close friends.  They open a business, more are allowed entry into the USA through various Visa provisions. Its a legal.

The high-tech or high-skilled workforce knows and understands buying property in the USA gets their foot in the door. Then they have the investor visa, which allows importing more people. Or just open a business Gas Stations, Convenience Stores, small hotels/motels require 24/7 staffing they all require 5-10 people to run the whole thing, close family/friends all can live in close quarters working the business.  The workers go to college in their off-time often.

But small-time foreign investors they are the most affected.  These people are not "rich" they are the often Middle-class/upper middle class they are liquidating family properties to make a bet in North America.  That bet is made on the back of they can get a family member into the country and stay. It all starts there.  

Super-rich foreigners and funds will continue to invest because they have the means and ability to come and go or check on an investment using services.  A close family friend of my wife bought a $2M home in the Toronto Area. Well some people nearby was saying some rich Asian guy bought the house and its empty.  Well it was empty because no one lived in it.  But my Father-in-Law would cut the grass and shovel the snow, then his Nephew lives not far away who would check on it who had a key. After about 2-3 years his Son and Daughter-in-law moved in straight from China and she was pregnant (had 3 kids since being in Canada). So I don't know Canadian immigration laws but I imagine they won't be going anywhere soon. These investments are really a series of transactions/actions being made in order to get into the Country. If its one-thing I've learned from my Wife's family and family friends they know how to play the long game.

I always like to watch Median Household Incomes vs Median Sales Price...I'm seeing lots of places with Median HH income at like $77K and the homes are sold at $400K.  If your mortgage balance is more than 3 times your annual income unless you just have tons of cash, this is a financial disaster in the making.

Another thing I feel like I'm seeing because Construction is back fired up again I'm seeing lots of frivolous purchases.  Seeing lots of new RVs around town, $90K loaded pickup trucks, when I need to get a massage its a 3 day wait, versus same day 3-4 years ago. By some of my rentals I see lots of new TV boxes, xBoxes, etc packages on garbage day. IDK, if the Median HH Income for your Census tract is $47K I would think if you make extra money you should pay down debt, save, or invest.

I get guys in their mid-20 to early 30s bragging basically they can afford a $1500/mo apartment because they make $32/hr.  When you do some digging they are on a 1099.

I get consumer spending drives our economy...But I forever have this statement burned into my brain.  When my oldest son was born I told people in my unit in the USAF that the money made while we were deployed I was setting up a college fund for my son. I did this versus buying a new motorcycle, buying firearms we were selling (I don't know how that was legal), or special order a car (cause nothing is better than doing 7 months in the desert and coming home to a Chrysler 300 or a Camaro). The response over and over again was "Why he may not even go to college, and thats like 18 years away he is like 5 months old".

With attitudes like this so rampant in our Country, I feel another debt crisis is always just one or two economic shocks away.

Rule of thumb, if you see a wholesaler trying to push a property in Detroit here, it's probably not a good neighborhood. Look one to two neighborhoods over in all directions. You will find your deal.

Anything in the suburbs under 100k is a solid buy with due diligence. Just always hedge your purchase and rent expectations.

I found a small apartment building.  I can afford the purchase but the building requires full rehab (can't afford to spend the money and not have something coming in for 8 months).  I ran into a contractor who has the capital to complete the rehab. He suggested he partners on the deal. I secure the property and does the rehab, and he is paid on the back-end once its occupied and refinanced.

How does a deal like this work? Does he go on Title? whats his premium for awaiting payment, etc.

Whats the best way to attack something like this?