All Forum Posts by: Isadore Nelson

@Isadore Nelson yes, I know someone that recently paid $500k to get a longtime rent controlled tenant out of a Carroll Gardens Brownstone. They bought the property with tenant in place for roughly $1.5mil under market value for property when vacant. In Manhattan, these buyouts can be 7 figures.

Hi Isadore,

You've gotten some good advice from other members above. I'll reiterate that a tenant buyout is likely your best option. You can (delicately) begin talking to these tenants now that you're in contract. They are people and have needs/concerns too. Some people are easy to deal with while others, not so much. Cash for keys is common, and frequently the part that keeps tenants from moving forward is not having an affordable place to go to. It makes a huge difference if you can solve that problem for them.

If you get the sense that there's someone who will NOT leave and make life hell, then it may be worth getting out of the deal (I don't know the specifics).

Good luck!

Metro Detroit has what 99% of Real Estate Investors want. Couple hundred bucks a door monthly cash flow, solid ROI, and yes plenty appreciation. (#1 appreciating city 2023)

I know many investors that have house-hacked with your exact criteria and done really well. 

It's a great market to grow your investment portfolio afterwards if you choose to do so.

I personally make well over $100k/yr cash flow from 21 properties here. All of which, I’ve purchased within the last 4 years.

There are 2 types of people who dog on Detroit..

1. People who don't actually own property in Detroit

2. People who did it wrong and weren't able to execute.

If you do it right, it’s arguably the best market to invest.

Purchase: $80k-$130k

Rent: $1100-$1500 (no rent control in MI)

1% rule: .9%-1.4% rule deals

Coc ROI: 5-12%

Total ROI: 20-40%

Cash flow: $50-$250/door (after all expenses and budgeting for maint, capex, vacancy)

Appreciation: 3-10%+ (has been double digit for a decade)

Location: C+, B-

These numbers are based on the "sweet spot" in Metro Detroit. These are largely in the suburbs and some markets within the city. You can find higher ROI (on paper) here and probably in other cities…but the probability of actually collecting rent significantly decreases. Where these numbers are found, there is a very high rate of rent actually being paid.

We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ford, Rocket mortgage, Beaumont hospitals and more. All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

The bad reputation of “Detroit” comes from OOS investors wanting sub $40,000, D class properties in poor condition, because they pencil out to 2-3% deals on paper. We don’t buy those.

We have found what works and repeat it as much as funds allow.

Detroit has one the highest rent to price ratios in the country…and we focus on the best balance of price/location within the area.

Here is a picture of my portfolio if you/anyone is curious.

I have been owning and self-managing Brooklyn, NYC Properties for 28 years now.

I want to start a YouTube Channel where I give weekly Podcast Discussions on the Management of the Week.

For instance, I have a couple that is splitting up. The Husband sent me a text telling me that he's giving me 6 weeks notice and I should work things out with his wife. He believes he can wash his hands in regard to his obligation to pay the rent by giving me notice.

When I get started with the YouTube Podcast, I will take things like this and begin to unfold the Story and follow it to it's conclusion. There will be multiple issues unfolding at the same time as there are always something going on!

In all my years of Property Management in one of the most tenant friendly Cities in the World, I bet there will be a lot of interested people, regardless if they are actually planning on buying in a tenant friendly City.

My management style would be considered highly unusual as I approach these issues so that it becomes a win-win situation and take into account the human element of the tenant.

There is potential for me to add more to that Podcast to include how the Portfolio did over the 28 years growth period (1998 to 2025) with real numbers.

There will be things like making the Portfolio safer as I age by paying off the Mortgages and increasing cash flow, etc.

I'm also a Cloud Software developer (Salesforce specifically) and will be employing a lot of A.I. in 2025.

The RE Portfolio is cash flowing very well and I can afford to integrate experimental A.I. to test it out.

Things like A.I. Customer Service integration to handle tenant issues, monitoring of Mechanical issues where the A.I. can proactively do something to ensure it's well maintained or to be able to fix an issue, etc.

My Portfolio has basically been self-running except for occasional P.M. Issues like I described above.

I believe that A.I. will allow us R.E. Portfolio Owners to become completely self-running in the very near future. I want to be on top of that technology and then teach it via my new Podcast.

That's the plan!

Have 10 properties now. I'd like to add at least 2 more in 2025!

Have you looked into Ohio markets such as Columbus? A lot of investors based in markets like California and New York are choosing to purchase their investments OOS in the Midwest because of the affordability and numbers making more sense.

Prices in Columbus are still low enough to find 1% rule deals and there's a ton of appreciation happening in this market as well. I actually moved from Florida to Columbus for the real estate. I saw how fast the city was growing and decided to make the jump.

Hey Shibashis, I can talk for hours about the Detroit market. I've been investing there personally since 2019 and own 12-doors in Detroit proper.

I lived on the ground there from 2017-2022 but now live back in California.

To answer your questions... yes, you can still find cash flowing deals in Detroit. But like most markets, it's getting increasingly difficult.

Plucking something from the MLS is tough because there's not a ton of inventory. An uneducated eye may think that's a silly statement because there appear to be a ton of listings in Detroit.

But many of them aren't worth buying. The ones that worth purchasing likely still need some amount of work... I'd say $10,000 - $15,000 in rehab. If you buy a median priced home in Detroit today ($90,000) and have to put $10,000 - $15,000 into a rehab, you may not cash flow. You really have to know how to do your numbers.

A lot of that may come down to the property taxes. They are high on a percentage basis in Detroit, but relatively low on a nominal one. I've personally done 60 deals in Detroit this year and I've seen monthly property taxes anywhere from $20/mo (extremely rare) to $350/month. Usually you're falling somewhere in the $150-$200 range, but you really need to understand this number and how to determine it.

The market, in general, in Detroit is rapidly appreciating. Take a look at the median list price over the last five years. It's doubled and it doesn't appear to be slowing down!

If you understand what's happening there, it makes a ton of sense. There's been a massive revitalization effort that started downtown and has spread throughout the city via the Strategic Neighborhood Fund (SNF). 

There's a bunch more industry outside of just automotive. And the Census officially announced Detroit's population ticked slightly higher in 2023 for the first time in nearly 70 years.

We're still early innings for Detroit's growth and appreciation. 

I'm personally still finding great deals for me and the clients I work with. But I'm almost exclusively sourcing them off-market. We're able to find similar stuff that you'd get on the MLS but at a discounted price. Put a little rehab into it, and you have pretty solid BRRRR potential.

Just today I had a client text me that his appraisal came in at $122,000. He purchased the home for $63,000 and put $20,000 into a light rehab. It's a huge win, and I admit, at the top end in terms of outcomes.

Most deals are leaving $5,000 - $15,000 post-refinance but still nicely cash flowing.

In short, yes, there's a lot of opportunity in Detroit but you really need to understand the market or work with folks that do.

I'd be happy to chat with you or anyone else looking at the market there.

Hey @Isadore Nelson - I'd bet my life savings on the fact that there's multiple reasons why other investors haven't scooped this up yet. 

Keep in mind, most offmarket/distressed deals are traded offmarket before they even hit the auction block. If it's made publicly available, understand that most investors have already passed on it. 

Does it mean its a bad deal? Not at all. A bad deal to one, is a good deal to someone else. 

I'm pretty active in Brooklyn and have closed multiple multifamily buildings, with the most recent happening a few days ago 11/26 @ $1.55M. 

Shoot me a text or DM and I can give my $0.02 on it after reviewing the deal - thanks and good luck to you! 

@Isadore Nelson

Are you responsible for any transfer taxes upon sale? Any violations, open permits, etc.?

Some title/ certificate of occupancy issues can cost $10,000’s-6 figures to resolve.

Buyers may be backing out for failure to obtain financing for the deal. Other reasons could be related to title or physical defects (i.e. foundation issues).