All Forum Posts by: Kurt Hines

@Thomas S.

I’ve noticed previously that the people most willing to pay a higher rent are those people who are less qualified, and will pay more money to have you overlook that. (Even offer it unprompted.)

Which makes me wonder if better qualified candidates would be attracted to a lower security deposit simply because they have more options. Those with the most money being least likely to be willing to spend it perhaps  

Another option is to move instead to a lower deposit with better credit score.  

@Diego Ortega

I like the idea of doing a lower deposit for good credit. Then the question is just what to set that level at!

I’ve been doing must make 3x times rent, and I pay attention to items on the credit report to make sure they have cash flow to afford it. Credit score of 620, although I’ve noticed people are either below or decently above this. I verify income and references (as much as you can, I don’t always have luck talking to previous landlords.). Pay stubs and W-2s are a must. 

@Anthony Smith

I’m in Plymouth, in Metro Detroit, not Detroit proper.  I appreciate the reply though!

@Matt Souza

I’m in Plymouth, but my rental is a condo that goes for $900 a month. I’m noticing that the replies to my ad are less this year, and wondering if there has been a rent softening in my tenant pool. Rather than lower the rent, I’m wondering if lowering the security deposit would attract a better class of tenant who just ignores 1.5x security deposit listings because other places they look at only require 1x rent. 

Hi everyone!  I'm wondering what security deposit everyone is requiring in Metro Detroit.  Currently I am at the state max of 1.5 rent in Plymouth, but I am considering lowering it to increase my tenant pool.

What has everyone else found?

Thanks!

I have a condo rental in Plymouth. It cash flows for me, but many condo's wouldn't.

There is good and bad. The numbers are very important, as HOA fee's can make or break you. However, insurance is really cheap, as the association covers most everything. (I pay $200/year, with landlord insurance). You don't have to worry about any maintenance outside the walls, which makes a condo rental very little work.

There are a couple things I would be aware of.

1. Many condo complexes limit the number of rentals allowed. This is due to FHA rules that limit the financing options when more than a certain percent of units are rentals. (My complex is not eligible for FHA mortgages because a majority of the units are rentals.) Make sure you verify ahead of time that you will be able to rent the unit.

2. The finances of the association matter a lot. If the association isn't well run, and doesn't have sufficient reserves, you could be in trouble. If a roof needs to be replaced, you could be hit with a special assessment that will wipe out years of profit.  It  helps you if you are on the board. You depend on the association for a lot, you you want to be certain it is a good association.

Good luck.

I'm a big fan of The Sweethome/Wirecutter. They review a category, do tons of testing, and suggest the best option for various price ranges/use cases. Oftentimes I'll buy their top recommendation, sometimes the alternate, and sometimes I just use it to learn. http://m.thesweethome.com/reviews/the-best-washer-and-dryer/

You'll find lots of opinions on reserves. I have 6 months expenses personal reserves, and 6 months expenses rental reserves. Once you set a number, start saving in a separate bank account for each. You don't want to mix it in with general savings. I like to think of it as not my money. Like a security deposit. (I use Ally bank, which makes it very easy to open a new 1% savings account in about 5 minutes. ) As for as saving half now, spending half now, that all depends on your goals. How much do you value reaching your real estate goals vs your travel goals?I'm not devaluing travel goals, I have done a lot of it myself. I don't believe in saving everything for some future day. You should enjoy life now, and make sure you save/invest enough so your future self can also enjoy life, especially if a personal financial hit happens.

Have you found a lender to do that low value loan? I think a lot of banks won't go that low. I had a similar size loan a couple years ago, and I had to find a portfolio lender. If you don't have one now, I would start calling local banks/credit unions, to make sure your credit assumptions are correct.

@Billy Holt

I live a few minutes from here (and know the owner of the  Realty office selling the lot (though not the listed agent).)  There are a lot of these lots, most haven't been built on as far as I know. But I don't think most people buy them to build on them.  Buying a lot gets you access to the association, which gets you access to the clubhouse (which I remember as rather nice, but I haven't been since I was a kid 20 years ago or so) the launch, some other private facilities I believe. It also gives you access to a private RV park, which is what many of the owners use. Basically, it is a way to buy access to Presque Isle, and Grand Lake (the large lake you mentioned. I live on it). People come up and spend the summer, or just summer weekends here.

The area is gorgeous in the summer, and has a decent level of summer tourism. There is also winter tourism for Ice fishing and whatnot. There are a lot of weekly rentals, but the core season is only about 10 weeks long.

I wouldn't consider it something to buy for an appreciation or development play. I can't imagine it making any money for you. But, if you want a summer getaway, it is absolutely an amazing place. I've been coming up here since I was a kid, and bought a lakehouse a couple years ago. With the RV lot, if you have an RV, you don't have to build to visit in the summer. (As I said, there are also many places to rent, including cabins, houses, and a resort. I'n happy to refer you if you are interested in a visit.)

Feel free to ask my any questions.  I would also be happy to go take some pictures and check out the lot for you, if you want.