All Forum Posts by: Kurt Hines

Hi @Sarah Lorenz I think it is likely to be a long time before Alpena becomes Traverse City 2.0.

There is appreciation outside of Alpena, but I'm not sure of the rental ability there. There is a divide here, with most houses in Alpena under 100k, and lake houses outside of Alpena many multiples of that. Most of the rentals on the market now are in core Alpena, in rent ranges above.  I do want to look in the rural areas outside Alpena, once I figure out how to gauge rental demand.

@Jason D. @Kati Ross I know very little about the Grand Rapids area. I've spent my life on the east side of Michigan, South and North (when I haven't been outside the state entirely). I'm not opposed to GR, but I have a network in Detroit Metro, and Alpena to a lesser extent already, which should make things easier as I ramp up. If I don't invest in northeast Michigan, my biggest likelihood of success will likely be SE Michigan

@Charles Kao I do need to look more wider afield in North East Michigan, and I will do so. What you say about not being able to find rentals in Petoskey is interesting. I wonder if it is because the inventory is taken up with vacation rentals.

Thanks for the reply @Jason D.

I'd be happy with $150 a door, but i'm concerned about the flat or negative appreciation, and declining population. I want to plan for long term buy and hold. If rents don't go up over time, but costs increase, and you don't make any appreciation (and have a hard time selling if you want to), it doesn't seem to make sense.

Also keep in mind that that triplex was the best case I've seen(and assumes it doesn't need much rehab, which is far from certain, and I can get it for 25k less than asking). The city seems to be mostly SFR (High rent seems to be about $800/month), and some duplexes. With SFR's, i get rid of some costs (heat, trash, water), but the overall rent is lower.

It seems that lower rents really boxes you in. No matter what you can get a unit for, you can't get higher rent than the market will bear, and long term, CAPEX will eat into that. If you have appreciation, you balance it out, but without that, seems better to drive somewhere else.

@Keri Middaugh I have considered vacation rentals, but haven't done a in depth analysis of the opportunity yet.  (The biggest problem I see is that summer is so short. I've been told you count on a 10 week season.)  I'm taking it step by step, with residential rentals first.

I do need to look at other cities in the area next.  From an initial look, Rogers city doesn't seem to have any better numbers than Alpena. I haven't looked at Cheboygan yet, but will. Do you have any experience with rentals in any of the markets up here?

@Brent Maxwell That is what I have been thinking, but I don't want to write off my local market without being certain. I'm from the Metro Detroit area (Commerce), and have family down there, and plan on investing down there regardless.

Hi Everyone.  I'm trying to decide on what market to invest in for buy and hold residential rentals. My closest city is Alpena, MI, in northeast Michigan. From all the numbers I have pulled, I don't think it fits my needs. I'm hoping for some more experienced eyes (especially anyone familiar with small town investing) to look at these numbers, and let me know if I am missing anything. (I'll be analyzing vacation rentals separately, since that might fit here.) 

According to a Rentometer Pro report, the Average Rent is $692, with the Median at $650. When I look at the numbers, it looks like rent is $500-$600 for a 1 bed, $600-$700 for a 2 bed, and $700-$800 for a 3 bed. (I realize I'm running numbers in Winter, so it might be better come summer). With those rents, even looking at duplex or triplexes, I'm not generating a lot of cash flow. (A lot of duplexes I look at seem to be a 2/1 and a 1/1) The best case I've seen so far is on a 55k triplex (listed for 80k) with a cash purchase is about $150 a door.  There are just too many costs to make much money with these low rents, especially considering it seems that heat (Natural gas) is generally not separately metered.

When it comes to the real estate market, the average time on market in the summer is 2+ months, in the winter is 4+ months. This seems long. The average home price is $70k or so. I'm interested in multifamily, and there are duplexes on the market for 40k-70k (that I think need a lot of work). 

I used (https://www.neighborhoodscout.com/mi/alpena/rates/...) to look at appreciation, and in the last 5 years, it is 2.48% total ( .49% annualized). So accounting for inflation, it is actually a negative appreciation rate. This compares to 25% growth at markets I've looked at in the Metro Detroit area.  There is also a 10% vacant home rate, which seems rather high. This makes sense to me, as the population seems to be on a long, slow decline (currently about 10k).

With the cash flow it looks like I would get, and little or negative appreciation, it looks like a market to skip. Have I missed anything?

Thanks for the help!

BP has a deal for Pay Near Me on the perks page: https://www.biggerpockets.com/perks

I use rentalutions.com to collect rent. It pulls money from the tenant's bank account every month, and deposits it in mine. However, this assumes a tenant who has a bank account, and has money in it come rent time.  A service I've heard as an advertiser on the podcast that I plan to use in the future is Pay Near Me (http://paynearme.com/en/businesses/).  The tenant goes to a local 7-11 or Family Dollar, and gives them the cash. Pay Near me then deposits it in your bank account. They say payments are guaranteed, with no risk of fraud of chargeback.

I haven't used the service, but seems ideal.

I think this is primarily a zoning issue. Is the property zoned to allow this, or can you get it allowed? Which means you'll have to get the answer for it locally, with the zoning department.

Congratulations, that is awesome! I've started analyzing deals, planning to go with the BRRR strategy, and I've learned how important that ARV is!