All Forum Posts by: Drew Sygit

China, Japan & Italy have this problem right now.

China is trying to ignore/hide it because their short-sighted 1 child/family policy caused it. They've now ended that policy and are now offering incentives to have more children.

In Italy & Japan you can buy houses cheap in abandoned villages. Japan has the fastest aging population in the world, with one of the lowest birthrates. They're the world's "canary in a coal mine".

Climate change will be racing with population declines to determine which will have a bigger effect sooner!

Low water supplies & fires out west, increasing hurricanes in the southeast and shorter winters in the north may drive population growth back to the Midwest.

@Rohmah Ismael Recommend you first figure out the property Class you want to invest in!

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market that we’ve learned in our 25 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.
Section 8: Rent is too high for S8 program.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years.
Section 8: Rent is usually too high for S8 program.

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.
Section 8: Program designed for this Class of properties!

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.
Section 8: Most of the S8 online "gurus" promote using S8 tenants to stabilize rental income. Problem is EVERY INVESTOR is trying to do this.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we’ve analyzed and have on a map on our website.

DM us if you’d like to discuss this logical approach in greater detail!

@Gp G. Not sure why owners invest in rentals, yet do very little research on market conditions!

They take the path of least resistance and always seem to blame their PMC for everything that goes wrong.

Recommend you take some time to understand what the above graph represents and why your PMC is probably not the problem.

Regarding your two PMC idea - how many water meters are there? Who will take care of common area issues like lawn maintenance, roof leaks, etc.?

@Bennie Smith there's two parts to that:

1) We take on properties all the time and do a TakeOver Evaluation Video that we share with the owner.
- Many of them have no clue of the actual condition of their properties and a decent percentage want to then sell.

2) We have owners we terminate, that don't want to spend a penny maintaining their properties. Or they think we are somehow to blame and want to terminate us.
- Recent example: we took a vacant property over and did our TakeOver video, then gave the owner a bid for around $10k to get it RentReady. Owner only gave us $2k to work with, so we took care of Health & Safety issues (to avoid lawsuits) and did our best to spread out the rest to make the property look "decent". O course, can't find a tenant and have to beg owner to lower rent due to condition. Owner goes behind our back and contacts a competitor - but they call us as we're on good terms with them. They tell us the owner bad-mouthed us to them that we're taking too long to find a tenant. We give them access so they can take a look. They copy us on their response to the owner, that the property needs a LOT of work done before they will manage it.

A decent amount of owners never accept responsibility for their mistakes:(

@Bennie Smith we've got a map at our website that we spent quite a bit on, to help investors understand what Detroit Neighborhoods they may want to invest in.

DM us to discuss more as Moderators may delete this thread if we cover too much here.

How long will Redfin last?

@Alex Saidenstat what are the odds you'll get a 12 month performing tenant in a $65k house?

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we’ve analyzed.

DM us if you’d like to discuss this logical approach in greater detail!

@James E Fraley Jr what tasks are you looking to outsource?

How high can housing prices in the City of Detroit go?

In case you missed it, Detroit' Mayor Duggan announced that the value of houses in the city increased 23% in 2024.

In the last 7 years, Detroit housing is up over 300%!

That's an average of 17% annually over that time.

The City of Detroit has not only outperformed every city in the Metro Detroit area, its outperformed every city in the USA from 2014-2024:

Let that sink in for a minute ... you'll probably need more time than that to process this!

Not only did Detroit beat every city in other popular Midwest states like Indiana, Missouri, Ohio, Wisconsin, etc...

Detroit beat every city in the super popular states of Arizona, California, Florida, and Texas - Detroit beat them ALL!

Now let's be real, yes housing values are up overall in the city, but they do vary by Neighborhood. So, it's still NOT a good idea to try to invest by zip codes - which are too big in our opinion/experience. Please stop asking us for "the best" zip codes to invest in.

Detroit has around 183 Residential Neighborhoods - wouldn't it be nice if "some proprety mangagement company" Classified them all as A, B, C, or D on an interactive map that real estate investors could use to make better decisions?

@Chani Walker can guarantee you can find someone cheaper, but then which services do you want to give up and which do you want to accept less service on?