All Forum Posts by: Drew Sygit

We've found a deal for $130k on a 6-unit in Detroit.

Property is fully occupied and performing. New roof, new windows.

Looking for 75% LTV financing to buy & hold. 3-5 year term, 10-20 amortization, with balloon at the end.

@Shayne Hastings: I also run a property management company in the Metro Detroit area, Royal Rose Properties. Most out-of-area investors view the entire Metro Detroit area as one market when they think about "Detroit". There's actually a major difference between the Detroit suburbs and the actual City of Detroit.

Suburbs: mostly like any other rental market you can think of, but we have some of the best returns in the country. Just evaluated a property for a client yesterday - price $45k, will rent for $850/month. Where in the USA can you get those type of numbers? 

Detroit: the Downtown, Midtown, Corktown and a select couple of other areas are similar to other urban cities around the country - but they make up less than 25% of Detroit. The other 75% varies between up & coming and "wasteland". Detroit's government has admitted there are 40,000 houses too many, but this is a conservative number. The city was built for almost 2 million people and now has less than 900k. The challenge/opportunity for investors is finding houses in good neighborhoods that are 1-3 years away from revival. 

We encourage intelligent investing in Detroit:)

@Jeff Rabinowitz: Thanks for the plug Jeff.

@Evan Dixon: who cares if you travel a lot? You still need a place to sleep! The big reason for house-hacking is to qualify for an owner-occupied mortgage -- lower down payment and lower interest rates.

1. Only you can answer where to buy. Appreciation is always a "risk" to depend on.

2. Attend local REIA meetings and get to know the wholesalers. Be sure to get your mortgage lined up first, because if they give you a deal and you waste their time because you didn't get ready to close, you'll get a bad reputation and no one will want to work with you.

The Ring Cities of Detroit Metro (any city that touches Detroit), are all "safer" investments than Detroit itself and pretty much offer the best cash-on-cash returns. They each have their own uniques challenges you should get to know, but great areas to buy rentals.

@Evan Dixon: Pretty much agree with all the advice given here:

1) Find out if you can qualify for a mortgage and how much. 

2) Consider FHA 203(k) as allows you to finance up to $35k of repairs in to the purchase mortgage. We can refer you to one of the best 203(k) lenders in the country, right here in Michigan.

3) Figure out if you're up for House Hacking - buying 2-4 unit property, living in one to qualify for the mortgage, while you rent the others out. Great way to get your feet wet! HIGHLY recommend NOT telling the tenants you are the owner though! NOTHING GOOD WILL COME OF IT, ONLY PROBLEMS! As tenants may get mail addressed to you as the "owner" you may need to tell them you're only the manager for your "partner". 

4) You can get a lot of advice for free, but if you feel that is not enough - pay a local mentor to assist you one-on-one.

Thanks or the mention Jeff:)

@Jim Bowser - Jim as Jeff stated above, it's best to hit as many real estate groups as possible. Figure out which ones you like and go to them as your schedule allows. Just DON'T BE A WALLFLOWER! It won't get you anywhere fast and icebreaking with fellow investors is good practice for dealing with sellers and buyers.

Hope to see you at REIAofOakland.com:)

Thanks for the plug Jeff:) 

@Inderpal Singh, let us know how we can assist you in building your empire.

The REIA of Oakland had multi-family subgroup at this time, but if there's enough demand for it we would start one. Brad, please contact me to discuss directly:)

It’s always good to stay organized, but when you’re doing something as complex as moving into a new home, it’s not just good — it should be mandatory.

When you’re moving into a new home, especially a rental, there are a lot of things you need to think about. There’s all of the generalities of moving — where to put your stuff, who gets what room, and so on — but then there’s all of the legalities as well. Applications for tenancy, rental history, proof of income, and so on always take up a vast amount of brain-space. It’s easy, among it all, to lose sight of the end-game: what happens when you finally decide to move out?

Well, you’re going to have to clean up after yourself — and if there’s any damage the landlord finds that wasn’t there when you moved in, you’re going to have to pay for it out of your security deposit. That’s why creating a Inspection Checklist is a critical part of moving in. A forthright landlord will encourage you to take your time with this document; a landlord of a more underhanded nature might just ask you to sign the document while it’s still blank.

How to Create a Inspection Checklist
Your landlord is required Michigan law to give you two copies of the inspection checklist (and a copy of the same document that the previous tenant left behind when they moved out, if you request it.) You have the option of supplementing that with your own evidence. The best bet, if you have the ability, is to go through the place with the landlord and a video camera, and record every square inch of the apartment. If you only have a still camera, that’s second best — just take pictures of everything, with close-ups of any actual damage you see and wide-angle pictures of absolutely everything.

Ensure that the doors and windows open and close, that the faucets work with good water pressure and the sinks drain at a reasonable rate. Naturally, if you find any issues during this process or immediately after you move in, you should inform the landlord immediately! The landlord doesn’t live here, so they don’t know about every aspect of the residence — and Michigan law gives you two weeks to turn in a revised inspection checklist. Save it, write everything down, and give it to the landlord all at once so that he can take care of the maximum number of items with the minimum number of trips.

Take those videos and/or pictures, and shortly after you’ve done the entire walk-through, watch them in slow motion (and/or go through the stills carefully) and write a description of every element of damage you see. If there are things that you noted but can’t see in the video, such as creaky or loose floorboards or off smells, write them down as well. Go room by room, and write everything that you notice in every room.

Once your written description is done, it’s time to save all of this information. Give a copy of everything to the landlord, and keep three copies yourself — one on your hard drive, one on some piece of cloud storage like a Google Drive or in DropBox, and one physical copy like a CD with the relevant information on it in your ‘legal documents’ folder.

How to Use a Inspection Checklist
With any luck (and a good relationship with your landlord), you won’t ever need all that documentation. You’ll move out, the landlord will respect what you’ve done to the place, and that will be that. But should there be a disagreement, you’ll have two times when you’ll be glad you had the assessment done.

(As a side note, before you move out, ask the landlord for their cleaning checklist, so you know what condition to leave the property in so as to avoid having a cleaning fee taken out of your deposit. Don’t be that tenant who is nitpicky about having the place clean when they move in, and then leaves the grime built up behind the fridge when you move out. Many landlords, ourselves included, will give you a copy of the move-out cleaning checklist along with your lease up front so that we know that you have your expectations in hand.)

First, before the situation gets litigious, you can simply show the landlord your assessment and prove to them that no, the lock on the bathroom door never did work (or what have you.) Unless your landlord particularly dislikes you, this is usually enough to get them to back off on your security deposit.

If, on the other hand, they refuse, you might need to take them to small claims court to get your deposit back. If that’s the case, your assessments will probably form the backbone of your case — and you’ll be doubly glad you had them available.

Make the neighbors your friends, and you’ll have taken the single best step you can toward protecting a vacant property.

It’s never a good thing to drop by a vacant rental property and discover a wide open door. Unfortunately, vacant rental properties pose a target of opportunity for would-be thieves, as even simple copper wiring and plumbing has extraordinary street value in today’s economy — and the AC, furnace, and hot water tank are worth quite a bit in scrap metal as well. That’s a huge investment down the drain — and if you have an empty property in Detroit city limits, it’s not a question of if it’ll get stripped, but when.

So how do you keep these vandals and prowlers off of your vacant property?

Ask the Neighbors for Help
Your best resource is the neighbors — if you explain that you have a vacant rental next door, you can often get the neighbors to keep a casual eye on it, particularly in areas that have a Neighborhood Watch organization. Ask them to contact you if they see strangers poking around or hear any suspicious noises. If they’re interested, offer to let them keep any periodicals or newspapers that are delivered to the home in exchange for the service of picking them up each day. The neighbors most motivated to help are the ones who own their homes and pay attention to maintenance — they’re the ones who benefit by keeping property values high.

You can also offer the neighbors a reward: if they save you $1000 in damages, giving them back $25 is a no-brainer. Don’t just tell them your phone number — give them your business card and/or get their permission to text them your number. “Call me regarding suspicious activity at 123 Main St. for a possible reward.” You can also have magnets developed that they can stick to their refrigerator to remind them to keep in touch with you. “Neighborhood Watch and Reward Program” does wonders. Offer to let them park an extra car in your driveway — some neighbors will do this anyway, and if they do, you should thank them.

Maintain Signs of Activity
Keep the lawn mowed, the leaves raked, and the garden weeded (this will help the place rent more quickly, so you should be doing it regardless.) Put lights on timers in the building — preferably in a cycle that looks like real people are moving from kitchen to dining room to bedroom each night. (Don’t think that this will help every time, though, because some of the less scrupulous neighbors will see the pattern and take advantage.) If you can find a radio or TV that will come on when it’s plugged in (as opposed to needing to be turned on after it’s plugged in), putting one or two of those on a timer helps a lot as well. If you have a car that you can keep in the driveway, that will do a lot for you as well.

Visit Often and Irregularly
Don’t visit every Saturday morning — vary your routine so that you’re not dropping by at the same time. But visit at least once a week, or get someone you trust to do it for you. On each visit, look for signs of forced entry, broken windows, and so on — and scan about the inside of the structure, too. In particular, look for window latches, door latches, and other locking mechanisms that may be unlocked; they can cost you thousands if the wrong person discovers them.

Point Lights Outward
Motion-sensor security lights should be standard procedure for any rental, but for a vacant one, there’s a simple extra step you can take: nudge those lights so that they’re clearly visible from a neighbor’s house. That way, a prowler will alert someone even though there’s no one home to alert.

Make Occasional Changes
If your rental is unoccupied for more than a couple of months, change something small but clearly visible about the place. You don’t have to repaint, but do something like hang up a wind chime, put a pink flamingo up, or hang something big and blatant in a window.

More Aggressive Strategies
If your property is in the city of Detroit proper, you’ll need to go the extra mile. Get a double-keyed deadbolt on the door so that the classic ‘break the window and unbolt the door from the outside’ routine doesn’t work. Board up the windows with steel bars (at minimum) so that people can’t break them to get in. In the extreme, you may even consider hiring a security guard to sit in your driveway — or even in the home itself — though it can be hard to make an investment like that cost-effective, even if you get a deal at $20 per night.

Of course, the best deterrent is making sure that the property is occupied — so putting some extra money into advertising and getting someone in there might actually be the best strategy.