All Forum Posts by: Mark Krier

Yea, well said @Sean Durham. Be sure to let us know how it goes. Let me know if you want a 2nd opinion on any of the deals you're looking at. My wife and I are both full-time Grand Rapids real estate junkies (Realtors and investors).  Post publicly if you're comfortable doing so or just send me an email at the address in my signature below. Best of luck!

I would recommend you move forward and take action with a very small flip, such as a cheap house that just needs some paint and carpet. It's very possible/likely you won't make money with a deal like that, but it's better to break even or lose a few thousand on a deal (and learn a ton!) than to sit on the sidelines for a longer time than you want.  I think your number one goal for your first flip would be to make it a deal which is extremely unlikely to get you into lots of trouble. That means find a house where there aren't going to be any hidden issues with very expensive things (i.e. foundation, roof, mechanicals), and get a good inspector to make sure they agree with your assessment before buying. That being said, with houses where all the expensive things are solid and it just needs paint and carpet, there isn't likely to be much (or any) meat on the bone in terms of a big profit. But you never know, you might find a great deal, and even if you broke even you would learn alot and be that much more confident on deal #2 to extend yourself a little further.

You can call and talk to property managers, or you can do your own research on rental comps being marketed on places like Craigslist and hotpads. I need the info for specific properties frequently enough that I just decided to start paying for a subscription service (I use rentometer.com) to estimate rental comps for me on a property by property basis. Seems pretty accurate so far. Rentometer has reports for averages by neighborhood too... If there were a particular neighborhood or two you wanted the reports for let me know and I can send it to you.  

I'm going to put it on my calendar, I was sad to miss the last one. Thanks for sharing.

JUST MY OPINION...

It doesn't have as many of the early 20th century neighborhoods which the east side and near downtown areas have. That can be good and bad. 

It's good, in that it lacks the severely dilapidated neighborhoods with 100 year old houses falling down that nobody wants to touch yet. The near-downtown areas have their share of these neighborhoods which are currently eye sores yet "up and coming". 

It's bad, in that it lacks the historic and rich character that so many early century east side and near-downtown neighborhoods have, with beautiful 100 year old houses full of character that have been well-cared for maintained. Not to say the Walker and Deltaplex areas don't have any of the nicer older homes with great character, there are some pockets, just not as many. 

You'll find more pockets of mid-century neighborhoods in these Walker and Deltaplex areas.  Some of the mid-century pockets are great streets with huge trees and very cool mid-century moderns. Many, however, in my opinion, are full of boring 1960's-1980's ranches and split-levels.

All in all, I'd say it's a safe area for investment in the long-term. Probably won't cash in on the highest highs, also won't get hit by the lowest lows.  

Hi Sam,

Grand Rapids is an excellent place to go to get started in house hacking and real estate investing. I'm an investor and Realtor here. When are you planning on getting here? Ill see you around the forums. Message me anytime. 

Mark Krier

I get questions like this from my friends all the time, and I always explain it like this: 

The math is going to tell you to buy the rental properties instead of paying off the debt. However, there is a certain piece of mind when it comes to being debt free, and sometimes the psychological benefits of being debt free can far outweigh the mathematical benefits of buying assets. It's just a personal decision as to what you're comfortable with. 

Personally, I'm highly analytical and minimally emotional when it comes to money. I love debt/leverage, so no matter how much money I accumulate in my lifetime, I will probably always use other people's money (i.e. the bank's money) instead of my own to buy properties. So for someone like me, the answer is simple, "buy more properties instead of paying off the mortgage". 

However, I know other people who are much different than I am, the type of person who is very uncomfortable with debt in any form, and who might lose sleep asking themselves "what happens if..." types of questions. To those friends, I always tell them to pay off the mortgages. It's just not worth it to take advantage of the mathematical benefits at the expense of the emotional/psychological cost. 

FYI, in case you're wondering, here's a quick explanation as to my thinking when I say that the optimal choice from a mathematical standpoint is to NOT pay down the mortgage: 

To analyze this, you have to ask yourself a couple questions: 

First: What is your short-term and long-term downside to buying rental properties right now in Grand Rapids? To answer that, you have to ask if you can you find rental properties in Grand Rapids which are currently cash flow positive, and which even in market-downturn stress testing (using 2007-2010 data as a stress test) are highly likely to maintain relatively neutral cash flows? The answer is yes. That means there is a very little short-term and long-term risk for you to ever have to come out of pocket with any of your own money. FYI, that includes never having to come out of pocket for things like property management, cap-ex/maintenance, etc.. All that could be paid for and escrowed from the rental income. 

Next: What's the upside, and what type of returns can you achieve in the short-term and long-term? That question is one which would take a whole new thread to discuss, but plugging in simple and conservative numbers into the BP rental calculator will show you that 6-15% is VERY likely. You should play with rental calculator if you haven't already.

Lastly: Assuming the mortgage on your current primary home has an interest rate in the ballpark of 4.5%, does it make more sense to use $210k to pay off your loan charging 4.5% of interest (tax-deductible interest I might add) or to invest the $210k in rental properties that are very likely to earn you 6-15% interest with very little downside risk? 

Personally, I'll borrow $210k at 4.5% to earn 6-15% all day! (and I do!) But like I said earlier, it's a matter of personal preference on what makes you comfortable. At the end of the day, piece of mind is much more valuable than investment returns. 

Best of luck to you! 

Grand Rapids has the lowest vacancy rates in the country so you're looking in the right place. Here are my recommendations depending on what you're looking for:

• If you're looking in the <$100k price range I'd recommend looking in the SE areas Anywhere east of 131 to Burton (probably between Division and Eastern), and north of 28th st (probably between Franklin and Burton).
• If you're looking around the $100k range, I'd recommend Creston or West Side.  
• If you're looking in $150K+ and up range I'd recommend Eastown, Midtown, Fulton Heights area.

I'm not a big west side guy, so personally I like Creston, Midtown, and even Highland Park. Basically, as close as I can get to downtown on the near north and near east sides. Good luck!

Hey all, I'm looking for a recommendation on general contractors in Grand Rapids and/or Grand Haven. Any investor-friendly GC would be a great recommendation and would be greatly appreciated, but the ultimate would be to find a younger/newer general contractor that might be interested coming on board as a partner. Either as a partner them to help me grow a real estate investment company, or as a partner for me to help him build his construction company. I know it's a long shot to find a good one, and if you have a great one you may not want to share, but I have to ask regardless. Thanks! 

Can someone tell me what kind of risk I'm running if I sell a home on LC that I have a mortgage on? Is my risk simply a financial risk in the sense that the the bank could exercise the "due on sale" clause on me if they wanted to and therefore force me to come up with the balance of the mortgage? I'm not too worried about that risk since I know I could come up with the cash if I needed to... I'd just rather not come up with the cash if I don't have to.

Or is my risk more legal, in the sense where I could get in some sort of legal trouble, or have issues with title?

I'm asking because I do flips and rentals but have never sold on LC before, and I'm thinking it might be beneficial in situations when I'm "in between" on what I'd like to do (flip it or rent it). For example, with this house, I'd love to hold on to it because it will cash flow well (80k house with $1,300 in rent) and also because it has more appreciation potential in my opinion than the average 80k home I buy. 

However, I'd rather not do my typical rental strategy on this one because the quality of the home isn't quite up to the standard that I like to keep (it's not bad, it's clean and safe) and it's too large a home for me to economically renovate it up to my normal standards. It's also not really worth flipping because the comps in the neighborhood max out at $90k and therefore limit me from doing much more than breaking even or making $10k. So rather than flipping it for $90k (5-10k profit), and rather than renting out a home that is not up to the standards of the home I like to manage, I'd rather sell it on LC for $90k with 10% down (quick $9k cash out) and then cashflow on it for 5 years while I don't have to manage the property (or pay taxes, insurance, maintenance).  

Any thoughts on if I'm able to do this, what risk I have if any? Or general thoughts on my thinking/logic?