All Forum Posts by: Marshall Downs

Experienced investor seeking a new construction loan at 70% LTV for a Michigan project. Thanks

@Elias Gilchrist those numbers should be obtainable in some manner. The HOA should provide you that fee, but be aware it may change and 99% of the time it increases. Utility companies in my area provide the average costs per property and likely do the same where you're investing. Just be certain you have all the costs unique to that particular location.

Have you considered a 2-4 unit? That's the ultimate house hack and could get you in with no real payment on a monthly basis. Here's a rudimentary budget. Apologies if too basic, but in case you need the info...

Income Potential: XXX

Less

Vacancy: 5-10% based on local market

Taxes: XXX

Insurance: XXX

Common Utilities: XXX

Repairs/Maintenance: XXX

Capital Expense Reserves: XXX

Miscellaneous Fees (rental registration, etc.): XXX

Income minus all the info above equals Net Operating Income (NOI)

If the NOI is greater than the debt required plus 20% it should be financeable. This is the Debt Service Coverage Ratio (DSCR).

The beauty of a 2-4 unit for house hacking is it will be underwritten as a single family and offers lower down payment requirements and interest rate. 

Conversely, you could kick in a bit more of a down payment and seek a portfolio loan from a local lender who may provide more flexibility.

Hi guys, I'm in SW Michigan just following this post. 

I've invested in Benton Harbor for many years so similar class and management issues. Looking at buying in Niles currently so will likely drop into a South Bend meeting.

Good stuff! 

Most cities want to be developed, but are not necessarily redevelopment ready. There is a big difference between a municipality commissioning a study and passing it along to developers and actually having the staff that's knowledgeable enough, available enough and has access to the proper people and tools to spur development. We will have a far easier time getting projects done in the community with the latter.

That being said, a developer can work almost anywhere depending on how badly they want the project.  I would set up a meeting with someone in the community development department and ask about the parcel. Inquire about the zoning and specifically the residential density. Do they own it or have a relationship with the owner? Any info out on the environmental condition? Are their tools for development available such as Brownfield or TIF? Is it by chance in an Opportunity Zone? What is the project approval process? How long does that usually take? Etc.

I wouldn't take a project to a board until I've done the following:

- Run thorough numbers (conservative, average, aggressive)

- Gotten some level of comfort on the environmentals 

- Obtained control either through purchase agreement or option

- Obtained renderings and floorplans

- Have at least budgetary construction figures

- Financing preliminarily arranged

- Secured counsel

- Determined target market 

- Ensured any gaps in my development team are rounded out by a    partner, vendor or consultant

At the end of the day most cities are looking for us to lead this process, but if they are truly pro-development they will have the ability to help developers remove obstacles to projects. 

Will do Brendan.

Thanks!

$110,000 for four rental properties in Benton Harbor, MI.

SFR 2\1 - $20k - $575/mo income

SFR 3\1.5 - $25k - $650/mo income

SFR 3\1 - $25k - $650/mo income

Duplex - $40k - $1,100/mo income

Great rentals, we've simply been trading up to MF.

Thanks!

Marshall Downs

Detroit is blowing up, but like @Joe Villeneuve said not all areas are the same. Find good people (realtor, property manager, contractor, etc) to hook up with and it will make the road much smoother. 

Investors have won and lost in Detroit, just like everywhere.

At that quantity you could go factory direct. We're a Whirlpool town so you could look for a commercial rate through them. I've had hit and miss pricing that way. Sometimes the big boxes are still lower. But, remember everything is negotiable 

At that quantity you could go factory direct. We're a Whirlpool town so you could look for a commercial rate through them. I've had hit and miss pricing that way. Sometimes the big boxes are still lower. But, remember everything is negotiable