All Forum Posts by: Michael Smythe

@Kiran Reddy no offense, but you're making a typical OOS investor mistake about the Detroit market!

We really have TWO SEPARATE markets here:

Metro Detroit - basically the suburbs.

City of Detroit - self-explanatory.

They are very different markets!

Metro Detroit - this is really what most investors conceptualize when picking a market. We coined the term, "Ring Cities", which is all the cities that touch the City of Detroit. These are all Class B areas, which often cashflow from day one of acquisition, have acceptable crime, etc.

City of Detroit - the "wild, wild, west"! Lots of opportunity, but correspondingly lots of risk.
Majority of the city is Class C or D, but Class A and B areas growing!
Many OOS investors try to invest by zip code, but zip codes cover too large of areas in the city. Experienced Detroit investors all know an investment should be done with a block-by-block strategy. Unfortunately, this is too granular for OOS investors. 
So, we think we found a happy medium via guiding investors to use the 173 city Neighborhoods to determine where to invest. We've ranked them all by Class A, B, C or D. 

Let us know what other questions you have!

@Edward Messer voted for @Rick Albert's response as it covers everything, but the property location, condition and the situation.

We've charged more when these are less than desirable.

@Marco Spaziani Brunella can be a nightmare getting loans on rental properties in your situation.

Easiest, besides seller-financing, would be to get a mortgage on a primary residence to start building credit. For primary home lending, several banks have Foreign National programs that accept a foreign credit report. You may have to go FHA or put 20% down though.

Obviously, get 2-4 USA credit cards and use them at least once every 3 months to start building credit here.

You can also try to piggyback on someone else's credit history, by having them add you to their credit account.

You need to network in your target market to find reputable wholesalers and investor focused agents.

@Kalp Mehta pretty much anyone buying a $500k+ SFR property with 20-25% down rarely cashflows from day one.

They are usually betting on appreciation for their positive ROI.

Eventually, rents increase to generate positive cashflow that adds to their ROI.

@Andy Oshodi

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

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

Our OPINION for the Metro Detroit market (always verify each area for yourself!):

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+, 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, 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, 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 zero or 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, 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.

@Logan M. wow, wouldn't have thought sellers would to that.

What are the average terms you've been able to negotiate - if you are okay sharing?

@Adedayo Adetunji our team will reach out to schedule something:)

@Adedayo Adetunji Vickie & Berkley parted ways and started their own companies. 

Bink doesn't appear to have a website yet, what owner portal system are they using?

We are very familiar with the Detroit market, managing almost 700 doors, with 92 S8.

What can we help you with?

@Christine Edwards you can typically get your bid(s) from a GC for loan approval and then once you close, be your own GC and save money.