All Forum Posts by: Michael Smythe

@John Kim @Travis Biziorek is 100% correct.

S8 really isn't difficult, but it's not the answer to everything that the self-proclaimed "gurus" make it out to be.

With S8 tenants, you're just trading one set of challenges versus direct paying tenants.

When we advertise a rental, we take the best tenant we can find, immaterial of their source of rental funds.

You want to be careful investing in the City of Detroit because there are a lot of "crooks" trying to sell you Class D properties dressed up to look like Class C or B.

Connect with us or Travis for more info!

Most standard insurance policies have $1M of coverage for liability - which is fine for a single house.

Just make sure you understand the policy coverage LIMITATIONS: floods, mold, etc. 

Then you may want to investigate the cost of special riders to cover what worries you.

@Jennifer Goddard too many reasons to cover, but here are some thoughts:

1) A PMC that works out fine for one investor, may not work out for you.

2) Chasing the cheapest rarely results in met expectations

3) While the majority of PMCs offer the same services, investors make the deadly mistake of assuming they all EXECUTE those services the same way:(

PM us for a call if you'd like more details.

@Ashley Ernst So, how many months of rent will the seller discount on the price to make you comfortable moving forward with the purchase?

Have to have processes to succeed!

You can either file a W-8BEN or get an ITIN and setup an LLC with its own EIN.

@Josh Terranova screen S8 tenants like any other tenant, but ALSO do a surprise visit to their current home as how it looks is how yours will look after they move in.

@Anthony Derrer how much profit are you offering someone to do this?

@Michelle Tanguay McIntosh so, asking "where to start" is the best question you can ask after what you've read so far?

Why haven't you read some of the free articles and books available?

First figure out the property Class you want to invest in, THEN figure out the corresponding area 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.