All Forum Posts by: Michinori Kaneko

Hi bumping so hopefully someone can help :)

that's great! Please keep me posted on how Detroit investment goes if you do go with it.  I've been curious about the market as well, looks like most folks are investing in suburbs outside of detroit though.

Hi All,  

I just read the 7 years to 7 figure wealth that Brandon Turner wrote and had some question.  In his examples, he talked about buying a $100K house for $80K.  My question is, how do you determine how much the home is "worth"? Maybe once you become seasoned, you can gauge it pretty well, but how does a new investor estimate what the property is worth, or do you just go by what the ask price of the property is? 

Secondly, he mentions that he does forced appreciation on those deals in year 1 to boost the value of the house by 10%.  In his example, it doesn't look like he spent any money, but what are good examples of forced appreciation that can be done cheap that can increase the value of the home a lot? What should I be looking for when buying a home?

Thirdly, I know his book was written few years ago, but his example has $2400 gross rent per month on a $100K property (which he bought for $80K).  That's 3% rent of purchase price, and $800 cashflow per month.  Is that kind of property still available in the market these days? If so where are these properties located? Maybe i'm looking at wrong places....?

Thank you for your help in advance.

Congratulations on your success! very inspiring!

@Maria Luna Did you decide to look into Detroit because of the list I posted on your other post? Keep in mind those numbers may be slightly updated (Detroit's been growing back like crazy) and those number are average so you may or may not find the properties that has those type of price to rent ratios.  Having said that, I'm curious about Detroit market myself.  Keep me posted on how you do :)

Just to clarify though, you can always overcome the negative point i made about from  investment standpoint by renting out your extra bedrooms, if you don't mind living with someone else! I'm not sure if that's something that's common in your neighborhood, here in NY it's very common so it was very easy to find a tenant.

Hi Rob,

Depends on what your long-term goal is, but buying what you will grow into is what I did.  When my wife and I were not married yet, we looked for a 2BR Coop in neighborhood that had a good public school (about 5 years ago).  Until about 1.5 years ago when we had our first child, we were renting our 2nd bedroom.  You always have that option (or even Airbnb, we did short term rentals for few few months until our tenant who stayed with us for 3 years moved in). One thing to keep in mind is your income will grow over time, but your mortgage won't.  when you do buy your larger home in the future, interest rate could be much higher (but maybe price maybe lower, who knows). It gets harder to save money once you have kids (and maybe you won't have the luxury of dual income at that point.   My wife doesn't work now, and we lost our tenant too, so it was a double wammy for me), so it's better if you just buy it now. I personally think that's a better approach.

However, from investment standpoint, perhaps not as great, since you COULD invest that extra money and hope to get extra returns from the capital you saved.  But you don't know if the appreciation on your below budget property + whatever return you get from you investment property will beat how much the bigger property would have appreciated.

Hope that helps!

$0 repair but after repair value is $20K higher. does that mean you think you bought the property for $20K discount from what it's actually worth? If so, based on the report as well, but it would be much more smarter to just flip the property and sell it for $57K (you just made $20K for FREE!)  Also are you managing the property yourself? If not you should consider cost of property management + tenants placement fee. 

probably should look at % rather than $.  a $1000 profit on a $300k property is not as good as $500 profit on a $120K property.  It's all relative to your purchase price and cash outlay.

Interesting topic! I ended up choosing Fort Wayne, Indiana.  I started from this list and went through each city that had higher rent to price ratio (or rather lower price to rent ratio). I had personal ties to Fort Wayne, and while I was visiting there i really liked the neighborhood so I stuck with it!