All Forum Posts by: Michael Kalis

I really like the discussion from everyone.  I was in a similar situation about 10 years ago and I actually rented the home I lived in (you have rent for $300/mo... that is awesome!  Mine was the same).  I then purchased a home and rented it out.  The rental wasn't where I wanted to live, but it paid for the rent on the other home... then the market crashed and I lost a lot... but prior to that it worked swimmingly!  

So it can be lovely as long as things keep going up.  Happy investing!

As a native to Metro-Detroit, manager of over 2,000 homes and guy that has bought hundreds of homes I can tell you from experience that fortunes have been made and lost here.  I want you to make it here!  I love my town and I want people to come out winners!  Follow these steps for Detroit LOVE;

1)  Love Your Partner.  Do you get excited when he calls?  Just look at the guy.  What are his strengths and weaknesses?  You will have to be in bed with him for a while.  Make sure you will want to roll over and view the beast at 6am even 5 years from now.  

2)  Love The Neighborhood.    Detroit is a really interesting, funky, gritty town.  Certain areas are supper cool.  It's tough.  It is the underdog.  Some are incredible homes of old money auto execs that can be purchased for a steal... or intern literally broken into and all of your stuff stolen.  Fall in love with the areas you buy in, or they will steal your heart (and wallet).   

3)  Love The Deal.  You are buying in an exponentially riskier area, you need exponentially more upside (and less downside)!  With all love for the city, we have the worst schools in the state, highest crime rates, highest property taxes (3.5% of property per year), highest income taxes.  These things are against you.  The deal has to be for you.  You need to be able to buy and sell well below replacement value and make money.  Make sure that you would want to spoon that sexy deal for years and lovingly pet down your slim cost structure.  

If you love your PARTNER, NEIGHBORHOOD and DEAL then I think you have a lasting thing.  Remember that you need to put in more then you take out, fill up your partner's love tank and I hope that you leave Detroit many years from now as a guy that made a fortune at a time that others merely blushed and dated a better looking suburb.  

It's not me, it's you!    

It's the famous blame game.  Is it the broker or the owner?  

In this day of technology, it is unlikely that the best use of a broker's time is to go cold call clients.  Instead it is having tight systems and processes to produce a predictable outcome just doing the things they are supposed to.  Easy to say.  Hard to do.  

Questions for your Property Manager.

1)  Are the pictures professional - Take a look... if they are not shot with a 35 mm, edited and virtually staged... they didn't put a lot of effort in.  This is the number 1 driver of leads.  Period! 

2)  Copy - Does that first sentence have a compelling unique selling position?  Does the copy draw emotional involvement?  Is there a call to action in the last sentence that creates urgency?  If the copy is 2 sentences, all caps or speaking to why a tenant should NOT rent there... it's no good.  (like... no dogs, no cats, must have credit app, must have great job, must be handsome etc etc)

3)  Process to Answer Calls - What percent of calls are picked up in 60 seconds or less (needs to be 90% of the time or better... we are at 93% in 30 seconds).   Shop your listings.  Call 3 or 4 times in one day and see  how fast your call is picked up.  Did you leave a message?  Ehhh ohhhh!  If they had to leave a message they just rented your competitors home.  We get TONS of tenants just because the home they liked better didn't call them back and they have to move fast.     

4)  How many times are potential tenants called back to set up a showing?  We call 5 times at staggered times through out the day if they don't pick up the first time, then drop it.  We found that after 5 it's a pretty low conversion.  In addition, we text each time to.  We can give you recordings of the calls and copy of the text message, can your broker?  

5)  Who is doing the showings?  We believe great people sell more.  Do you have a closer that is speaking with the tenants?   How many did they rent last month?  If it's below 10 homes rented last month run.  They are want to be sales people.  Our top person did 30 last month.  Don't you want her?  

6)  Is there a simple electronic process for the tenant to apply?  The next step is clear after they express interest in the home.  If they are trying to get manual signatures and paper checks then tenants will be turned off just by a bad process.   

If your property manager is CRUSHING the things listed above, then they have the right to look at a pricing strategy.  But if your manager is falling short on even one of the issues above, it is them not you.

However, if your manager is doing everything above (I mean really doing it) then the pricing strategy may need to be considered.  Take a little less now, get er rented and increase rates later.     

So you want title to a car?  Yep... you can do that.  

I actually really respect the creativity in this thread.  Not only have I attempted this type of thing, I've worked to include other "interesting" parts of a lease that solve challenges and get people what they want.  In this case, a poor credit tenant a home.    

~ Title to a Car - Yep, I did that.  We had a tenant with pretty bad credit but they had a paid off classic car (I'm from the motor city, this is normal :) ).  We actually took title as the security deposit and agreed to return title when they returned the home.  We got the home back in great shape, we returned title.  Would that hold up in court?  Not sure.  Would it hold up in the real world?  It did. 

The real question is what other interesting tactics could you employee to be more creative then the competition and get an edge?  That is one and only applies in certain situations.  

Thanks for the post!  

I love the creative deal, what fun!  

The more seller financing is involved, the less your risk of getting into something harry.  At least the prior owner has a good reason to help you out.  Sounds like you have a great deal, here are a couple possible thoughts;

1)  Consider 100% seller financing but bump the price the owner gets.  I might suggest a a land contract.  

2)  Consider a 5 or 10 year balloon.  Yes... 2 years may sounds good.  But it may actually take longer, banks don't actually fund things quickly.

3)  Instead of a second mortage, you may be better able to simply get an advance from a line of credit or credit card for a small downpayment to make the seller happy

Sounds like a fun deal.  I hope it works for you!

Jonathan- I'm interested in this one... shoot address to [email protected].  

Neat little flip!  

I can do $85K all cash.  Shoot me a note at [email protected].  

Wilmar - I would love to help you find great homes.  Are there certain price points you want to stay around.  We have some properties in the suburbs that still give decent returns.  Happy to help you find some good opportunities.  

There is one question you need to ask, what are you most passionate about?  If you love restaurants, then do that.  If you love real estate then do that.  If you are unsure, then neither is right and you need to keep searching for the thing that makes your soul ignite with passion.  

I've been in real estate for 10 years.  I have made and lost millions a couple times over during that period.  But I LOVE real estate, I love deals, I love people... I just love the entire thing.  When poo hits the fan, you need to step back and know that even if you don't make any money doing what ever you do, that you love it.  If you got paid nothing would you stay in restaurants?  If you got paid nothing would you still do real estate?  

I love that you are searching for the answer, that is the first step!  I wish you success and a soul that is fulfilled with purpose and drive.  

Quick suggestion on the order of operations;

1)  Put in an offer on a home contingent on an inspection

2)  Do an "inspection" (not a contractor, an inspector) and they will give you all the items that need to be done.  

3)  Then ask a contractor to bid the projects for a "Rough number" (after you have done a ton of them, you will start to get it and not need to ask). 

4)  After the deal is hard, then have a contractor give you a more firm quote. 

Personally, we have developed relationships with some great guys that do really good work.  We found that you really don't want to squeeze everything out of them.  You want to pay a fair price that works for everyone.  They are excited when you call, you get quality and things done on time.  

Her is to your biggerpockets! 

Regards,

Mike