All Forum Posts by: Jeff Rabinowitz

SE Michigan is well represented here on BP.  We are also fortunate that there are several local REIAs.  Don't hesitate to reach out.  There is a lot of experience available and I have found many have been happy to help with projects and share their advice if just asked.

@Roy N.  Thanks for the technical assistance.

Mr. Strather tied up 6,000 parcels and the County had expenses associated with the auction for properties that didn't sell.  Why would he be entitled to his deposit back? Looks like Mr. Strather got a lot of free publicity.  Do you think that was the plan?

http://www.usatoday.com/story/news/nation/2014/11/05/detroit-developer-cancels-blight-buy/18554153/

I bought one of my early units with a tenant in place.  It was profitable from day 1.  In fact, I had a rent credit at the closing for the current month.  (Pay attention to when the rent is due and when you close.  If rent is due on the first of the month you should get a credit for 29 days if the closing is on the second of the month.  If you close on the 28th you will only get a rent credit for 2 days.)  

The tenant had been in the home for a couple years and the previous landlord provided a clear rental history.  There was a good lease and a good rental rate.  I did not have to do any repairs at all and the home already had a rental cert. from the City.  If I recall correctly, the tenant kept paying on the current lease and when that expired she stayed on as a month to month tenant.

I once rented one of my homes to someone who wanted to run a day care in it.  They wanted the home because it was on a corner (lots of room to pick up and drop off) and because it had a nice fenced yard.  I think they only had ~7 kids at the daycare.  The tenant didn't even live there--they lived ~1/2 mile away.  Anyway, they were great tenants.  The only food they ever served was light snacks.  The home was always clean.  In retrospect, I didn't check with my insurance agent and should have.  The daycare wasn't viable with only 7 kids so they packed up after the first year but I was sorry to see them go.

It sounds like you have neighbors complaining because they think a daycare might be a problem and they don't want to live near one.  I wouldn't be surprised if they may not want to live near a rental property because they think that may be a problem.  Guess what?  They don't get a vote.  It is your property.

How are you getting two different values for the home depending on whether you are using it as a rental or are selling it? The ARV should be determined from the recent sales comps. Unless you are forcing value in your flip rehab plan by, for example, adding a bedroom, adding a garage or refinishing the basement, it seems unlikely that the house with the "flip" rehab will be worth $20K more than the house with the "rental" rehab. Of course, there is always variation in estimating ARV but intended use is not usually a factor.

What is the deal worth to you?  What are you willing to work for?  Some may want to clear $5K to make the deal worth doing, others will demand $20K or $50K.  Determine that figure for yourself.  Then see if the loan rate and terms you can find will get you to that figure.  If your number is $10k and you find a deal that will return $15K to you what difference does it make what the interest rate is?  If you walk away from the deal you walked away from $15K.

The numbers in many unrealistic pro formas (those that aren't bordering on fraudulent) are technically accurate at the time of the listing;  however, since vacancies will occur at every property and maintenance will be needed for every property the pro forma numbers may not be accurate for very long.  What happens when you have to start an eviction proceeding for non payment of rent?  Pro formas should be read as if they have the common warnings:  "results are not typical" or "your results may vary".

@Michael S., they are not only misrepresenting expenses--they are probably ignoring some completely and they are some of the biggest expenses.  These are vacancies and maintenance.  Unfortunately, there are several wholesalers in the Detroit area (probably in other areas also) who do this routinely.  The sellers often state that they can't properly quantify those expenses so they leave them out. That is BS.  I don't know if it is proper to put blog links here but I did post a blog based on a Detroit listing about 6 months ago.  I titled it "Magic House for Sale".  Here is the link: http://www.biggerpockets.com/blogs/4527/blog_posts/37258-magic-house-for-sale .  I'd be interested in your thoughts.

I just did my first deal in my (actually my wife's) Solo 401K today.  Look for @Dmitriy Fomichenko .  He has been very helpful.