All Forum Posts by: Tom A.

Likewise Brian. I'll give you a shout next time I'm out that way.

Welcome to BP, @Brian Woline. This is a great resource.

I live on the other side of the state but I spend a lot of time in Grand Haven. It's a great town.

Phil, did you mean Palmer Woods instead of Palmer Park? Palmer Woods is the mansion area NW of 7 Mile/Woodward, while Palmer Park is mainly apartment buildings, south of 7 Mile. While there are some nice historic apartment buildings in Palmer Park, a number of which are undergoing rehab by a couple of very energized investors, Palmer Woods is IMO the premier neighborhood in Detroit, with numerous 5000 - 7000 sqft homes built during the gilded age with no expense spared.

For those who are close, they have an annual home tour and in-house cocktail party in December featuring one of Detroit's excellent jazz groups. If you love fine old homes this is a very worthwhile event.

Nice slideshow. I think people are amazed at both how nice the nice parts of the city are, and how bad the bad parts are. Makes for an intriguing yet hard-to-understand city.

I just read all the posts. Advice seems to be running 10:1 toward don't buy, with well justified reasoning. Original poster takes the one answer they were predisposed to agree with, buy, and is pretty much running with it. Interesting approach. I'd love a 5-year follow-up post.

In my experience REIAs are where you find smart private money. Meaning that they know what they can earn investing in real estate themselves, so you better bring a financially compelling investment offer. Newbies will get shut down unless they have a killer deal with massive security for the lender. Experienced investors who are known quantities AND pleasant and trustworthy people to do business with will get "expensive" but very feasible prices for money.

If you want 6% - 8% for five years better talk to your Aunt Sally. If you're flipping a house, have a track record, aren't a slimy character, and can pay high teens interest for six months you'll find plenty of lenders at the local REIA who'll bankroll you. If you know what you're doing their "expensive" money will cost you 1/5 to 1/10 of what you pocket.

This has been a great discussion with a number of different yet totally valid viewpoints expressed. How we spend our time is clearly a personal decision that transcends ROI and IRR.

When I started out I wasn't comfortable with hiring contractors to do things I didn't understand (yes, I was educated as an engineer). The potential for poor quality work, overcharges or other unforeseen events lead me to do a lot of things myself (along with the classic justification to buying power tools -- "if I do it myself it pays for the table saw/nail gun/laser level/impact driver" -- signs of a power tool addict.)

While that self-education process has paid dividends when estimating rehab expenses, dealing with contractors and evaluating the quality of their work, it cost me a bunch of time (and therefore money) during my first few rehab projects.

Personally, I get a lot of enjoyment out of manual projects such as framing, tiling, plumbing and even lawn mowing -- my garden tractor has a cup (beer) holder. Financially, I know that many of these activities are more profitably outsourced.

While I may have learned more than @J Scott regarding construction activities by doing some of the initial ones myself, he probably did several more flips than I did while I was figuring out how to lay tiles on the diagonal. If my projects were a little more "perfect", his were a lot more profitable in aggregate.

My advice to those wondering which path to pursue would be to outsource as much as you reasonably can. You may pay more or make more mistakes via bad contractor decisions, but your learning curve will be steeper and more profitable. DIY can be an expensive hobby.

My market area has a number of turnkey rental providers. Over the last few years I talked with a number of long-distance investors who've been taken advantage of by some unscrupulous or simply incompetent turnkey companies.

While some just needed to find a better property manager or a reliable contractor, others have paid a lot of money for a house that was never actually rehabbed, never tenanted, and should never have even been considered as a potential rental house given the awful, abandoned neighborhood in which it sits. Often, even for performing properties, the returns are nowhere near the fluffed-up numbers quoted by the turnkey company (no vacancy/maintenance expenses or reserves).

Recently I came across the webinar linked below which does a good job of getting a potential turnkey investor up to speed on how to make an investment they won't quickly regret. Disclaimer: I don't have any tie to Vena Jones-Cox, the investor/"guru" (she doesn't like that term applied to her) who produced the webinar. I don't sell turnkeys. There's nothing being pitched in the webinar. I just think it's good advice that hopefully will keep someone from getting burned.

Webinar description from Vena Jones-Cox:

"Every time I hear a turnkey rental buyer complain
the their investment hasn't worked out the way they
hoped it would, I think to myself, "It's too bad you
didn't know how to evaluate that property and the
deal BEFORE you got into a mess that's going to
be expensive and stressful to get out of."

So this week, we'll talk about:

• The various turnkey rental "deals"--buying for cash, buying with financing, the sale/leaseback, and being and equity partner, and the pros and cons of each
• How to analyze a pro-forma on a turnkey rental to get to the REAL return, not the stated return, which is rarely realistic
• Speaking of which, what a reasonable return on a quality turnkey rental actually is, and how the neighborhood affects what you should expect to get
• How to do real due diligence on things like property value and condition despite being miles or even states away from the property"

http://www.regoddess.com/pages/passiveinvestment/passiveinvestmentseriesweek2.php

If the house is worth $149K and will only rent for $1000 - $1400 I would not consider it a good rental. I'd sell it and reallocate those funds to buy rentals that cashflow better. Without much difficulty you can find lower priced properties in other areas of the US where $149K worth of rental housing will generate $3000 of monthly rent. I'm not talking about really bad high crime areas either, just lower class or working class areas, typically in the South or Midwest.

I think Brad nailed it. $50K - $54K.